Sorry Renters, Big Oil Thinks You’re Stupid

In an election season loaded to an unprecedented degree with wantonly misleading claims stuffing mailboxes around the state, a mail piece supporting the controversial Amendment 74 constitutional ballot measure forwarded to us this week manages to stand out:

This mail piece’s message targets non-homeowners, extolling the renter recipient’s hard work and savings–and “one day, you even hope to own a place you can call home.” But watch out, because “the government” can take that property you don’t have yet!

We understand the campaign’s obligation to contact renters with some kind of pro-Amendment 74 message, but this mailer is so thoroughly misleading and exploitative that we had to say something. First of all, government cannot “take your property” without fair compensation. Less deceptive pro-Amendment 74 materials refer to “reducing your property’s value,” which acknowledges Amendment 74’s far broader scope and (more importantly) the fact that private property is already protected from being taken without just compensation by the Constitution.

This isn’t merely an oversimplification. It’s a straight-up lie.

And that’s just the beginning. Amendment 74 isn’t about individual homeowners in any practical sense–it’s about enriching owners of mineral rights below homeowners, or the business that wants to open where they’re not zoned, or the gravel pit occupying what used to be your scenic backyard view. In its application, Amendment 74 would encroach on the rights of individual homeowners every time they ran into conflict with somebody’s business idea. Again, this is not a small deception. It’s a total falsification.

As for the renter voters this piece is targeting, sorry! Not only is there nothing in Amendment 74 for you, the Colorado Amendment 74 would create may not be a place you would want to buy property in at all.

For all of these reasons, this mailer is an insult to the intelligence of every voter who receives it.

Brian Watson, GOP Treasurer candidate: “Teachers just collect government checks.”

(Promoted by Colorado Pols)

Brian Watson, candidate for Treasurer of Colorado, is kind of a jerk. He demonstrated that recently in a Club 20 debate with his Democratic opponent, Dave Young,  captured on video by Colorado Education Association. Dave called out Brian Watson for owing nearly a million dollars in unpaid taxes and loans for seven years: “How can you manage our state’s finances if you cannot manage your own?,” Dave Young asked.

Watson replied, ” I’m so glad you asked that question. Because while you were a junior high math teacher, collecting a check from the government, which you have done your entire career, <snip>, we job creators were on the front line.”

Watson is a “job creator”? He’s a real estate developer, and pledges that he won’t take a salary if elected to the Legislature. (Hint: he plans to moonlight at Northstar Commercial Partners, the company he founded, which owns buildings all over Colorado. Watson doesn’t need a treasurer’s $68K a year salary )

Watson, like Trump, loves debt, and spins his deadbeat history as a net positive:

I’ve restructured complex debt….I’m battle – tested

But since Watson has a history of unpaid taxes and liens, Watson has been a net drain on the economy. He finally paid off his business debts right before the Republican primary in 2012. The contractors who had to wait for payment, or had to write off debts, were probably unimpressed by Watson’s “battle testing”.

Can you say, “Conflict of interest”?

As Treasurer, Watson would be making decisions and helping to make policy that would directly impact his company’s bottom line. For example, included in Northstar’s portfolio of buildings are several renting to charter schools in Colorado. As Treasurer, Watson’s business stands to profit by renting to charter schools, which are generally taxpayer-supported public schools, while he continues to work at his real estate investment company – just like the current Treasurer, Walker Stapleton, who continued to collect a $150,000 salary consulting  at Sonomawest , / Stapleton Acquisitions), all while “moonlighting” as Colorado’s Treasurer.

At least, if elected, Watson could take a lunch break at one of the buildings his company owns near the Capitol.

For a longer , higher quality video of the two Treasurer candidates debating, see the Aaron Harber show, Parts 1 and 2.   I’ve highlighted their statements about PERA below.

(more…)

Payday Loan Reform Measure Makes Ballot

A press release from Coloradans to Stop Predatory Payday Loans announces their success reaching the ballot this year with Proposition 111, a measure to cap interest rates on so-called “payday loans” that have been the source of much vexation in Colorado politics in recent years:

The Secretary of State today confirmed that the Campaign to Stop Predatory Payday Lending will be on the November ballot as Proposition 111. This initiative is supported by Coloradans from all walks of life, ranging from military veterans to people working day in and day out address poverty in our communities. If passed, the initiative would reduce the cost from payday loans which carry 200% annual interest.

“We are grateful to people across the state who worked so hard to help provide some relief from financial strain to Colorado working families,” said Meghan Carrier from Together Colorado. “We’ve seen many families fall prey to this never ending debt trap due to unscrupulous fee and ridiculously high interest rates and believe they deserve a better chance to rise out of financial pitfalls and live a dignified life.”

