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Rule changes after the Supreme Court’s Federal Election Commission v. Senate Ted Cruz ruling will allow elected officials to raise more money to pay off loans to their campaigns after the election. became.
Federal candidates have unlimited money in their campaign funds, and wealthy candidates are increasingly self-financing their campaigns. Candidates vying for seats in the House and Senate in the 2022 midterm elections have put more than $283 million in their own funds into campaign finance, according to a new analysis from OpenSecrets.
Congressional candidates have already nominally made more 2022 campaigns than total self-funding from House and Senate candidates over the entire 2020, 2016, 2014 or 2012 cycle . In the 2018 midterm elections, his $317 million candidate’s self-funding was raised for the entire cycle.
Donors are donating more and more money to candidates after elections, most often to the candidates who win the elections. Post-election donations are subject to the same donation limits as the election cycle, but give donors who may not have previously endorsed the candidate a second apple and do the favor of the elected candidate. It gives them the opportunity to be accepted effectively.
During the 2020 election cycle, more than $3.5 million in donations were raised for candidates after they won elections. Many of them came from donors who gave the maximum amount allowed. About $75,000 of that came from registered lobbyists.
The 2016 election cycle saw post-election lobbyist donations surpass a record $126,000, much of which went to then-House Speaker Paul Ryan (R-Wisconsin).
Since post-election donors generally know who won and their contributions do not help the campaign, some reform advocates quarrel Contributions should be regulated like gifts to federal employees.
Some reform activists argue that candidate self-financing reduces the potential for corruption because candidates are not perceived to be indebted to donors, but they do not have the money to spend on campaigns. Loans can have the opposite effect if a wealthy candidate who is in debt can personally benefit from the investment.
Several state-level candidates are also self-funding their campaigns.
The highest self-financed state candidate in history is Illinois Governor JB Pritzker (Democrat), who pledged at least $172 million to his 2018 gubernatorial campaign and another $132 million to his 2022 re-election campaign. donated.
Some candidates donate millions of dollars to campaigns as donations without any strings attached and without trying to repay themselves. and several candidates have begun reinstating previously forgiven loans for repayment after the recent Supreme Court ruling.
Unforgivable loans allow candidates to withdraw from campaign funds
The FEC’s third-quarter filing deadline has been cut short for self-financed candidates after the Supreme Court’s ruling and the FEC’s approval of an interim final rule removing regulations that previously restricted personal loan repayments. gives us the first glimpse of the resurrection of loans that were not allowed. Candidates participated in their campaign.
An analysis of new FEC filings by OpenSecrets shows that candidate loans that were previously converted to donations have already started to come back, so campaigns can use post-election donations to pay back candidates.
Senator Ted Cruz (R-Texas), whose campaign was at the center of a Supreme Court case, was repaid $555,000 from his campaign, Insider first reported in a new FEC filing. showed.
The court ruled that in the 2018 cycle Cruz loaned $260,000 to his re-election campaign, and after the 20-day window passed, his campaign repaid him $250,000 and left him with a personal loan of $10,000, and then the existing lawsuit. held 6-3 that the nominee’s loan repayment limits were unconstitutional.
In addition to paying off a $10,000 personal loan from Cruise for the 2018 general election, Cruise’s campaign also paid him $545,000 for a back-up loan in 2012, according to a new federal campaign filing. is showing.
Introduced by the landmark Bipartisan Campaign Finance Reform Act of 2002, the old federal campaign finance rules limited post-election repayments of a candidate’s campaign funds to $250,000 within 20 days after the election.
The new rules open the door for candidates to lend huge sums of money to campaigns and then raise funds to repay candidates after winning an election.
Erin Chlopak was Senior Director of Campaign Finance at the Campaign Legal Center and ran the FEC’s Policy Division. She told her OpenSecrets that the rule change will help candidates “enrich themselves personally by offsetting their debts,” adding that campaign funds could be used to pay back candidates. He noted that values are “material and personal.”
The interim final rule was posted in Federal Records on September 8 with an effective date of November 30.
Supreme Court Helps Put Campaign Money Back in Pockets of Self-Funded Candidates
Cruz isn’t the only candidate seeking repayment of a once-unforgivable loan following a Supreme Court ruling.
