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Colorado Proposal Could Throw Election To Kerry

FORECASTS & TRENDS E-LETTER
By Gary D. Halbert
August 24, 2004

Colorado Proposal Could Throw Election To Kerry

IN THIS ISSUE:

1.  The Colorado “Electoral College Reform Initiative”

2.  Colorado Initiative Could Backfire On The Democrats

3.  Why The Colorado “Split-Vote” Idea Is A Bad One

4.  Handicapping The Republican National Convention

5.  Why The Swift Boat Controversy Won’t Go Away

6.  There Is Another “Gary Halbert” Out There

Introduction

The presidential election remains a statistical dead-heat.  Since I last handicapped the state-by-state polls on July 6, John Kerry has improved his standing, and most of the so-called “blue states” are now comfortably in his corner.  President Bush, meanwhile, has most of the so-called “red states” solidly in his camp.  Most politicos now believe the election will once again come down to just one or two states – probably Florida and/or Ohio.

However, the state of COLORADO is considering changing its Electoral College rules from a “winner-take-all” system to a “split-vote” which would allocate its nine Electoral College votes to both candidates based on the popular vote in the state.  Is this important?  You bet.  If CO had such a system in place in 2000, Al Gore would be President today!

The citizens of CO will vote on this new Electoral College initiative on November 2, and if it passes, it will be retroactive to the 2004 presidential election.  As you might expect, the Democrats are behind this initiative.  I’ll explain how it works below, and how it could actually backfire on Kerry.

We’ll also preview the Republican National Convention and ponder whether President Bush will get a meaningful convention bounce in the polls.  We also look into the Swift Boat controversy which is dominating the presidential campaign as this is written.  Clearly, someone is not telling the truth, but the question is, which side?

Colorado Electoral College Reform Initiative

On July 30, a “citizens group” submitted 130,000 signatures to CO’s Secretary of State demanding that the initiative to change the way the state’s Electoral College votes are awarded be placed on the November ballot.   Unless most of the signatures are bogus (only 67,000 are required), the initiative will be on the CO ballot, and CO voters will decide whether to change the system to a split-vote or leave it winner-take-all as it is now.  All other states – except Maine and Nebraska – have the winner-take-all system for the Electoral College.

This new (and suspicious) CO initiative has national implications.  As noted above, if it had been in effect four years ago, Al Gore would be president.  And if it goes into effect beginning on November 2, it could decide this year’s race as well.  In 2000, because George W. Bush won 51% of CO’s vote, he therefore earned all eight of the state’s Electoral votes.  Under the system proposed in the new initiative, Bush would have received only five electoral votes in 2000, and Gore would have gotten three.  That would have changed the national Electoral College vote 271-266 in favor of Bush to 269-268 in favor of Gore.  This year, CO has nine Electoral votes.

It shouldn't come as a surprise, then, that the CO election effort has Democratic fingerprints all over it.  The campaign spokesman for the “citizens group” promoting the effort is Rick Ridder, who was also campaign manager for Howard Dean’s presidential run.  He calls the electoral reform “a multi-partisan effort,” claiming that 20% of the campaign’s signatures are from Republicans.  On the other hand, GOP state chairman Ted Halaby says the initiative “just doesn't pass the smell test.” Governor Bill Owens said, “If that passes, Colorado will cease to be a factor in any presidential campaign in the future.”  He makes a good point as I will explain below.

President Bush has been ahead in the CO polls for most of this year.  So, the Democrats who collected the signatures necessary to get the initiative on the ballot in November obviously had in mind claiming some of CO’s nine Electoral votes for John Kerry.  If the initiative passes, the popular vote winner would get five votes, while the loser would get four (assuming the race is fairly close).  In a national race this close, a swing of 4-5 Electoral votes could easily decide the ultimate outcome.

How The CO Initiative Could Backfire On The Democrats

Let’s start by assuming that Kerry wins the same 20 states that Gore carried four years ago.  That leaves him with 260 votes in the Electoral College, to Bush’s 278 (assuming Bush wins his same states this time around).   Now, let’s assume that Kerry adds New Hampshire to his column, which is another four electoral votes, and the count would then be 274-264 in favor of Bush.  If we assume Kerry wins CO and its nine Electoral votes, he would win the presidency, 273-265.  But not if the reform initiative passes.

If the reform initiative passes, instead of the winner-take-all nine votes, Kerry would receive only five electoral votes to Bush’s four (assuming Ralph Nader doesn’t pick up one electoral vote in CO).  That could evenly divide the Electoral College at 269-269, leaving the House of Representatives to break the tie.  As the House is likely to remain in GOP hands, Bush likely gets a second term and Democrats would claim that Bush stole the election for another four years.

Don’t think the Democrats haven’t thought about this possibility.   In fact, while they are pushing hard to get the initiative on the ballot, they are also preparing to challenge it legally – IF it doesn’t work out in their favor (ie- Kerry wins).  Here’s how.   The initiative specifically asserts that it applies “retroactively” to the 2004 election.  Opponents have claimed that the initiative violates provisions in the state constitution that prohibit retroactive legislation.  The Democrats, on the other hand, say they have found case law that supports some retroactive legislation.

