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	<title>View From a Height</title>
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	<itunes:summary>Commentary From the Hile-High City - V4.0</itunes:summary>
	<itunes:author>View From a Height</itunes:author>
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		<title>Who&#8217;s Panicking?</title>
		<link>http://www.jsharf.com/view/?p=2569&#038;utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=whos-panicking</link>
		<comments>http://www.jsharf.com/view/?p=2569#comments</comments>
		<pubDate>Thu, 16 May 2013 01:31:08 +0000</pubDate>
		<dc:creator>Joshua Sharf</dc:creator>
				<category><![CDATA[PERA]]></category>

		<guid isPermaLink="false">http://www.jsharf.com/view/?p=2569</guid>
		<description><![CDATA[Last week, former PERA Executive Director Miller Hudson penned an op-ed for the Denver Post, arguing that PERA&#8217;s situation has improved to the point where we need not worry about it, and that no further tinkering with it is necessary (&#8220;There is no need for panicky &#8216;fixes&#8217; to PERA&#8220;).  Unfortunately for the taxpayers of Colorado, Mr. [...]]]></description>
			<content:encoded><![CDATA[<p>Last week, former PERA Executive Director Miller Hudson penned an op-ed for the <em>Denver Post,</em> arguing that PERA&#8217;s situation has improved to the point where we need not worry about it, and that no further tinkering with it is necessary (&#8220;<a href="http://www.denverpost.com/opinion/ci_23167652/there-is-no-need-panicky-fixes-pera" target="_blank">There is no need for panicky &#8216;fixes&#8217; to PERA</a>&#8220;).  Unfortunately for the taxpayers of Colorado, Mr. Hudson&#8217;s comforting conclusions are belied by some uncomfortable facts.</p>
<p>Let&#8217;s begin with where Mr. Hudson places the blame for the current funding problems.  He identifies one of them correctly &#8211; overly generous benefits that amount to promises that cannot be kept, except at great expense.  He is also correct that the dot-com bubble was fool&#8217;s gold for the legislature, which led it to create the overly-generous benefits.</p>
<p>But PERA&#8217;s portfolio managers (who predate Mr. Hudson&#8217;s tenure as Executive Director), allowed the fund&#8217;s investments to become dangerously overweight in volatile stocks, in effect <a href="http://www.jsharf.com/view/?p=2501" target="_blank">letting their winning bets ride</a>.  When the dot-com bubble burst, so did PERA&#8217;s funded ratio, and it continued to decline throughout the decade, recovering only slightly in the mid-00s:</p>
<p><img src="http://www.jsharf.com/images/PERA/PERA-Funded-Stocks.jpg" alt="" /></p>
<p>This chart also shows the folly of relying on long-term returns to determine a fund&#8217;s solvency.  If a plan is underfunded, adding additional return may look like the way to catch up.  But along with that additional reward comes additional risk and volatility.  When the portfolio has a bad year, as in 2000, 2001, and 2008, it doesn&#8217;t have the option of drastically reducing its payout that year, as you or I would with our own retirement accounts.  The need to pay benefits regardless of the fund&#8217;s annual return can put it in a hole that it can never recover from.  PERA&#8217;s estimate of 8% may indeed be a realistic return over 30 or 40 years.  But benefits need to be paid when they need to be paid, and the results of this thinking are all too obvious in the above chart.</p>
<p>And while the legislature rarely met its Annual Required Contribution (a contribution set by <a href="http://www.gasb.org/st/summary/gstsm27.html" target="_blank">Government Accounting Standards Board</a>, and designed to ensure actuarial soundness), this shortfall was only a <a href="http://www.jsharf.com/view/?p=2455" target="_blank">relatively minor factor</a> in the fund&#8217;s increasing unfundedness.  According to the chart below, had the legislature made the ARC every year from 2000 on, the State and School Divisions, which comprise the overwhelming part of PERA, would only have been about $4 billion better-off last year.  PERA admits to a $23 billion unfunded liability, although there is reason to believe it is much larger:</p>
<p><img src="http://www.jsharf.com/images/PERA/Shortfall/07-CompAllWithShortfall.jpg" alt="" /></p>
<p>Mr. Hudson also argues that, because overall, PERA contributions account for less than 3% of public spending, the burden is light.  This ignores that for many entities &#8211; school districts, in particular &#8211; PERA spending is eating up an <a href="http://www.jsharf.com/view/?p=1985" target="_blank">increasing portion of their operating expenses</a>:</p>
<p><img class="alignnone" src="http://www.jsharf.com/images/PERA/PctOpExp.jpg" alt="" width="481" height="289" /></p>
<p>This is a result of the very supplemental payments (SAEDs) that are designed to save the system from ruin.  PERA is correct that the supplemental payments were envisioned as being shared between the districts and their teachers.  But with many, if not most, school boards under the thumb of the teachers&#8217; unions, they have decided to have their districts absorb the entire supplemental payments.  This means that as of 2011, for four major Denver-area school districts, roughly 11% of their operating expenses were going to teacher pension plans, money that could have gone into the classroom.</p>
<p>Mr. Hudson tries, implicitly, to discredit those who are concerned about PERA&#8217;s fiscal condition by claiming that it is only &#8220;in recent decades&#8221; that concern has grown up around the unfunded liability.  While it is true that in the past, PERA has been significantly under-funded, two conditions make that of greater concern now.  First, the PERA unfunded liability is much larger now <a href="http://www.jsharf.com/view/?p=2567" target="_blank">as a percentage of the state GDP</a>, meaning that should a fix become necessary, the pain to the state&#8217;s taxpayers will be considerable greater than it has been in the past.  In the 1980s and early 90s, the unfunded liability hovered around an unthreatening 2% of state GDP.  That has since grown to 9%:</p>
<p><img class="alignnone" src="http://www.jsharf.com/images/PERA/PERA-State-GDP.jpg" alt="" width="481" height="424" /></p>
<p>Second, since PERA has an unfunded liability, it means that some of its current expenses are paid for by current employees.  (A fully-funded program would, by definition, have all current expenses in the bank.)  The ratio of current employees to retirees <a href="http://www.jsharf.com/view/?p=2487" target="_blank">has been falling for decades</a>, as well, meaning that any increases in contributions will fall more heavily on future employees and future taxpayers:</p>
<p><img src="http://www.jsharf.com/images/PERA/PERA-Participation.jpg" alt="" /></p>
