As he has traveled the country campaigning for president, Ted Cruz has held up his victory in the 2012 U.S. Senate race as nothing short of a political miracle — and a potential template for his path to the White House.
“All the political graybeards said there was no way you could win that race, and it came from the grassroots,” Cruz recalled to supporters during a home-state rally last year. "It started out it was a few dozen, then it became a few hundred, then it became a few thousands, then it became tens of thousands across this state.”
Part of that miracle, Cruz says, was made possible after he and his wife, Heidi, decided to gamble away their life savings on the contest — a bold move, considering that decision was made when he was still a clear underdog. It paid off, though, and Cruz went on to handily beat then-Lt. Gov. David Dewhurst by more than 13 percentage points in a runoff.
Yet a new revelation is raising a question about how exactly Cruz funded that miracle — one that threatens to put an asterisk next to the single electoral triumph that has become so central to Cruz’s political identity. The New York Times reported Wednesday that Cruz had not disclosed to the Federal Election Commission a loan from his wife’s employer, Goldman Sachs, that was worth as much as $500,000 and went toward the race.
Speaking with reporters Wednesday night in South Carolina, Cruz called the issue a “technical and inadvertent filing error” that he would resolve if necessary. He argued that he wasn’t trying to hide anything and pointed out that the loan has been public record for years as part of the personal financial disclosures required of him as a member of the U.S. Senate.
Cruz aides have also downplayed the seriousness of the revelation, joking, for example, that reporters should also know that Cruz sometimes crosses the street when there is not a sidewalk. In an email asking supporters for money Thursday afternoon, Cruz responded to the report more seriously, calling it a “shameful attempt to not only affect tonight's debate but also change the ultimate course of the 2016 election.”
Cruz’s Republican rivals were mostly mum on the revelation Thursday, hours before the sixth GOP presidential debate in Charleston, S.C. But in an interview with Bloomberg Politics, Trump suggested it was anything but the non-issue Cruz’s campaign was making it out to be.
“Well, I heard it's a big thing. I know nothing about it. But I hear it's a very big thing,” Trump said. “I hope he solves it. I think he's a nice guy and I hope he gets it solved.”
Cruz’s detractors closer to home, however, say the revelation points to a recurring theme from Cruz's Senate race: the disconnect between his Ivy League resume and anti-establishment persona.
Cruz cultivated an outsider narrative during his 2012 bid to replace U.S. Sen. Kay Bailey Hutchison, in which he faced off in the Republican primary against Dewhurst — widely viewed as the frontrunner — former Dallas Mayor Tom Leppert and former ESPN analyst Craig James. A former strategist for a rival Republican Senate campaign said Cruz has a history with a “murderers’ row of insider institutions”: Princeton University and Harvard Law School where he studied, the U.S. Supreme Court where he clerked and the Bush administration, where he was a policy adviser.
“Who cares about the loan? That doesn’t matter,” said the strategist, who was granted anonymity to freely discuss the campaign’s thinking at the time. “What matters is, how do you say you're an outsider when you’re married to a person who makes hundreds of thousands of dollars a year from Goldman and you’re the most insider of insiders?”
Cruz used the race to launch himself as a Tea Party firebrand backed by grassroots conservatives. And he painted the contentious race as a fight against a moderate, longtime statewide officeholder. At the time, Dewhurst had served as lieutenant governor for almost a decade and had picked up endorsements from Texas Republican leaders, including former Gov. Rick Perry.
“Tonight is a victory for the grass roots,” Cruz said the night he defeated Dewhurst in a runoff election. “It is a testament to Republican women, to Tea Party leaders and to grassroots conservatives.”
The disclosure of the loan during the Senate bid would have not been helpful for Cruz, who faced a barrage of attacks from Dewhurst related to both his time in Washington and private law practice.
“The general view was, ‘Why give the Dewhurst campaign any more ammunition against us?’” said Mark Jones, a political science professor at Rice University. “I think it was one of those things where if it had come up during the campaign, it would’ve been used against him.”
Texas Democrats pounced on the undisclosed loan, describing Cruz’s actions as a “Republican hypocrisy.”
“It must be nice for Ted Cruz to be a well-connected politician with the big banks on his side,” said Manny Garcia, deputy executive director of the Texas Democratic Party. “To top it off, Cruz hid the deal from Texans during his election and has been spinning a Tea Party fairy tale about his rise in Republican politics.
But grassroots activists in Texas are brushing off any criticism of Cruz. JoAnn Fleming, a prominent conservative activist whom Cruz named as his Texas Tea Party chairwoman, said the loan came as no surprise because Cruz disclosed it on personal financial disclosures after he was elected.
“A loan and having a relationship with a bank is not the same thing as a government bailout,” Fleming said. “This doesn’t rise to a state of alarm for me and for anybody else that I’ve talked to today, and we’re still sending people to Iowa for Sen. Cruz.”
The sources of Cruz's campaign war chest were an issue even during the 2012 race. His face-off with Dewhurst drew national interest and more than $50 million in spending, making it the most expensive non-presidential race of that election cycle, according to the Center for Responsive Politics.
That included the $1.43 million in personal funds Cruz put into his campaign, which was thwarted by the $24.9 million Dewhurst lent himself during the primary and runoff elections. And it included big spending by out-of-state groups, including several based in Washington, D.C., that collectivelypoured millions into Cruz’s campaign. Pointing to those contributions, Dewhurst attempted to label Cruz as a “Washington insider” but that rallying call was drowned out by Tea Party support for Cruz who at the time was a rising political star in a Republican Party lurching farther to the right.
For Fleming, the current attacks on Cruz over the loan are nothing more than an indication of his frontrunner status and echo the scrutiny he came under during his Senate bid.
“When you are a frontrunner in a hotly contested race, your opponents are going to look for any possible thing,” Fleming said. “We certainly saw a lot of that mudslinging and frankly outright lying about Sen. Cruz when he ran for the [U.S.] Senate. We’re used to this. We knew that it would come.”
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