…Payday lenders strip $50 million per year in interest and fees from financially-strapped Coloradans. The average loan lasts 97 days, and some customers need additional loans to cover the interest, spending more than half the year in high-cost debt. The average loan of $392 costs customers an $119 in interest and fees to borrow money for 97 days. With a default rate of 23 percent — almost 1 in 4 loans — many customers face insufficient funds and overdraft fees from lenders’ automatic withdrawl from a customers account without notice, collection efforts, and even bankruptcy for a loan that was supposed to help them through a shortfall.

“Payday lenders have preyed on some of Colorado’s most vulnerable families and they should follow the same usury laws that everyone else plays by,” said Corrine Rivera Fowler. “Colorado consumers now have the chance to protect themselves and loved ones from the debt traps established by payday lenders when they charge 200% in interest rates and take money directly from a customer’s bank account without notice.”

Payday loans have been a hot button issue in the Colorado legislature ever since an exemption to the state’s usury laws was carved out to legalize them back in 2000. In 2010, a significant reform of the industry was passed by the Colorado General Assembly, changing the loan’s crushing two-week repayment terms term into a six-month loan, but effective interest rates on these loans can still exceed an eye-popping 200%.

Longtime readers will recall that the loan shark industry lavished money and lobbying hours in the fight to prevent even those basic reforms, and politicians on both sides in the legislature have tried to roll back reform on behalf of the industry in ways both overt and sneaky ever since. Colorado would join a significant number of states and the District of Columbia in capping these rates at 36% inclusive of fees if Proposition 111 succeeds.

Longtime readers also know that repeated attacks by payday lending spammers on this blog have left us with little love for this industry in addition to the factual and moral arguments against payday loan sharks. We’d be happy to see this unscrupulous industry’s exemption from Colorado’s usury laws ended once and for all.

At Least He’s Not Your Congressman

Congressman/yacht captain Vern Buchanan (R-Sarasota)

Welcome back to our long-running series, “At Least They’re Not Your Legislator.” For today’s, uh, episode, we take you to Florida, where Republican Rep. Vern Buchanan is getting hammered for what appears to be an egregious example of a “loan-to-play” agreement.

From the Florida Center for Investigative Reporting:

U.S. Rep. Vern Buchanan (R-Sarasota), who sits on the House Ways and Means Committee and leads its tax policy subcommittee, has been under fire in recent weeks for purchasing a yacht on the same day he voted for the GOP tax package. Buchanan registered a 73-foot Ocean Alexander vessel named Entrepreneur with the U.S. Coast Guard a month later, according to federal records. [Pols emphasis]

Although Buchanan is one of the wealthiest members of Congress — worth at least $80 million — federal records show one of his limited liability companies financed the purchase with a BMO Harris Bank loan worth as much as $5 million. Since 2016, Buchanan’s companies have received three loans worth as much as $35 million from BMO Harris, which is the American subsidiary of the Bank of Montreal. In total, since he was appointed to the Ways and Means Committee in 2010, Buchanan and his companies have received between $17 million and $85 million worth of loans from four lenders.

If “BMO Harris Bank” sounds familiar to you, it should:

The bank’s first annual report after the passage of the GOP measure said corporate tax cuts in the bill are “expected to increase our annual net income from what it would have otherwise been.” In late May, shortly after its report was published, the company announced record U.S. profits. BMO Harris had publicly celebrated the bill in January and said it would increase its minimum wage to $15 per hour as a result of the tax cut. Both the Trump administration and House Republicans touted BMO Harris as an example of the tax cut’s success. [Pols emphasis]

The bank also announced a plan to repurchase as many as 20 million shares of its own stock — providing ammunition to critics who predicted that companies would use the tax cut windfall to enrich executives and shareholders, rather than to create new jobs.

The Republican tax plan crammed through Congress in late December hasn’t done much for the average Joe, but it’s been wonderful for the top 1% of Americans…and elected officials like Vern Buchanan.

At Long Last, the Top 1% Will Finally Get Some Help

Income inequality in the United States is a growing problem. Recent data shows that the top 1% of Americans continue to seize a disproportionate share of wealth compared to the rest of us, and at a rate that is significantly outpacing our counterparts in Western Europe. This chart from the 2018 World Inequality Report explains the issue better than words can describe:

Via the 2018 World Inequality Report

 

This distressing trend has been turbocharged since Congressional Republicans rammed through President Trump’s tax plan last December. You remember the Great Republican Tax Plan, right? That was the one that became, unsurprisingly, a massive giveaway to the richest Americans at the expense of basically everyone else. The plan that was sold as a middle-class benefit has served largely to further enrich the richest Americans through a deluge of stock buybacks. As The Atlantic summarizes:

Companies are working overtime to make their owners richer in the short term, more so than to improve their longer-term competitiveness or to invest in their workers.