<p>As part of his rhetoric, Mr. Hudson contrasts the concrete &#8211; and real &#8211; improvements from SB10-001 with unnamed and undescribed &#8220;fixes&#8221; proposed by those who worry about PERA&#8217;s financial condition.  This leaves the reader to imagine all sorts of horribles.  Let&#8217;s look at some of the &#8220;panicky&#8221; fixes proposed in the state legislature over the last several years:</p>
<div>
<ul>
<li>HB13-1040: Would have calculated benefits on the basis of seven, rather than three years&#8217; pay, making &#8220;spiking&#8221; more difficult to achieve</li>
<li>SB13-055: Would have applied the same liability discount rate rules to PERA as apply to US private pensions and European public pensions</li>
<li>HB12-1142: Would have given all PERA members the option to join PERA&#8217;s own defined contribution plan</li>
<li>HB12-1179: Would have broadened the composition of PERA&#8217;s board to reduce conflicts of interest and increase accountability</li>
<li>SB12-016: Would have given local governments the same option the state government has to make plan members pick up more of their benefit contributions in times of fiscal distress</li>
<li>HB12-1250: Would have calculated health care benefits on the basis of costs, rather than employees&#8217; salaries</li>
<li>SB12-082: Would have set the PERA retirement age to that of Social Security for non-public safety members, a matter of basic fairness</li>
<li>SB12-119: Would have forced PERA make adjustments until its plans could meet a 30-year amortization window, the standard for pensions</li>
<li>SB12-136: Would have included PERA benefits in the state&#8217;s Biennial Compensation Report</li>
</ul>
</div>
<p>All of these changes are designed to increase transparency, increase accountability, and decrease conflicts of interest.  All of them are designed to increase fairness, and <em>increase</em> the likelihood that PERA retirees will be able to rely on promises made to them.</p>
<p>It is telling that each of these changes &#8211; every last one &#8211; has been opposed by PERA and its allies in the public employees unions here in Colorado.</p>
<p>And it&#8217;s enough to make you wonder who&#8217;s <em>really </em>panicking.</p>
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		<title>Yes, PERA Is Worse Now</title>
		<link>http://www.jsharf.com/view/?p=2567&#038;utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=yes-pera-is-worse-now</link>
		<comments>http://www.jsharf.com/view/?p=2567#comments</comments>
		<pubDate>Tue, 14 May 2013 23:36:02 +0000</pubDate>
		<dc:creator>Joshua Sharf</dc:creator>
				<category><![CDATA[PERA]]></category>

		<guid isPermaLink="false">http://www.jsharf.com/view/?p=2567</guid>
		<description><![CDATA[Defenders of PERA often argue that while the liabilities have been under-funded in the past, it is only now that PERA&#8217;s critics have begun to worry about the matter.  The implied message is that the complaints are political, rather than financial.  Here&#8217;s why this isn&#8217;t the case: Yes, Colorado&#8217;s economy has grown, but the PERA [...]]]></description>
			<content:encoded><![CDATA[<p>Defenders of PERA often argue that while the liabilities have been under-funded in the past, it is only now that PERA&#8217;s critics have begun to worry about the matter.  The implied message is that the complaints are political, rather than financial.  Here&#8217;s why this isn&#8217;t the case:</p>
<p><img class="alignnone" src="http://www.jsharf.com/images/PERA/PERA-State-GDP.jpg" alt="" width="481" height="424" /></p>
<p>Yes, Colorado&#8217;s economy has grown, but the PERA liability has grown faster.  While through the 80s and most of the 90s, the unfunded liability hovered around 2% of the state&#8217;s GDP, since 2000, it has grown to 9%.  Of course, during the good economic years, it declined somewhat, and it may well decline a little again this year, as PERA&#8217;s returns are expected to be around 12% on its portfolio.  But sooner or later, we will hit a cyclical recession, and even as the economy shrinks, PERA&#8217;s unfunded promises will continue to accumulate.</p>
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		<title>Daily Glimpse May 13, 2013</title>
		<link>http://www.jsharf.com/view/?p=2565&#038;utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=daily-glimpse-may-13-2013</link>
		<comments>http://www.jsharf.com/view/?p=2565#comments</comments>
		<pubDate>Tue, 14 May 2013 00:31:39 +0000</pubDate>
		<dc:creator>Joshua Sharf</dc:creator>
				<category><![CDATA[PPC]]></category>

		<guid isPermaLink="false">http://www.jsharf.com/view/?p=2565</guid>
		<description><![CDATA[Daily Links From Glimpse From a Height Three Views on the UKIP The UK Independence Party did quite well in this past week&#8217;s council elections in England, at least in terms of the popular vote.  They didn&#8217;t win control of any councils, although they did end up with representation on some of them.  So the [...]]]></description>
			<content:encoded><![CDATA[<p class="scrd_header">Daily Links From Glimpse From a Height</p>
<ul class="scrd_digest">
<li><a href="http://jsharf.com/glimpse/?p=1152#utm_source=rss&amp;utm_medium=rss&amp;utm_campaign=three-views-on-the-ukip" rel="external">Three Views on the UKIP</a>
<div>The UK Independence Party did quite well in this past week&#8217;s council elections in England, at least in terms of the popular vote.  They didn&#8217;t win control of any councils, although they did end up with representation on some of them.  So the talk of a Tory-UKIP coalition, or even of an electoral alliance, grows [...]</div>
</li>
<li><a href="http://jsharf.com/glimpse/?p=1149#utm_source=rss&amp;utm_medium=rss&amp;utm_campaign=alas-colorado" rel="external">Alas, Colorado</a>
<div>Colorado immigrant Sarah Hoyt, on not moving from Colorado: So, now to everyone who keeps sending me notes asking me what I intend to do about the Colorado legislature and its laws to ensure we never get to have a say in governing again. I’m not stupid.  I see the Detroit writing on the wall.  [...]</div>
</li>
</ul>
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		<title>Banana Democrats</title>
		<link>http://www.jsharf.com/view/?p=2560&#038;utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=banana-democrats</link>
		<comments>http://www.jsharf.com/view/?p=2560#comments</comments>
		<pubDate>Sun, 12 May 2013 19:17:28 +0000</pubDate>
		<dc:creator>Joshua Sharf</dc:creator>
				<category><![CDATA[Colorado Politics]]></category>
		<category><![CDATA[Vote Fraud]]></category>

		<guid isPermaLink="false">http://www.jsharf.com/view/?p=2560</guid>
		<description><![CDATA[There&#8217;s an area of Colorado, near Buena Vista in the south-central part of the state, known as the &#8220;Banana Belt&#8221; for its temperate climate.   It&#8217;s unknown if State Sen. Greg Brophy (R-Wray) had that in mind when he claimed that HB13-1303 will turn the state into a &#8220;banana republic,&#8221; but his comments remain accurate nonetheless. [...]]]></description>