If the initiative passes, and Kerry wins the presidency as a result of it, the supporters will make their case for the initiative’s retroactivity to the 2004 election.  If it backfires, and costs Kerry the election, expect them to join the opponents in trying to get the initiative overturned, or at least postponed until the 2008 election.  What else is new?  In fairness, I would expect the Republicans to attack the initiative as well, if it costs Bush the election.

CO Initiative Has National Implications 

There are several possible scenarios whereby the CO initiative, assuming it passes, could decide the election.  There are several possible outcomes, depending on which states go for Bush and which for Kerry, where a 4-5 vote swing in the Electoral vote could decide the election (assuming the initiative isn’t overturned or postponed to 2008 by the loser). 

However, if the initiative passes in CO, it could have broader and more long-term issues for presidential politics.  Specifically, what if several (or more) other states decide to adopt such a split-vote in the Electoral College?  For example, let’s look at what would happen if the five largest Electoral states were to adopt the CO split-vote system (using the vote percentages for Gore in 2000 for Kerry this year and the 2000 percentages for Bush):

State

Winner-Take All

Colorado Split-Vote

California

55

Kerry 29 - 26 Bush

Texas

34

Bush 20 - 14 Kerry

New York

31

Kerry 20 - 11 Bush

Florida

27

Kerry 14 - 13 Bush

Illinois

21

Kerry 12 -  9 Bush

*Source: The Weekly Standard

This is NOT a pretty picture for the Democrats!  In this scenario, Bush gains 45 Electoral votes, and Kerry loses 45.  Assuming that California, New York, Florida and Illinois (or Pennsylvania, also 21 votes) continue to vote for Democrats, this split-vote arrangement would be a disaster for the Democrats. 

I assume the Democrat leadership has thought about this, but you never know.   There are many that would stop at nothing to see Bush defeated this November.

Why The Split-Vote Idea Is A Bad One

The split-vote initiative in CO is a BAD idea.  The Electoral College is not some 18th century anachronism.  If the proposed CO system had been used nationally in 1992, Bill Clinton would have had just 236 Electoral votes, and the House of Representatives would have had to decide who became the president.  The same would have been true in 1968 and 1948. 

While there have been three times in our history when the winner of the popular vote did not win the Electoral College, it has served our nation very well for many, many years.  Political scientist Judith Best notes that the Electoral vote system, combined with the winner-take-all allocation, creates a “distribution condition.”  What does this mean?  Candidates cannot simply pile up votes in the largest states and ignore the others.  Because of the Electoral College, they must win in many states, and this insures that they travel and campaign all across the country.

The Electoral College has also served to prevent potentially dangerous factions and special interest groups – racial, religious, labor, economic, the rich, the poor, etc., etc. – from uniting their votes across state lines.   In the winner-take-all system, they must concentrate their efforts in their home state only, for the most part.

Yet even with the Electoral College, this may be changing in light of the enormously flawed campaign reform legislation.  McCain-Feingold, as you may recall, was supposed to be the end-all to unlimited campaign financing.  No more “soft money,” we were told.  But it wasn’t, just as I told my clients and subscribers when it was passed into law. 

In fact, McCain-Feingold paved the way for today’s huge “527” non-profit organizations that are funneling hundreds of millions of dollars into the Kerry campaign (and a fraction of that into the Bush campaign).  I will have another weekly E-Letter soon on the huge imbalance of 527 money flowing to Kerry versus Bush.  Prepare to be surprised.

My Advice To Colorado Voters – Just Say No

Finally, here’s my advice to Colorado voters:  Just say NO to the split-vote referendum.  Here’s why.  Currently, CO is one of the so-called “battleground states,” at least this year.   Both Bush and Kerry have made multiple campaign visits to CO in this election season, hoping to lock up your nine Electoral votes. 

Currently, the polls show that Bush and Kerry are in a dead-heat in your state.  So, it is safe to assume that they will be back in CO campaigning between now and November 2.  But consider what will happen if you pass the split-vote initiative in November. 

If you pass it, your state will become a ONE Electoral vote state, instead of a NINE Electoral vote state.  Win or lose, one candidate automatically will get FIVE votes, and the other will get FOUR votes, in most elections.  So, you become a ONE-VOTE state in most elections.  Who will come see you then?  Probably no one.

The leading Democrats in CO may be willing to pass the split-vote initiative this year, just because they will do anything to defeat Bush.  But if they do, they will sadly ignore the longer-term implications.

There are those who believe this trend could spread to other states, if CO passes it this November.  Maybe so.  As I illustrated above, this could backfire on the Democrats this year, should Kerry win CO, and it could be very positive for Republicans in 2008 and beyond.  But in the long-run, it is bad news for the American political process.  Let’s hope the good people of Colorado reject this latest political ploy to get rid of George W. Bush at any cost.