This story from Politico lays out more of the details:

A POLITICO review of data disclosed in Securities and Exchange Commission filings shows the executives, who often receive most of their compensation in stock, have been profiting handsomely by selling shares since Trump signed the law on Dec. 22 and slashed corporate tax rates to 21 percent. That trend is likely to increase, as Wall Street analysts expect buyback activity to accelerate in the coming weeks.

“It is going to be a parade of eye-popping numbers,” said Pat McGurn, the head of strategic research and analysis at Institutional Shareholder Services, a shareholder advisory firm.

That could undercut the political messaging value of the tax cuts in the Republican campaign to maintain control of Congress in the midterm elections.

Well, don’t you worry, because President Trump has a plan to make this…um…more of a problem. As the Washington Post reports, the Trump administration is aggressively pursuing a proposal to cut capital gains taxes, which would almost exclusively benefit the richest Americans, even if it means bypassing Congress to make it happen:

The Treasury Department is considering a tax cut for the wealthiest Americans through a change that would not need approval from Congress, officials said, a move that would follow a package of tax cuts last year that also benefited the super-rich…

…But the use of executive power on such a significant change to the tax law would be highly unusual and could be vulnerable to a legal challenge. Senior administration officials have discussed whether to proceed but have not concluded they have legal authority to do so. The move was rejected during the George H.W. Bush administration because it was seen as outside the scope of Treasury’s authority and only attainable via an act of Congress.

The idea has long been advocated by White House National Economic Council Director Larry Kudlow, but tax changes this drastic are typically made by Congress, not the Treasury and Internal Revenue Service. Still, Treasury Secretary Steven Mnuchin told the New York Times in an interview that he was reviewing whether to move ahead if Congress doesn’t act on its own.

This is nothing short of economic malpractice, though as we’ve seen repeatedly since Trump took office, it’s unlikely that his base of supporters will so much as blink an eye at this brazen effort. We’ll be more interested to see if Congressional Republicans will do anything to stand in the way of this proposal. Republicans who are desperately seeking to maintain their majorities in November might want to actually show voters here that they have a reason to exist. Trump has already bypassed Congress on a number of foreign policy issues, and is now trying to skip past Congress over massive — and unnecessary — tax cuts for the rich.

Will Congressional Republicans just roll over and let it happen? Hopefully that doesn’t turn out to be a rhetorical question.

Trump Wants Big Auto Tariffs, Republicans Plead for Reason

Must…add…tariffs…

As the Washington Post reports, President Trump is going further down the tariff rabbit hole:

Several of President Trump’s senior economic advisers believe he plans to push forward with 25 percent tariffs on close to $200 billion in foreign-made automobiles later this year, three people briefed on internal discussions said.

Trump wants to move forward despite numerous warnings from GOP leaders and business executives who have argued that such a move could damage the economy and lead to political mutiny. [Pols emphasis]

But Trump has become increasingly defiant in his trade strategy, following his own instincts and intuition and eschewing advice from his inner circle. He has told advisers and Republicans to simply trust his business acumen, a point he tried to reinforce Wednesday morning in a Twitter post.

“Every time I see a weak politician asking to stop Trade talks or the use of Tariffs to counter unfair Tariffs, I wonder, what can they be thinking?” Trump said Wednesday. “Are we just going to continue and let our farmers and country get ripped off?”

Trump’s trade policies are being hammered on all fronts lately, with Congressional Republicans getting louder about their opposition to policies that are already causing havoc on the American economy. As Politico reports:

Pro-free trade Republicans were already furious with Trump’s escalation of tariffs against U.S. allies and China — a multi-front trade war they say is hurting U.S. farmers and manufacturers. But the administration’s response Tuesday — announcing plans to send $12 billion to farmers hurt by retaliatory tariffs to ease the pain — is the opposite of conservative, free-trade orthodoxy, they said.

“This is becoming more and more like a Soviet type of economy here: Commissars deciding who’s going to be granted waivers, commissars in the administration figuring out how they’re going to sprinkle around benefits,” said Sen. Ron Johnson (R-Wis.). “I’m very exasperated. This is serious.”

“Taxpayers are going to be asked to initial checks to farmers in lieu of having a trade policy that actually opens and expands more markets. There isn’t anything about this that anybody should like,” said Sen. John Thune of South Dakota, the No. 3 GOP leader. He suggested the new spending might need to be offset by cuts in other funding areas.