			<content:encoded><![CDATA[<p>There&#8217;s an area of Colorado, near Buena Vista in the south-central part of the state, known as the &#8220;Banana Belt&#8221; for its temperate climate.   It&#8217;s unknown if State Sen. Greg Brophy (R-Wray) had that in mind when he claimed that HB13-1303 will turn the state into a &#8220;banana republic,&#8221; but his comments remain accurate nonetheless.  The new law will, among other things, lower the residency requirement to 22 days, pre-register 16-year-olds when the get their drivers licenses, replace precinct voting with vote-by-mail and the occasional vote center, and permit same-day registration to cast regular ballots.  It will require that mail ballots be sent to all registered voters, and will do away with the &#8220;Inactive Voter&#8221; status, which voters attain by not voting for several consecutive elections.</p>
<p>To many Republicans, this one included, these changes sound like a stamped, self-addressed invitation to vote fraud.  Vince Carroll of the <em>Denver Post</em> has <a href="http://www.denverpost.com/carroll/ci_23192925/setback-election-integrity" target="_blank">detailed some of the problems with the bill</a>.</p>
<p>The bill would retain all the current means of registration &#8211; including being able to register using a utility bill and the last four digits of <del>your Social Security number</del> the license plate you saw outside, and then to proceed immediately to vote, using a regular ballot, not a provisional one set aside for after the registration was verified.  County clerks had argued in favor of the bill, claiming that the SCORE system currently used to track voter registrations could easily be expanded to statewide use, and that once a statewide system is set up, there will be little trouble tracking voter registrations.</p>
<p>The fact is, the system we have <em>now </em>is manifestly riddled with bad registrations, old registrations, and dead people.  And the very same people who wrote this bill, in collusion with the legislative Democrats, are the ones who not only stand in the way of cleaning up the rolls, but have tried to pry open the system with a judicial crowbar in the past.</p>
<p>I&#8217;ve been directly involved in a number of campaigns that involved going door-to-door for signatures.  I don&#8217;t even bother with apartments, since the odds of the registrant matching the resident are somewhat south of hitting a given number on a roulette wheel.  The voter rolls for these precincts are literally (not figuratively) filled with bad registrations.  And it&#8217;s no good saying it&#8217;s not a problem because we&#8217;re only 6 months away from the last election.  Since Colorado routinely has odd-year elections for ballot initiatives and school boards, we&#8217;re also only 6 months away from the next one.</p>
<p>The groups that were called into help write the bill &#8211; notably not including the Secretary of State&#8217;s office &#8211; have, in the past, sued the Secretary of State for ridding the voter rolls of dead people, criticized him for trying to get non-citizens off the registrations rolls, and filed suit in 2004 seeking to permit anyone to vote the full ballot anywhere, without any form of identification.  In the <a href="http://www.courts.state.co.us/Media/Opinion_Docs/04CV7709.pdf" target="_blank">decision in that case</a>, the judge noted that:</p>
<blockquote><p>But at the moment, if I were to try to design a system that maximizes the chances that fraudulent and ineligible registrants will be able to become fraudulent voters, I’m not sure I could do a better job than what Plaintiffs are asking me to do in this case—allow voters to vote wherever they want without showing any identification.</p></blockquote>
<p>The entire opinion is worth reading, and I&#8217;ve quoted salient paragraphs from it at length before.  For the moment, bear in the mind what that quote says about the character of Common Cause and the other co-conspirators to this hijacking of our electoral system.</p>
<p>The Democrats who wrote and voted for this bill have to be well aware of these fact.  These are elected state representatives and state senators.  Every last one of them - <em>especially</em> the Democrats who tend to come from urban areas &#8211; is a professional politician who got elected by working these very precincts.  It beggars the imagination to believe that they are so unacquainted with their districts that they don&#8217;t know how detached the voter rolls are from reality.  And that&#8217;s now, before these changes are put in place.</p>
<p>The only conclusions to draw are that the Democrats who voted for this bill are at best unconcerned about the integrity of our elections, and at worst see elections as a whole not as contests to be won, but as boxes to be checked off in the ratification of their power.</p>
<p>We are all from Buena Vista now.</p>
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		<title>Alliances and Their Discontents</title>
		<link>http://www.jsharf.com/view/?p=2552&#038;utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=alliance-and-their-discontents</link>
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		<pubDate>Sun, 05 May 2013 15:35:05 +0000</pubDate>
		<dc:creator>Joshua Sharf</dc:creator>
				<category><![CDATA[Foreign Policy]]></category>
		<category><![CDATA[Iran]]></category>
		<category><![CDATA[War on Islamism]]></category>

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		<description><![CDATA[The Sunday Times is reporting that several Arab countries are prepared to join Israel and Turkey in a missile-defensive alliance designed to contain the threat from a nuclear Iran: The plan would see Israel join with Turkey, Jordan, Saudi Arabia and the United Arab Emirates, to create a Middle Eastern “moderate crescent,” according to the Sunday [...]]]></description>
			<content:encoded><![CDATA[<p>The <em>Sunday Times</em> is reporting that several Arab countries are prepared to join Israel and Turkey in a <a href="http://www.thesundaytimes.co.uk/sto/news/world_news/Middle_East/article1255088.ece" target="_blank">missile-defensive alliance</a> designed to contain the threat from a nuclear Iran:</p>
<blockquote><p>The plan would see Israel join with Turkey, Jordan, Saudi Arabia and the United Arab Emirates,<a href="http://www.thesundaytimes.co.uk/sto/news/world_news/Middle_East/article1255088.ece" target="_blank"> to create a Middle Eastern “moderate crescent,” according to the Sunday Times</a>, which cited an unnamed Israeli official. Israel does not currently maintain formal ties with Riyadh or Abu Dhabi, and relations with Ankara have been strained since 2009.</p>
<p id="article-promo">According to the report, Israel would gain access to radar stations in Saudi Arabia and the UAE and in exchange share its own early warning radar information and anti-ballistic missile defense systems, though it’s not clear in what form. The report details that Jordan would be protected by Israel’s Arrow long-range anti-missile batteries.</p>
