Federal law states that candidates can only give other candidates $ 2,000 per election. But Sen. Ted Cruz (R-TX) – in classic Cruz fashion – may have found a battle.
Last month, Cruz poured a staggering $ 137,183 into the home campaign for Cassy Garcia, a former co-worker running for the Texas Congress.
Along the way, the tendentious Texan – who regularly pushes campaign funding limits and is currently challenging the federal election regulator in the Supreme Court – broke new ground, assumed unlimited spending power and raised campaign funding red flags.
Cruz’s last-minute blitz paid off. His six-figure spending helped Garcia get through Republican primary on May 24th. And Cruz’s support may have played a pivotal role, as none of Garcia’s campaign financial reports show a dime spent on promotion – no ads, no digital marketing, no signs, no mailings, no call lists, no exceptional efforts. Just a $ 600 website.
For some reason, Cruz filled that gap. When the ballot papers were counted, he spent more money on Garcia than she had ever collected.
If this sounds weird, it is. Experts say the movement seems endless. And it can cause other candidates with fat bankrolls and strong personal preferences – candidates like Donald Trump – to think twice about throwing their weight around.
If it seems illegal, technically, it probably is not.
At the very least, it’s probably not illegal as long as the senator and his former deputy head of state have never “coordinated” on spending – a broad term that also applies to candidates and super PACs.
Here’s how he did it.
Federal rules limit the amount of money that campaigns go directly to one another to a surprising degree: $ 2,000 for the primary, and another $ 2,000 for the general. That’s less than the limits for individual donors, which can add up to a combined total of $ 5,800.
But the rules do not set limits on how much money campaigns spend on indirect forms of support, known as “independent spending.” This means that a campaign could theoretically spend millions of dollars on advertising or marketing efforts to support a friend’s campaign – or to attack a friend’s adversary.
Essentially, Cruz cut out the middleman. His campaign committee, “Ted Cruz for Senate,” created tens of thousands of dollars in the kind of promotional efforts that would typically help fund these $ 2,000 donations, just as a Super PAC would complement an official campaign.
Spending began Feb. 23, a week before primary, when Ted Cruz scrapped the first $ 64,800 for the Senate: $ 40,000 knocking on GOTV doors; $ 24,500 for two media purchases; and a final $ 300 for printing and design. The next day, the campaign dropped $ 40,000 on web services, $ 9,306 on printed materials, and $ 16,200 on GOTV phone calls and text messages. The spree ended with another $ 5,000 media purchase on February 25, and a $ 1,877 kicker for media and travel on February 28.
The campaign, however, had a problem. The tactic was so unusual that the Federal Electoral Commission did not really have a way of reporting it. Instead, campaign treasurer Cabell Hobbs took “various” forms, complete with a particular Cruzian bit of comment – “in light of the FEC’s failure to provide a mechanism for authorizing committees to report independent expenditures that support candidates in other races.”
While Cruz waited until last week to jump in, Garcia’s campaign was not long in coming. She first filed with the FEC in mid-December, raising about $ 128,000 before primary – about $ 10,000 less than Cruz spent.
Of that $ 128,000, the Garcia campaign available reports show only $ 11,738 in expenses, for accounting, research, credit card processing, a trade name, and $ 600 for web design. Cruz’s management PAC also nearly covered that bill, with its $ 10,000 New Year’s gift.
And while it is possible that Garcia has made more expenditures on her own behalf in the 20-day gap between her last available report and the primary day, there are gaps. For example, the only Garcia campaign ads in Facebook’s political ad library are the ones that bought the Cruz campaign. Google’s ad library has no hits at all. And even if Garcia had fired her account, she would not have spent as much as Cruz.
Caleb Burns, a campaign finance expert and partner at Wiley Rein, told the Daily Beast that while his approach is novel, Cruz appears to be in the law.
“A campaign should be free to engage in independent spending on behalf of other candidates based on both constitutional concerns and on existing FEC regulations,” Burns said, noting that he has also explored the issue before the Supreme Court. Citizens United Judgment has blown the doors of political fundraising and spending.
Burns observed that this type of campaign spending is “excessively rare”, and offered an explanation – candidates want to keep their campaign expenses because it is the only money they spend on their own election efforts.
“Candidates typically reserve campaign funds for themselves and rely on other vehicles to make independent expenditures,” Burns said. “For example, candidates and bureaucrats can use their leadership PACs – which can not be used to support candidates or their own choices – to make independent expenditures to support other candidates. And since Bierger United v. FECallied Super PACs and other organizations also make independent expenditures.
To be sure, the campaigns have a number of channels to expand cash to their allies. But as the political fundraiser continues to break records, teenagers who find themselves with more money than they can spend – thinks Sen. Lindsey Graham (R-SC) and challenger Jamie Harrison’s $ 240 million bonanza in 2020 – could see a new appeal in the Cruz approach.
Brett Kappel, a specialist in campaign finance law at Harmon Curran, pointed out that this could most likely prove true where a candidate has a personal shareholder in another race.
“It remains to be seen whether this will become a trend. It may be tempting for members of Congress with a national fundraising base to weigh in on races in which they have a personal interest in or against a specific candidate,” Kappel said.
Since the FEC did not set up proper reporting conditions, he added, an external candidate might be able to type the scales “before voters ever know who is funding the independent spending”.
However, the keyword is “independent”. Some of Cruz’s issues, Kappel said, raise questions about how independent it is, exactly.
Candidates can not coordinate these expenses – and this includes discussion, approval and suggestions, and it goes beyond the candidates and intermediaries.
Cruz and Garcia show overlap. Cruz’s Facebook issues promote a joint rally organized by his campaign, with an EventBrite link, and a post on Garcia’s official Facebook page linking to the same rally and the same EventBrite invitation – listing Ted Cruz for the Senate as organizer.
In addition, Cruz and Garcia, who have a close history, also both paid a joint salesman for “design” work – a small Texas firm called Birdwell Communications, which only paid for two other federal committees.
“The use of a common vendor would be seen as a red flag that indicates the possibility of coordination between the two campaigns,” said Kappel.
The Cruz and Garcia campaigns did not immediately respond to a request for comment.
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