The pushback on Trump’s trade policies isn’t limited to Washington D.C. Here in Colorado, exasperated farmers are dismissing a White House proposal to spend $12 billion  on “emergency aid” in an attempt to stem the bleeding from a wound that didn’t exist until Trump started poking at it.

Republican Colorado Farmers To Trump: Your Trade War Sucks

Meat.

9NEWS reports on the less-then-enthusiastic response from Colorado farmers to emergency relief authorized by President Donald Trump to offset losses caused by new tariffs in place as Trump goes to economic war on major trading partners like China:

“To a producer that’s been impacted greatly by the tariff situation it’s really a band-aid,” said Kim Reddin, Colorado Corn Communications Director.

The President announced the emergency aid Tuesday morning. It is meant to help farmers across the country who are hit by foreign countries’ response to U.S. tariffs. The Colorado Corn Growers Association said in a statement that ‘producers have been treated unfairly by China’s illegal trade practices and taken a disproportionate hit with illegal retaliatory tariffs.’

While Colorado Corn is thankful the administration is taking action, the group said farmers in our state need a long-term fix.

“Growers really want, not an aid package or assistance,” Reddin said. “What they’d really prefer is market driven demand where they can go to the marketplace and sell their crop.”

The issue of toughening American trade policies to reduce unfair competition and support domestic production of all kinds is more complicated than some of the other cleanly partisan issues under debate in this election year. The fact is that at least some of Trump’s protectionist moves against other nations like China have support from traditionally Democratic allies in organized labor. The Clinton-era embrace of globalized trade by the Democratic Party hasn’t been enough to destroy the coalition between the party and labor, but it hasn’t been good for it, either–and there are plenty of union Democrats who quietly wish it wasn’t a deplorable figure like Trump taking action to “protect American jobs.”

Here in Colorado, however, the situation is more easily clarified. Colorado exports large quantities of agricultural products, many directly affected by the retaliatory tariffs recently imposed by China and Mexico. Meat prices, as one example are set to plunge as warehouses fill with unexportable product. Much less exposed to tariffs on manufactured goods, the threat to Colorado’s economy from disruption of agricultural exports is quite significant–and politically, more damaging to rural areas traditionally loyal to Republicans.

In short, there’s much more political downside for the GOP in this trade war than upside here in Colorado.

Initiative 126 Launches To Stop Predatory Payday Lending Usury

A press release from a coalition of groups who launched a ballot initiative campaign to cap interest rates on so-called “payday loans”–a finance product aimed at struggling consumers that frequently traps borrowers in a cycle of unaffordable debt at interest rates that would blow creditworthy consumers away:

A coalition of community, faith, and advocacy organizations have come together to stop predatory payday loans in 2018. They are working to qualify an initiative for the November ballot that would cap payday lending interest rates. Payday lenders are currently exempted from the state usury cap, allowing them to charge over 200% for short-term loans of up to $500.

Payday lenders strip $50 million per year in interest and fees from financially-strapped Coloradans. The average loan lasts 97 days, and some customers take these loans one after another, spending more than half the year in high-cost debt. The average loan of $392 costs customers an average $119 in interest and fees to borrow money for 97 days. With a default rate of 23 percent — almost 1 in 4 loans — many customers face insufficient funds and overdraft fees, collection efforts, and even bankruptcy for a loan that was supposed to help them through a shortfall.

There was a legislative attempt at reforming this industry a few years ago that made a few changes beneficial to borrowers, most importantly changing the terms of payday loans from a two-week full repayment to a six-month plan. Despite this change, consumers continue to be subject to finance terms from payday lenders that result in a loan product of dubious net value just to bridge the gap to the next pre-spent paycheck. Initiative 126 would cap the allowable interest on payday loans at 36%, which most people would still consider to be awfully damn high.

Back when payday lending reform was a major issue in the Colorado legislature leading up to the passage of the 2010 reform legislation, longtime readers will recall this this blog was hit by a large volume of spam posts linking to various payday lending outfits. We were never quite sure if there was a connection between the legislative effort in Colorado to rein in payday loans and the mass spamming of our blog, but we resolved in the wake of that episode to enthusiastically support all efforts to regulate these loan sharks into an ethical business model. Or failing that, put them out of their predatory business entirely.

And please, spare us the disingenuous pleas of mercy for the minimum-wage employees of payday lending shops. There are better jobs waiting for all of them in today’s fully-employed economy. The damage done by predatory lending eclipses any value of those low-wage jobs.

Colorado will be just fine without loans that hurt people more than they help them.