<p>The so-called 4+1 plan is being brokered by Washington, and would mark a sharp shift in stated policy for the White House, which has insisted the US is not interested in containing Iran but rather stopping it before it reaches nuclear weapon capability.</p></blockquote>
<div>This is an idea that may have some merit, but if overburdened with expectations, could also lead to catastrophe.</div>
<p>The idea of finally breaking the ice between Israel and its longtime Arab enemies in a meaningful way has got to be tremendously appealing.  If the stalwart Saudis could be brought publicly on board with such a plan, it makes it easier for other Gulf States and Arab countries to be added in eventually, and forces the more recalcitrant states to explain why their people&#8217;s survival is less important to their rulers than the Saudi subjects&#8217; is to their king.</p>
<p>It puts the lie to the idea that the Palestinians present the paramount, insurmountable obstacle to such cooperation.  The Israelis will never agree to return to the Auschwitz boundaries, but for those obsessed with the &#8220;peace process,&#8221; by playing on Palestinian fears that Israel and the rest of the Arab world are prepared to move on without them, in however limited a way, it may force the Palestinians to re-examine their own obstructionism.  And it surely brings to the surface the internal contradictions of a Muslim world that tries to isolate Israel even as it makes its own accommodations to its existence.</p>
<p>Put in the context of recent developments, it also places Obama&#8217;s attempt to get Israel and Turkey talking again as a first move in a plan to contain Iran.  If the administration is finally looking to create more alternatives for itself, rather than paint itself into rhetorical corners, it&#8217;s also a welcome sign of some belated maturity.</p>
<p>But all of these are largely long-term effects, the sort of thing that take years, even decades to mature into tangible benefits.  It may be that a military threat from Iran is what is forcing the Arabs and Turkey to publicly look to Israel for cooperation, but a solid trade relationship would accomplish much the same thing.</p>
<p>The risk is that the military benefits and diplomatic durability of such an alliance get oversold, with the result that the lack of one leads to the collapse of the other.</p>
<p>In point of fact, none of the players very much likes any of the others; it&#8217;s a potential alliance with 10 difference two-way relationships, almost all of which are fraught with distrust and hostility.  Such alliances are often useful over the short-run, and become, over time, extremely vulnerable to diplomatic maneuvers designed to exploit these fault lines.  Moreover, the Turks have never really cut off trade relations with the Iranians, they they share a common interest in keepin&#8217; the Kurd down.  Once the Syrian regime has fallen, it&#8217;s anyone&#8217;s guess whether that country will continue to be a source of irritation between Iran and Syria.</p>
<p>We don&#8217;t have to detail every individual scenario &#8211; some are obvious, others less so &#8211; in order to understand how that works.  Purely defensive alliances by definition put the initiative in the hands of the enemy.  Without persuasive offensive options, such alliances allow the enemy opportunities and time to manipulate the diplomatic landscape.  It allows them to choose when they&#8217;ll make their moves, and if they&#8217;re smart, they&#8217;ll wait until a moment of tension between two or more of those allies.  If they&#8217;re really smart, they&#8217;ll help create that tension themselves.  And the Iranians have shown themselves adept at avoiding actual containment, both through the threats of terror abroad, and the availability of their oil to willing buyers.</p>
<p>Ultimately, these are the wages of appeasement.  With the United States not only being evidently unwilling to strike Iran&#8217;s nuclear facilities itself, but also having publicly restrained Israel from doing so when it might have, we are now left with this option.  Instead of having acted when we might have, and still might, we seem resigned to the deeply immoral policy of MAD.   As long as we understand its severe time and extent limitations, it may serve as part of a fall-back plan.</p>
<p>&nbsp;</p>
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		<title>Game of Thrones, High Altitude Edition</title>
		<link>http://www.jsharf.com/view/?p=2546&#038;utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=game-of-thrones-high-altitude-edition</link>
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		<pubDate>Sun, 28 Apr 2013 22:18:27 +0000</pubDate>
		<dc:creator>Joshua Sharf</dc:creator>
				<category><![CDATA[Foreign Policy]]></category>
		<category><![CDATA[Asia]]></category>
		<category><![CDATA[China]]></category>
		<category><![CDATA[India]]></category>

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		<description><![CDATA[Walter Russell Mead has aptly characterized the ongoing re-working of strategic relationships in Asia as the &#8220;Game of Thrones,&#8221; and he takes notice of the latest developments on the disputed Chinese-Indian border. The government on Friday for the first time admitted that People&#8217;s Liberation Army(PLA) troops had intruded as much as 19 km inside Indian territory [...]]]></description>
			<content:encoded><![CDATA[<p>Walter Russell Mead has aptly characterized the ongoing re-working of strategic relationships in Asia as the &#8220;Game of Thrones,&#8221; and he <a href="http://blogs.the-american-interest.com/wrm/2013/04/23/game-of-thrones-on-the-high-peaks/" target="_blank">takes notice</a> of the <a href="http://timesofindia.indiatimes.com/india/Chinese-troops-19km-inside-Indian-territory-govt-admits/articleshow/19747508.cms?intenttarget=no" target="_blank">latest developments</a> on the disputed Chinese-Indian border.</p>
<blockquote><p>The government on Friday for the first time admitted that People&#8217;s Liberation Army(PLA) troops had intruded as much as 19 km inside Indian territory to pitch their tents there, even as it kept a third flag meeting between local commanders in eastern Ladakh &#8221;on hold&#8221; to give China &#8220;time and space&#8221; to withdraw its soldiers on its own.</p></blockquote>
<p>The move has to be seen in at least 4 different contexts.  First, there&#8217;s the simple straightforward ongoing border dispute with India.  India still has bad memories of having lost that war, and is clearly shying away from a direct confrontation this time.  It doesn&#8217;t have the organization to take on the Chinese right now, and doesn&#8217;t have the irredentist passion that existed in, say, pre-1914 France.  Anyone who&#8217;s ever tried to climb a 14er, or has followed a rescue from such a peak, understands the difficulty of conducting operations in such an environment.  So the Chinese may have stolen a 12-mile push forward, but it&#8217;s not as though there&#8217;s much more than pride at stake here.</p>