“In the post-cruise situation as interpreted by the FEC, nothing prevents candidates from using post-election donations to pay off debts or raise funds from previous elections,” it said. Chlopak told OpenSecrets.
Cropak said the election-by-election donation limit still applies, but donors who didn’t contribute in past election cycles can get the most out of the current election as well as pay off past election debts. You can also provide funds to do so.
Questions remain as to whether the FEC will treat the advisory opinion without limiting the period over which the rule applies, but Chlopak told OpenSecrets, “The opinion does not appear to limit it.” said.
At the same hearing where the FEC unanimously approved the rule change, the committee said former Congressman Harley Lauda (Democrat, California) would reinstate personal loans for the 2018 campaign, giving candidates loans to the committee. also approved an advisory opinion allowing the repayment using the funds of pay back debt.
Rouda won a seat in the US House of Representatives representing California’s 48th congressional district in the 2018 election, but lost for re-election in 2020.
New FEC filings show that Rouda’s loan forgiveness was canceled on Sept. 19, and the campaign paid Rouda about $116,000 that day, leaving an outstanding balance of about $787,000.
In addition to repaying Rouda from the $48,609.38 cash remaining on hand at the end of September, the campaign may also solicit new donations to pay off its 2018 debt, although new donations will be used as reserve funds for 2018. Must be designated as an election donation. Contributions for that cycle are limited and must not exceed the campaign’s outstanding debt for the 2018 primary.
Rep. Vicente Gonzalez (D-Texas) has also revived funding for the congressional campaign, new FEC filings show. In July, the campaign wrote to the FEC supporting Rouda’s demands, noting that Gonzales wanted the loans he had forgiven reinstated to pay off.
Gonzalez loaned approximately $1.9 million to the campaign, and while the campaign repaid $500,000 ($250,000 each in the 2016 primary and primary run-off ballots), the remainder was converted into donations. I was. Gorzalez said this was due to the candidate’s loan repayment limits, which were voided by Cruz’s decision.
The remaining approximately $1.4 million that Gonzalez had previously forgiven was reinstated on Aug. 31, FEC filings show.
Candidates accused of circumventing contribution limits with self-financing loopholes
By removing the 20-day limit on a candidate’s loan repayment from campaign funds, the new rule requires candidates to provide one donor with an amount that exceeds the campaign’s donation limit, thereby reducing the contribution limit. You can also strengthen your strategies to avoid foreheads. Contributions to previous election cycles for loan forgiveness.
In 2018, Senator Mike Brown (R-Ind.) solicited donations to pay off his personal campaign-fund debt for the Republican primary. After paying off those debts, Brown lent the exact same amount to the general election campaign, effectively creating a loan-and-repayment cycle that circumvented traditional donation limits.
Faced with allegations of financial misrepresentation by failing to properly disclose contributor information, Brown’s campaign benefited from the Supreme Court’s FEC v. Cruz case.
Before the decision — when campaign repayments for candidate loans using post-election contributions were still limited to $250,000 — FEC auditors determined that the campaign for post-election loans and interest repayments in 2018 I indicated that my repayment to Brown exceeded the contribution limit.
However, in its final report, released shortly after the Supreme Court’s FEC v. Cruz decision, the auditor removed allegations that Braun’s campaign had accepted $8.5 million in potentially inappropriate loans and found them inappropriate. We recommend that you do not certify Some of the candidate loans are no longer excessive.
FEC auditors identified approximately $730,000 in contributions that would have still exceeded the contribution cap under Cruz, but the findings were not included in the final audit report. was not
Rep. Matt Rosendale (Republican, Montana) employed a similar tactic in 2018, using personal loans from his 2014 House campaign to effectively circumvent the contribution limit. . Rosendale began fundraising to pay off his debt in 2018, but donations to that effort didn’t count against his 2018 cycle donation limit.
Multiple wealthy donors who helped pay off debt had already contributed up to $5,400 to Rosendale’s 2018 campaign. After being repaid, Rosendale lent even more money to the campaign, allowing donors to effectively circumvent the donation limit by donating in multiple cycles.
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