House “Freedom Caucus” Kills Farm Bill

The House Freedom caucus tries to explain why the Farm Bill is “just resting.”

As Politico reports, Republicans still can’t figure out what to do with their majority in Congress:

The House Freedom Caucus on Friday sank a partisan farm bill over an immigration dispute with GOP leadership, delaying a bill that included President Donald Trump’s push to impose stricter work requirements on food stamp recipients.

The bill went down, 198-213, after leaders feverishly tried to flip conservative votes on the floor, even leaving the vote open for a time to try to change opponents’ minds. It is a huge setback to the farm lobby and House Speaker Paul Ryan’s welfare reform agenda. [Pols emphasis]

The vote came after a 48-hour standoff between GOP leadership and members of the Freedom Caucus. The bloc of conservatives held the bill hostage, demanding that the House first vote on controversial immigration legislationin exchange for their support for the sweeping agriculture and nutrition legislation.

“It’s not a fatal blow, it’s just a reorganize,” said Freedom Caucus leader Mark Meadows. “I think at this point we just really need to deal with immigration in an effective way.”

Republicans will no doubt try to find a way to blame Democrats for this latest failure, but history doesn’t support such an argument:

Rejection of the legislation is reminiscent of the last farm bill cycle in 2013, when the House also voted down a conservative version of the legislation, delaying the process for months. Ultimately, the sweeping bill was bailed out by Democrats the following year. [Pols emphasis]

While the farm bill is historically bipartisan legislation, Ryan has backed a Republican-only version this cycle as a way to notch a win on his welfare plan before he retires at the end of the year. House GOP leadership also pitched the bill as a positive messaging tool for the midterms.

Three members of Colorado’s Congressional delegation voted in favor of the Farm Bill today: Rep. Scott Tipton (R-Cortez), Rep. Doug Lamborn (R-Colorado Springs), and Rep. Mike Coffman (R-Aurora). Greeley Republican Ken Buck did not cast a vote on the Agriculture and Nutrition Act of 2018.

Gardner On Wrong Side As Senate Halts Net Neutrality Rollback

THURSDAY UPDATE: The battle to save net neutrality now moves to the House, where all eyes are on Rep. Mike Coffman to see if lip service will translate to votes at the critical moment they’re needed:

Evan Greer, deputy director at Fight for the Future, a nonprofit that has advocated for an open internet since 2011, told Courthouse News this week that the prospect of achieving the simple majority in the House is “doable.”

“But it’s an uphill battle,” Greer said.

“Fifteen House Republicans voted against the CRA to gut broadband privacy rules last year and a handful of others like Reps. Mike Coffman of Colorado, Don Young of Arkansas, Jeff Fortenberry of Nebraska, Dave Reichert of Washington, John Curtis of Utah have already publicly criticized the FCC repeal,” she said.

Even if the resolution clears Congress and makes it to President Donald Trump’s desk, there’s a still a chance he could veto it.

But it’s not a given, Greer said.

“Getting this to Trump’s desk would be a massive victory for the net neutrality movement,” she said. “It would show that there is a clear mandate for strong, enforceable net neutrality protections. Even if Trump vetoes it, it will set a tone for any future congressional fights to come and beat back attempts by ISPs to push watered down legislation that undermines net neutrality while claiming to save it.”

The whole series of tubes is watching.

—–

Senator Cory Gardner (R).

A dramatic vote in the U.S. Senate today delivers a stinging rebuke to the Trump administration and Federal Communications Commission chairman Ajit Pai in particular–overturning new rules that would have gutted longstanding regulations requiring equal treatment of all internet data. CNN reports:

The Senate voted Wednesday to pass a measure that would repeal changes to net neutrality rules that were recently adopted by the Republican-controlled Federal Communications Commission.

The measure, which was backed by all 49 Democrats and Republican Sens. Susan Collins of Maine, Lisa Murkowski of Alaska and John Kennedy of Louisiana, will be sent to the GOP-led House, where it’ll likely go nowhere — and President Donald Trump is unlikely to back it.

While Collins’ support had been public leading up to the vote, Murkowski’s and Kennedy’s “yes” vote came as a surprise to some.

Democrats used the Congressional Review Act to force a vote — a law that allows Congress to repeal agency rules and regulations on a simple majority vote, instead of a 60-vote threshold needed to break procedural hurdles on most legislation, the kinds of traditional roadblocks where Senate leadership could typically hold up such a proposal.