<p>Of course, Chinese-Indian tensions now extend well beyond the Himalayas.  As Robert Kaplan as pointed out, the Chinese have made Pakistan a strategic ally, with an eye towards an outlet to the Indian Ocean; the two countries are engaged in a struggle for economic influence in Burma, which has a direct bearing on the question of who will end up being responsible for naval security in the vital Straits of  Malacca.  And the Indians have taken suitable umbrage at Chinese resource claims in the South China Sea.  China&#8217;s Hiamalayan gambit can also be seen as an effort to put India back on its heels.</p>
<p>Not only does this serve as a remind to India of who&#8217;s in front right now, it also reminds others in the region that India can&#8217;t protect them, and of their own, weaker positions vis-a-vis China.  And globally, it calls into question the United States&#8217;s willingness and ability to continue to stabilize the situation in Asia.</p>
<p>Thus the fruits of taking punch at your strongest rival in his weakest spot.</p>
<p>The risks, of course, are they someday you&#8217;ll misjudge your own strength or your neighbors&#8217; willingness to resist such incursions, even as your strengthen their resolve.  China, without serious allies in Asia (unless you count Russia&#8217;s willingness to make distracting trouble elsewhere), now has simmering direct or proxy disputes with India, Burma, the Vietnam, the Philippines, Australia, South Korea, Taiwan, and Japan.</p>
<p>It&#8217;s also worth remembering that China&#8217;s population is becoming older and unbalanced, with more men that women, thanks to sex-selective abortions, putting it in a mid-term (no longer a long-term) demographic bind.  This, even as the population grows increasingly displeased with Communist Party rule, has led the Party to stoke nationalist flames.</p>
<p>The analogy to pre-WWI Germany is looking increasingly apt, with baleful possibilities for all concerned.</p>
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		<title>It&#8217;s About Politics, Not Governance, With Guns</title>
		<link>http://www.jsharf.com/view/?p=2540&#038;utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=its-about-politics-not-governance-with-guns</link>
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		<pubDate>Tue, 09 Apr 2013 16:15:15 +0000</pubDate>
		<dc:creator>Joshua Sharf</dc:creator>
				<category><![CDATA[Colorado Politics]]></category>
		<category><![CDATA[National Politics]]></category>
		<category><![CDATA[PPC]]></category>
		<category><![CDATA[Gun Control]]></category>

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		<description><![CDATA[As the US Senate begins today&#8217;s debate on gun control, Coloradoans can be forgiven for having a feeling of deja vu.  That&#8217;s because the debate in Congress is intended to mimic the one in Colorado, and because it&#8217;s about politics, not about governance. The one piece of the president&#8217;s broad gun control agenda that has [...]]]></description>
			<content:encoded><![CDATA[<p>As the US Senate begins today&#8217;s debate on gun control, Coloradoans can be forgiven for having a feeling of deja vu.  That&#8217;s because the debate in Congress is intended to mimic the one in Colorado, and because it&#8217;s about politics, not about governance.</p>
<p>The one piece of the president&#8217;s broad gun control agenda that has survived public scrutiny is background checks on sales.  This is a broadly popular idea, and even gun owners support it by large margins in poll after poll.  But <a href="http://completecolorado.com/pagetwo/2013/04/09/u-s-senate-bill-turns-gun-owners-into-felons-over-transfers/" target="_blank">Dave Kopel of the Independence Institute has shown</a> that in Congress, as in Colorado, while the bill will be sold as checks on sales, it actually does much, much more:</p>
<blockquote><p>While the woman is out of town on a business trip for two weeks, she gives the gun to her husband or her sister. If the woman lives on a farm, she allows all her relatives to take the rifle into the fields for pest and predator control — and sometimes, when friends are visiting, she takes them to a safe place on the farm where they spend an hour or two target shooting, passing herover gun back and forth. At other times, she and her friends go target shooting in open spaces of land owned by the National Forest Service or the Bureau of Land Management.</p>
<p>Or perhaps the woman is in a same-sex civil union, and she allows her partner to take her gun to a target range one afternoon. Another time, she allows her cousin to borrow the gun for an afternoon of target shooting. If the woman is in the Army Reserve and she is called up for an overseas deployment, she gives the gun to her sister for temporary safekeeping.</p>
<p>One time, she learns that her neighbor is being threatened by an abusive ex-boyfriend, and she lets this woman borrow a gun for several days until she can buy her own gun. And if the woman becomes a firearms-safety instructor, she regularly teaches classes at office parks, in school buildings at nights and on weekends, at gun stores, and so on. Following the standard curriculum of gun-safety classes (such as NRA safety courses), the woman will bring some unloaded guns to the classroom, and under her supervision, students will learn the first steps in how to handle the guns, including how to load and unload them (using dummy ammunition). During the class, the firearms will be “transferred” dozens of times, since students must practice how to hand a gun to someone else safely. As a Boy Scout den mother or 4-H leader, the woman may also transfer her gun to young people dozens of times while instructing them in gun safety.</p></blockquote>
<p>These are not far-out scenarios.  Kopel notes that &#8220;transfers&#8221; are defined very specifically in the bill, with specific exceptions.  And lest &#8220;transfer&#8221; be read narrowly to exclude loans, where someone retains possession, time limits on such transfers are laid out.  In order to escape such notice, guns could be &#8220;gifted&#8221; to family members, but presumably those gifts would be considered taxable events.</p>
<p>The bill does include some exceptions, designed to provide plausible deniability to senators who want to claim they&#8217;ve made reasonable allowances.  Those exceptions are subject to such severe restraints so as to make them all but meaningless.  This was largely the same legislative and debate strategy used here in Colorado, and for fun, count the number of times reference is made on the floor of the Senate to what happened here.</p>