NPR reports Sen. Cory Gardner’s vacant sloganeering while yet another issue with lopsided public support passes him by:

Republicans overwhelmingly support ending net neutrality because they want to shift regulatory power away from the federal government and toward the private market. Republicans also argue that Democrats are playing on unfounded fears that Internet service providers will jack up costs and anger their consumer base. “If the Democrats want to run on regulating the Internet, I think that’s a losing strategy,”  [Pols emphasis] said Sen. Cory Gardner, R-Colo., who runs the Senate GOP’s 2018 campaign operation and voted against the resolution.

A poll from last February demonstrates just how fundamentally out of touch this statement is:

Outside of Washington, D.C., net neutrality isn’t a partisan issue. Americans from red and blue states alike agree that equal access to the internet is a right, including: 79% of Colorado residents, [Pols emphasis] 81% of Arizona residents, and 80% of North Carolina residents.

91% of Americans believe consumers should be able to freely and quickly access their preferred content on the internet. Support for net neutrality is growing: When Mozilla and Ipsos asked this same question in 2017, 86% of Americans believed this…

76% of Americans believe internet service providers (ISPs) should treat all consumer data the same, and not speed up or slow down specific content. This opinion is most common among older Americans (80% of adults ages 55+) and Americans with a college degree (81%). 63% of Americans do not think that ISPs will voluntarily look out for consumers’ best interests, compared to 32% who agree with this statement…

So here’s where this issue stands just a few months from the midterm elections: when Republicans took control of the White House in 2016, ending net neutrality was high on the agenda. The attempt to repeal net neutrality rules was a major public relations fiasco, with the public and most of the tech sector outside internet service providers flatly rejecting the new rules. Stakeholders then organized a months-long grassroots lobbying campaign with the longshot goal of persuading enough Senators to reject this long-lobbied change. Since then, millions of Americans have contacted their representatives urging them to hit the brakes.

Today, that’s exactly what happened. While Sen. Cory Gardner stood with the 21% of Coloradans who don’t want net neutrality, a coalition of all 49 Senate Democrats, including Colorado’s Sen. Michael Bennet and a few conscientious Republicans, scored a critical victory for a free internet.

It’s not a decisive issue for everybody. But to patrons of this blog and every other website, it should be.

The Real PERA Problem is Getting Ignored

State lawmakers are rushing to finish up a number of bills before Wednesday’s final day of the 2018 legislative session. At the top of the list is legislation to make changes to PERA (the Public Employees Retirement Association), the state pension system that includes more than 500,000 Coloradans among its members. Legislators from the House and Senate are currently trying to work out a compromise on SB-200, but there are serious differences of opinion on issues such as raising contributions and limiting cost-of-living adjustments for beneficiaries.

The weakening of retirement benefits has been a significant pain point for teachers across the country, from Kentucky to Arizona and here in Colorado. Reforming PERA is also emerging as a major issue in the 2018 race for Governor, particularly on the Republican side; State Treasurer Walker Stapleton has long made PERA reform a signature issue (when he bothers to show up, of course).

“Many institutions pay substantial sums to consultants who, in turn, recommend high-fee managers. And that is a fool’s game…

…Most advisors, however, are far better at generating high fees than they are at generating high returns.”

— Warren Buffet

Most of the discussions around PERA funding have revolved around whether to increase contributions from employees and/or the state, but as David Sirota reports for Westword, there is a gigantic elephant in the room that has yet to be addressed: PERA is paying Wall Street investing firms more than a billion dollars in fees for managing portfolios that are consistently underperforming their benchmarks — which means PERA hasn’t even been keeping up with the stock market.

Sirota’s story is thick with detail but well worth the read:

Ask legislators at the Colorado State Capitol if they’ve even heard about the $1 billion of investment fees that the state’s pension system paid out to external money managers between 2009 and 2016, and you will get blank stares. Ask them if they realize those are only the fees that are disclosed — and that there are likely hundreds of millions of dollars of additional fees being paid — and they will express disbelief. Ask them if they know that state officials passed legislation — written by the financial industry — barring the details of the fee terms from being revealed to the public, and you will elicit outrage.

This is a little-discussed reality at PERA — just as it is at many retirement systems across the country. And lately PERA has moved to funnel even more money into an opaque fund that is a mishmash of exotic investments from timberland to hedge funds — and has generated ever-higher fees while trailing the broader stock market…

…In nearly every state with revenue shortfalls, the political debate over pension reform primarily revolves around proposals to cut workers’ benefits — while ever-larger payouts to financial firms are considered sacrosanct and kept hidden from view.

As Sirota explains, PERA’s problem isn’t just that it holds underperforming “alternative” investments (including private equity, real estate, and hedge funds), but that hundreds of millions of dollars are being paid in “fees” to Wall Street brokers to manage these middling returns. We don’t know exact numbers on how much money is being paid in fees because an obscure piece of legislation from 2004k keeps everything hidden:

Colorado’s two-paragraph legislation gave PERA the right to hide all information about private equity, debt and timber investments if pension trustees determined that “disclosure of such information would jeopardize the value of the investment.”

Detailed financial information on management fees is not, and cannot, be disclosed by PERA. What we know about these fees is based only on a snapshot of data provided by PERA. For example:

Between 2009 and 2016, PERA disclosed spending roughly $1.2 billion to manage all of its investments. More than two-thirds of those expenses were fees paid to firms managing money in the private equity, hedge fund and Opportunity Fund portfolios, even though those managers only oversaw roughly 20 percent of the state’s overall investments. 

… In its 2016 annual report, PERA reported an 8.5 percent return over the most recent five years — but even that has trailed a traditional Vanguard fund, and it also trailed at least one of its peers in the Intermountain West. Nevada’s public pension system, which is 12 percent smaller than PERA and has far less exposure to private equity and real estate, earned a 9.1 percent return during the same five-year period. That outperformance came at a cheaper cost: Nevada paid 75 percent less in fees than did Colorado, paying half a billion dollars less to Wall Street than PERA did.

The numbers that are available from PERA don’t provide a lot of confidence. For example, take a look at PERA’s Annualized Rate of Return over the last decade (outlined in PERA’s 2016 annual report): PERA shows a return of 5.2%, while the median public pension system in the U.S. saw a return of 5.5%. During that same time period, Vanguard’s low-fee Balanced Index Fund (60% stocks and 40% bonds) generated annualized returns of 6.4%.

Again, you really should read the entire Westword story in order to understand the full depth of the problem here. It would appear that PERA can make great strides in its bottom line by changing its investments andaddressing the hundreds of millions in fees being paid out to Wall Street for what seems to be pretty terrible advice. This probably won’t be enough to fix PERA’s financial problems entirely, but the burden for reform shouldn’t be felt by PERA members alone.

Where’s Walker? Stapleton Absent from Big PERA Meeting

Reforming PERA (the Public Employees’ Retirement Association) has always been a top issue for State Treasurer Walker Stapleton, who is also the current frontrunner for the Republican gubernatorial nomination. Stapleton is a member of the PERA Board of Trustees, and despite his professed interest in PERA reform, his overall involvement in reform — as well as his attendance at board meetings — has been consistently spotty over the last eight years.

On Thursday, the PERA Board held a special meeting to discuss a critical piece of legislation that is being worked out in a legislative conference committee. Guess who didn’t show up?

Stapleton has never been particularly good about showing up for work since he was elected Treasurer in 2010. His attendance record at PERA Board meetings is particularly abysmal, and despite his regular rants on PERA reform, Stapleton doesn’t really dispute his lack of involvement in the actual details on the issue. On Thursday, Stapleton didn’t even bother sending a representative from his office to the PERA meeting (although this might actually make some sense, given that he had to fire Deputy Treasurer Jon Forbes last summer after Forbes loudly told the rest of the PERA Board to “go f*** themselves”).

State Treasurer Walker Stapleton

Stapleton’s opponents in the Republican Primary for Governor have taken notice of his vapid rantings. Check out what Doug Robinson (Mitt Romney’s Nephew) said on “The Get More Smarter Show” two weeks ago:

I’m tired of the talk. I’m tired of people saying they’ve been a voice on this issue or that issue. Yet, you’ve been on the board for seven years and it’s not done. The problem is bigger today that it was before…

I’m upset about this. In remember in 2010, PERA was in a big crisis and they said they made changes and they fixed it. And now it’s almost double the liability that it was at that time, and the stock market has more than doubled during that time.

So where was Stapleton last night instead of attending a special PERA meeting? We’ll update this story as we learn more about Stapleton’s absence. Hopefully it wasn’t just because of a rainy night in Denver.

Surprise! Republican Tax Plan Only Good for Rich People

Economic Rocket Fuel!