<p>All of these scenarios will fly under the radar.  The plan is for the press to continue to repeat the <a href="http://www.nationalreview.com/articles/338735/40-percent-myth-john-lott" target="_blank">&#8220;40% of sales&#8221; myth</a> and to deflect attention from the real burdens of the proposed law.  Western Democrats will be given enough cover to present their votes as reasonable to the folks back home, and Republicans opposing them will have the Hobson&#8217;s Choice of either caving (and dispiriting and disillusioning their supporters) or appearing obstructionist and unreasonable.</p>
<p>It&#8217;s the same strategy that the Democrats used with the Violence Against Women Act: take a non-controversial piece of legislation, load it up with partisan baggage, and dare the other side to vote against it.  It was a key element in the 2012 campaign theme of a &#8220;War on Women,&#8221; and it didn&#8217;t really have anything to do with governing.  Obama and the Democrats now hope to repeat the same trick, and set up the 2014 Congressional campaigns as one of the Republicans against the Suburbs, <a href="http://www.joelkotkin.com/content/00626-america%E2%80%99s-last-politically-contested-territory-suburbs" target="_blank">newly-competitive territory</a> which the Dems see as the key to long-term victory.</p>
<p>The bills, largely written by Mayor Bloomberg of New York, suffer from the same lack of public process, examination, amendment, and debate as Obamacare and the ill-thought-out, and supposedly much simpler, magazine ban  rushed through the New York State legislature in the wake of Newtown.  That&#8217;s by design; while the mayor and the president may be true believers in disarming citizens, President Obama is a greater believer in winning elections.</p>
<p>To thwart this strategy, the Republicans will have to do more than filibuster.  Their amendments &#8211; and thus the floor debate &#8211; will have to be focused on the question of &#8220;transfers&#8221; and the absurd outcomes that this bill creates.  They&#8217;ll never have a better time to make their case publicly.</p>
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		<title>Even A Failed Nork EMP Attack Is Bad</title>
		<link>http://www.jsharf.com/view/?p=2535&#038;utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=even-a-failed-nork-emp-attack-is-bad</link>
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		<pubDate>Sun, 07 Apr 2013 23:13:54 +0000</pubDate>
		<dc:creator>Joshua Sharf</dc:creator>
				<category><![CDATA[Uncategorized]]></category>
		<category><![CDATA[EMP]]></category>
		<category><![CDATA[Missile Defense]]></category>
		<category><![CDATA[North Korea]]></category>

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		<description><![CDATA[In the wake of Kim Jong Un&#8217;s loud talk from and missile movements within the Hermit Kingdom, there has been much speculation about what he&#8217;s actually up to.  My own pet theory is that it&#8217;s an EMP attack, the sort that would wipe out the electrical grid, fry a great deal of electronic infrastructure, and [...]]]></description>
			<content:encoded><![CDATA[<p>In the wake of Kim Jong Un&#8217;s loud talk from and missile movements within the Hermit Kingdom, there has been much speculation about what he&#8217;s actually up to.  My own pet theory is that it&#8217;s an EMP attack, the sort that would wipe out the electrical grid, fry a great deal of electronic infrastructure, and more or less set us back to 1850 (although we&#8217;d have battery-powered devices and personal generators available for a while).</p>
<p>The odds of North Korea actually being able to pull off such an attack successfully remain thankfully low, but even failure shouldn&#8217;t leave us too complacent.  Here are a number of ways in which such an attack could fall short or be thwarted, and yet not really let us breathe much of a sigh of relief.</p>
<ul>
<li><strong>Technical failure</strong>: Obviously, such an attack is still a tricky thing to pull off.  The missile has the launch, the warhead has to deploy and explode properly.  But men are solving technical problems all the time, and the easiest ones to solve are those that have already been solved by someone else.</li>
<li><strong>Our Countermeasures Discourage the Attack</strong>: In part, this is a variant of the last. Technical countermeasures, such as THAAD, are always subject to technical solutions. In part, it&#8217;s also a strategic thinning of our defenses, since once up, we&#8217;ll never really be able to let these stand down.</li>
<li><strong>THAAD</strong>: This is probably the best option. In war, our actually using a weapon is an intelligence coup for the enemy, and don&#8217;t think there aren&#8217;t other enemies who&#8217;ll be looking.  But a THAAD intercept from a forward deployment won&#8217;t tell them much they don&#8217;t already know, since THAAD has been around for a while.  And a successful intercept of a presumed attack launch provides a lot of pretext go ahead and bomb all sorts of North Korean missile and nuclear facilities.  It also suggests they don&#8217;t have a real warhead (since an EMP attack is a high-altitude explosion), making a nuclear response to a sustained bombing campaign not a credible threat.</li>
<li><strong>Our ASAT</strong>:  We actually have tested several successful anti-satellite systems, most famously the plane-launched ASAT in the 1980s, most recently a ship-based weapon designed to send a message of deterrence to the Chinese.  My understanding is that the tracking needed for this weapons to work reliable will only work once the warhead is no longer being boosted, so it&#8217;s kind of a last line of defense.  You would always rather hit things earlier rather than later, since that cedes far less of the actual attack timeline to the enemy.</li>
<li><strong>Chinese ASAT</strong>: We could also be talking to the Chinese about <em>their</em> ASAT.  Or having the Chinese talk to the Norks about their ASAT.  This is probably the worst option, since even if the weapon isn&#8217;t actually used, it puts our defense in the hands of a primary adversary.</li>
</ul>
<p>A word about ASAT weapons in general.  The administration has historically been very cool on the idea of ASATs, mostly for the same ideological reasons that lead it to think that unilateral nuclear disarmament is a good idea.  In 2011, <a href="http://www.washingtontimes.com/news/2011/jan/27/us-eu-eye-anti-satellite-weapons-pact/?page=all" target="_blank">they were talking ASAT limitations with the EU</a> &#8211; as though the EU were our major worry on that front.  One hopes that, just as the current crisis has led them to rethink their position on missile defense, it has also led them to reconsider their position on ASAT weapons.</p>
<p>Ultimately, my own feeling is that an EMP attack remains an extraordinarily cost-effective temptation for the Norkos or the Iranians to try against us.  The failure, defeat, or deterrence of one attack shouldn&#8217;t lead us to be complacent about what can happen, or the need to harden our power generation infrastructure against a future assault.</p>
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		<title>Why PERA’s Presumptions Are Faulty</title>
		<link>http://www.jsharf.com/view/?p=2530&#038;utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=why-peras-presumptions-are-faulty</link>
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		<pubDate>Thu, 28 Mar 2013 13:33:58 +0000</pubDate>
		<dc:creator>Joshua Sharf</dc:creator>
				<category><![CDATA[Colorado Politics]]></category>
		<category><![CDATA[PERA]]></category>
		<category><![CDATA[PPC]]></category>

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		<description><![CDATA[Did you recognize the faulty presumptions in PERA’s spirited defense of defined benefit plans? You have been given a false choice about why defined benefits plans are better than defined contribution plans. In a recent EdNews Colorado Voices column, Colorado PERA Executive Director Greg Smith avers that PERA’s existing defined benefit structure best serves both the teachers and [...]]]></description>
			<content:encoded><![CDATA[<p>Did you recognize the faulty presumptions in PERA’s spirited defense of defined benefit plans?</p>
<p>You have been given a false choice about why defined benefits plans are better than defined contribution plans.</p>
<p>In a <a href="http://www.ednewscolorado.org/2013/01/30/55338-voices-pera-responds-to-nctq-report" target="_blank">recent <em>EdNews Colorado</em> <em>Voices</em> column</a>, Colorado PERA Executive Director Greg Smith avers that PERA’s existing defined benefit structure best serves both the teachers and the taxpayers of Colorado. He was responding to a report by the National Council on Teacher Quality that leads the reader to support reforms to move away from the existing scheme and toward a defined contribution plan. Smith’s claims are wrong about the advantages of defined benefit plans in general, and PERA’s actuarial soundness in particular.</p>
<p>Smith cites a National Institute on Retirement Security (NIRS) report that claims three advantages for defined benefit plans over defined contribution plans:</p>
<ol>
<li>Less error in the amount saved for retirement,</li>
<li>Less need to rebalance and re-allocate assets over time, and</li>
<li>Better returns, largely as a result of lower transaction costs.</li>
</ol>
<p>Each advantage turns out not to be dependent on having a <em>defined benefit </em>plan, but on having a professionally-managed, aggregated plan. The same advantages would accrue to a similar <em>defined contribution</em> plan that was also aggregated and professionally-managed.</p>
<p>PERA already has such an option, PERA Plus. It’s organized as a three-part 457(b) / 401(k) / Defined Contribution option. Like any set of diversified retirement offerings, it includes a variety of funds with different investment goals. For our discussion, the most relevant set of funds are those with target retirement dates. PERA has nine of these, with target dates every five years from 2015 to 2055, and an Income Fund designed to provide current income for current retirees.</p>
<p>Over time, as the target date for each fund approaches, that individual fund reallocates its assets into more conservative investments, before maturing and merging into the Income Fund. While each individual fund “ages,” all the funds collectively are maintaining a proper average. Taken together, they continue to represent the aggregate ages and target retirement dates of the entire set of members, the very source of the first two alleged advantages. The third, that of lower transaction costs, is completely independent of how liabilities are calculated.</p>
<p>There is no inherent reason why the assets of a DB plan should earn a higher return than those of an identically-invested DC plan.  The only mandatory difference is that the defined benefit plan beneficiary has a share only in the specific benefits to be paid – the fund’s liabilities. By comparison, the owner of a defined contribution plan has a property right in the assets. Therefore, while a defined contribution plan is, by definition, always fully-funded, a defined benefit plan may have to seek additional funding, or trim back on its promises, in order to remain so.</p>
<h2>The danger of unrealistic promises</h2>
<p>It is therefore imperative that the promises being made to future retirees be realistic. All the more so if the promised benefits are being used to attract and retain qualified or exceptional teachers. Unfortunately, it is far from certain that PERA can afford the promises it is making, given its current funding levels.  Recent legislative reforms (Senate Bill 10-001 in particular), while welcome and substantial, simply do not close the gap.</p>
<p>By PERA’s most recent published calculations, its unfunded liabilities remain at a staggering $26 billion, and its overall funded level is well below 60 percent, on a par with the chronically ill Illinois public pensions. In fact, a recent study by Barry Poulson suggests that PERA could be in the worst shape of any statewide plan in the country.</p>
<p>Let’s give credit where credit is due. PERA’s adoption of a 401(k)-like portability is indeed commendable. But if it’s designed to mimic the properties of a 401(k), it can hardly then provide an advantage over one.</p>
<p>While PERA is no longer “letting it ride,” as it did with its stock market investments of the late 90s, the 8 percent returns needed for a return to solvency come with risk. Even better-than-average returns during regular years won’t make up for prior losses in bad years, because funds must then catch up, while payments can’t be deferred.</p>
<p>What success SB1 does offer is predicated on both benefit reductions and payment increases. However, a court challenge to the limitation of COLAs to 2 percent has been upheld by a State Court of Appeals, and its future is uncertain at best. Should the lower courts find that limitation not to be justified, most of the immediate reduction in PERA’s unfunded liability will be wiped out.</p>
<p>On the contribution side, PERA plans to require supplemental increases, rising incrementally from 2 percent to 5.5 percent until 2018.  School districts have been picking up the tab for these increases, rather than passing them on to the teachers themselves, as they are allowed to do.  As a result, PERA now absorbs upwards of 15 percent of annual operating expenses in many large school districts, a number that is expected to rise to 20 percent as the existing plan increases for make-up contributions.</p>
<h2>Disclosure of ties to lobbying group needed</h2>
<p>It is also worth noting that the institute that issued the favorable DB article (NIRS) is the lobbying and public policy arm of the defined benefit public pensions, with a particularly close relationship with Colorado PERA.  Smith sits on the board of directors of NIRS, as does Meredith Williams, PERA’s former executive director.  Colorado PERA is both a charter member and in NIRS’s Visionary Circle, along with such other public plans as CalPERS and the Illinois Municipal Retirement Fund.</p>