Congressional Republicans were giddy in late 2017 when they finally did a thing after spending most of the year fumbling around with healthcare “reform” and generally accomplishing nothing. The Great Republican Tax Plan was touted as “rocket fuel” for the American economy that would spur American investments and corporate growth, which in turn would trickle down to the middle class, yada, yada…

As the New York Times reports, that didn’t really happen:

Republicans sold the 2017 tax law as “rocket fuel” for American investment and growth, saying that corporations — flush with cash from lower tax rates — would channel money back into the economy by building factories and offices and investing in equipment, which would help companies grow and provide winnings for workers…

But, so far, hard evidence of such an acceleration has yet to appear in economic data, which show more of a steady investment roll than a rapid escalation. And while there are pockets of the economy where investment is picking up — among large tech companies and in shale oil business, for example — corporate spending on buying back stock is increasing at a far faster clip, prompting a debate about whether the law is returning money to the overall economy or just rewarding a small segment of investors. [Pols emphasis]

Data on the gross domestic product, released Friday, showed that business investment grew at a 6.1 percent annual clip during the first three months of 2018, down from 7.2 percent during the first quarter last year. Excluding oil and gas investment, which is particularly volatile, the investment pace grew slightly over the past year.

While the first-quarter investment numbers were more robust than they were in 2015 and 2016 — when a bust in oil prices curtailed a large chunk of American corporate spending — they weren’t radically different from the roughly 5 percent rate of growth for business investment that has prevailed since 2010.

Senator Marco Rubio (R-Florida) is getting flogged by right-wing Republicans for daring to point out the obvious: The Republican tax plan ain’t doing shit for the economy. Check out this quote from Rubio in the current issue of The Economist:

“There is still a lot of thinking on the right that if big corporations are happy, they’re going to take the money they’re saving and reinvest it in American workers. In fact they bought back shares, a few gave out bonuses; there’s no evidence whatsoever that the money’s been massively poured back into the American worker.” [Pols emphasis]

Perhaps Rubio’s buddy, Sen. Cory Gardner, saw this coming; Gardner regularly praised the legislation as something of a Christmas miracle, but he was noticeably absent in defense of the tax bill in the aftermath of its passage (he has since returned to cheerleading the legislation). American voters, meanwhile, were well aware of the problems with this turd long before President Trump signed it into law.

Gardner has another two years to worry about the electoral consequences of his tax vote, but this bill is coming due in November for Republicans like Rep. Mike Coffman (R-Aurora) and Rep. Scott Tipton (R-Cortez). Coffman shrugged off concerns about rising debt and in January scolded critics of the tax plan, telling KNUS radio that the stock market would have crashed had Republicans not acted when they did. Tipton, meanwhile, never even seemed to bother with trying to understand the tax bill that Republican leadership told him to support.

What was once billed by the GOP as its signature achievement of 2017 is turning into an issue that Republican candidates may avoid discussing altogether this fall.

Alamosa Official Won’t Resign After Writing ‘Republicans hate poor people’

(The foot remains in the mouth – Promoted by Colorado Pols)

Alamosa residents decried Councilor David Broyles’ assertion that “Republicans hate poor people,” before calling for his resignation at last night’s city council meeting, which also included a discussion of a possible recall election.

Broyles admitted to being the author of the Alamosa County Republicans’ controversial post on its Facebook page Friday. He has since resigned from his position as Vice Chair of the Alamosa GOP, but remains in his public office as city councilor for Alamosa’s Ward 2. 

The full city council meeting can be viewed online here. The links in the paragraphs below jump directly to the statements being discussed.

Alamosa GOP Facebook post by then-Vice Chair David Broyles

South Alamosa resident Scott White asked directly for Councilor Broyles’ resignation: “We should as a city, ask for Broyles’ resignation as a clear show of support for the poor people that he claims Republicans hate. We are some of the poorest counties in the state and we need to support our people and not encourage or defend hate speech. I ask that Councilor Broyles resign as a city councilperson.”

Following comments from the public that included requests for his resignation, Councilor Broyles apologized for the post, saying in part,

“I made the posting. It doesn’t represent who I am and it doesn’t represent the platform of the Republican party. I sincerely apologize to the public and to the Republican Party. All I can say is that I will show you in the months ahead that my heart really is centered with helping the poor. My whole life has been with working with the poor. One of these days I’m going to write a letter to the editor to tell you everything I do to work with the poor.” 

(more…)

Caption This Photo of Sen. Kevin Lundberg Tripping Out

The Colorado Senate GOP is celebrating passage of this year’s budget in an almost schizophrenic way:

Got that? $600 in “new spending proposed by the Democrats.” But then the very next two Tweets:

Because the debate was never about “new spending” by Democrats–there’s simply more money in the budget this year! Everybody who follows Colorado politics knows that, or at least should know that, so it makes you wonder who Senate Republicans think they’re kidding. It’s an old joke that in Washington, Republicans only care about deficits when a Democrat is President. In Colorado where we’re not allowed to run deficits, it appears the only good spending is GOP majority-approved spending.

Though to Sen. Kevin Lundberg, especially on whatever he’s smoking in the image above, we honestly believe that Democratic and Republican spending all looks the same.

Trippy, man.