<p>Inasmuch as NIRS is not an independent think tank, but instead is a creation of interested parties to the debate over public pensions, this relationship ought to have been disclosed.</p>
<p>While there is no doubt that total compensation is an important part of attracting and retaining effective teachers, those promises must be grounded in reality. Until realistic arguments are used, PERA will continue to fail not only its member teachers, but also the schools and parents it is intended to serve.</p>
<p><em>This article originally appeared in <a href="http://www.ednewscolorado.org/voices/voices-why-peras-presumptions-are-faulty" target="_blank">EdNewsColorado</a>.</em></p>
<p>&nbsp;</p>
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		<title>It&#8217;s A National Political Strategy</title>
		<link>http://www.jsharf.com/view/?p=2524&#038;utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=its-a-national-political-strategy</link>
		<comments>http://www.jsharf.com/view/?p=2524#comments</comments>
		<pubDate>Tue, 19 Mar 2013 05:21:58 +0000</pubDate>
		<dc:creator>Joshua Sharf</dc:creator>
				<category><![CDATA[Colorado Politics]]></category>
		<category><![CDATA[National Politics]]></category>
		<category><![CDATA[PPC]]></category>
		<category><![CDATA[Gun Control]]></category>

		<guid isPermaLink="false">http://www.jsharf.com/view/?p=2524</guid>
		<description><![CDATA[On Friday&#8217;s Grassroots Radio, the discussion of Rep. Mike McLachlan&#8217;s (D-Durango) deceptive advertising of his own gun control positions turned to the national agenda being rammed down Colorado&#8217;s throat.  I pointed out that while other states with Democrat majorities and governors &#8211; Illinois and Washington came to mind &#8211; had rejected similar proposals, Colorado had [...]]]></description>
			<content:encoded><![CDATA[<p>On Friday&#8217;s Grassroots Radio, the discussion of Rep. Mike McLachlan&#8217;s (D-Durango) deceptive advertising of his own gun control positions turned to the national agenda being rammed down Colorado&#8217;s throat.  I pointed out that while other states with Democrat majorities and governors &#8211; Illinois and Washington came to mind &#8211; had rejected similar proposals, Colorado had seemingly been singled out for lobbying by Mayor Bloomberg and Vice President Biden.  Bloomberg has been open about his desire to influence other states&#8217; policies, but traditionally, federal officeholders don&#8217;t meddle in state politics.  Even Diana DeGette and Ed Perlmutter confined their post-Aurora comments to proposed federal legislation, not what Colorado ought or ought not do.</p>
<p>So something was up.  Tomorrow&#8217;s <em>New York Times</em> <a href="http://www.nytimes.com/2013/03/19/us/gov-john-hickenlooper-of-colorado-is-poised-to-sign-tough-gun-laws.html?pagewanted=1&amp;_r=0&amp;smid=tw-share" target="_blank">tells us what</a>: &#8220;If you can do it here, you can do it anywhere.&#8221;  This was the article that Hick was waiting for, before announcing his intent to sign these bills on Wednesday.</p>
<p>It has been clear from the beginning that Obama plans to use gun control, not merely as a diversion from governing, but as a battering-ram issue to achieve his major 2nd-term objective: regaining the House of Representatives for the Democrats.  To do that, he believes he must isolate the Republican House as being an obstruction to common-sense, practical gun control measures that most of the country agrees on.  To do <em>that, </em>he must persuade enough Senate Democrats &#8211; especially Western Democrats &#8211; to back proposals that they really, really don&#8217;t want to even vote on, much less support.</p>
<p>Colorado becomes the key to providing them cover.  The proposals &#8211; poorly-written, full of absurd outcomes &#8211; will have to be portrayed as practical compromises.  The debate on the national level will mirror the deceptive line taken here: confusing sales with temporary transfers, or even loans to friends; outlawing magazines of more than 15 rounds, but forgetting to mention that inheriting such a magazine from a deceased parent is a criminal act, a <em>felony</em>, even.  Colorado&#8217;s reputation as a western, freedom-loving state works in their favor.</p>
<p>This was a repeat of the entire Obamacare political drama, here at the state level.  The Democrats in favor barely felt the need to argue for them on the floor, largely because when they did, they embarrassed themselves with references to pens as defensive weapons, whistles as substitutes for protection, and condescending to rape victims.  State senators either abandoned, fled, or chastised their own town halls when the issue came up.  Democratic leadership openly asked its members to ignore the public.  The controversial bills passed without a single Republican vote, but over bipartisan opposition.</p>
<p>But the &#8220;If you can do it here, you can do it anywhere,&#8221; line of publicity conceals what really happened.</p>
<p>Ultimately, it makes the recalls of Sen. Hudak and Rep. McLachlan &#8211; along with whatever other vulnerable Dems can be included &#8211; even more important.  Those recalls, like the recalls in Wisconsin, take on a national significance and urgency, not merely because of the issues involved, but because of the political implications at the national level.  The promise of protection, of resources and money, to vulnerable Dems who backed him on this legislation, is the application of national resources to state races, just as the Blueprint was the application of state resources to local races.  It is the Blueprint raised to a national scale.  If Obama is able to implement that, then he will indeed have locked in substantial political changes that can change the society for the worse, for the long run.</p>
<p>On the other hand, if those promises can be shown to be empty - <em>before</em> the House of Representatives comes up for election, or has to vote on the national bills &#8211; then the entire narrative is turned on its head.  Not only does Obama look like an unreliable friend, but the power of the issue dissipates.  (That&#8217;s one reason why an initiative is more useful in the event that we fail to take back both the legislature and the governor&#8217;s mansion: only fiscal issues can be on the ballot in odd-numbered years.)</p>
<p>Hickenlooper, in 2012, specifically avoided charging voters up over this issue.  Even in 2010, he didn&#8217;t really mention it at all.  Colorado has not had a vigorous debate on these bills or these issues.  This was not something done by us.  It was something done <em>to</em> us.</p>
<p>It&#8217;s our move, Colorado.</p>
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