The Republican Convention

The Republican National Convention will begin next Monday (August 30) in New York at Madison Square Garden.  This is an outstanding choice of locations, in my opinion, as opposed to the Dems’ convention in Boston.   Yet it remains to be seen if the Republicans’ convention will be as much of a non-event as the Democrats’ convention last month.

The Democrats had Ron Reagan as their surprise speaker as a slap at the Republicans.  The Republicans, not to be outdone, will have conservative Democratic Senator Zell Miller from Georgia.  He will deliver the Republican convention’s keynote address on Wednesday September 1 - a role he played before in New York as a keynote speaker at the 1992 Democratic convention that nominated Bill Clinton.

Other featured speakers at the Republican Convention will be: Michael Bloomberg, mayor of New York; Rudi Giuliani, former mayor of New York; Senator John McCain; First Lady Laura Bush; CA governor Arnold Schwarzenegger; New York governor George Pataki; and of course, Vice President Cheney and President Bush.   

It remains to be seen if Bush can get a solid convention bounce next week.  The major media networks have planned the same 3-4 hours of prime-time coverage for the Republican convention as they did for the Democrats.  It remains to be seen if the Republicans draw more viewers than the dreadful ratings during the Dem’s convention.

Maybe President Bush gets a bounce of 2-5 points after the RNC convention, much like Kerry got, if all goes well next week.  Maybe Bush pulls a couple of points ahead in the national polls in the week or two after the convention.  And then, most likely, it’s back to a neck-and-neck race.   I do hear that the Bush campaign is set to launch a new round of potentially very damaging ads about Kerry’s record in the Senate.  Unlike the Swift Boat controversy, Kerry’s votes (and lack of votes/no-shows) in the Senate are indisputable; they are public record.

The Swift Boat Controversy 

By now, you’ve no doubt heard about the Swift Boat controversy.  The accounts of what happened over 30 years ago in Vietnam are so different that one side or the other has to be lying.  The Swift Boat Vets claim that Kerry fled the scene when the boats came under fire, and returned only after the firefight ended to rescue Jim Rassmann from the Bay Hap River.  The Vets claim Kerry was not under fire at the time of the rescue.  Kerry maintains that they were under fire.

Kerry has claimed frequently over the years that he spent Christmas Eve of 1968 inside the border of Cambodia under hostile fire.  The Swift Boat Vets also challenge this story, and the Kerry campaign has backed off this claim, suggesting that Kerry was at least near Cambodia at the time.

I don’t pretend to know who is telling the truth.  Yet with over 290 Vietnam veterans signing onto the Swift Boat Vets’ challenge of the events, this controversy has mushroomed out of control at this point.  And needlessly so, in my opinion.  Kerry and his advisors chose to make his Vietnam record the centerpiece of their campaign.  They have avoided running on Kerry’s 19-year record as a Senator.  You would think they would have known that some of these Vietnam vets were going to surface and challenge Kerry’s service record and his accounts of events.

The Kerry campaign’s reactions to the Swift Boat Vets have been loud, vitriolic and very defensive.  They have tried to get the publisher of John O’Neill’s book “Unfit To Command” to recall the books from bookstores.  Now they are filing a formal complaint with the Federal Election Commission, demanding that the Swift Boat ads be banned.  For many Americans, all of this sounds like so much whining.

Feeding the controversy even further, the Kerry campaign claims that President Bush and Karl Rove are in cahoots with the Swift Boat Vets.  As a result of their dramatic reactions, this controversy continues to be front-page news. 

Kerry should have dismissed the Swift Boat Vets once, reminded Americans that President Bush has praised his service in Vietnam, and then ignored them.

But for whatever reason, the Kerry campaign chose to fight this thing tooth and nail, and so it continues to rage on.  It is hurting Kerry in the polls.  You have to wonder who is giving him advice on this one.

The Other “Gary Halbert”

I have struggled for years to combat the confusion between myself and the “other” Gary Halbert, one Gary “C.” Halbert, who also runs in certain investment circles.  I’m Gary “ D.” Halbert and am NO relation to him.  I have never even met him. 

If you search Google for “Gary Halbert” you will not find a link to me until you get over 50-DEEP into the Gary Halbert links; the previous links are all about Gary C. Halbert, who reportedly went to prison in the ‘80s for mail fraud.  As I reported last year, he is back in trouble again.

On September 23 last year, the Securities & Exchange Commission announced that it had initiated litigation against Gary C. Halbert, his son, Bond Halbert, and their company for “possible violations of the federal securities laws” related to a stock trading system they were promoting.  Just as a reminder, here is the SEC press release:

QUOTE: “U.S. Securities and Exchange Commission
Litigation Release No. 18359 / September 23, 2003

SEC Files Subpoena Enforcement Action against Gary C. Halbert, Cherrywood Publishing, Inc. and Others

Securities and Exchange Commission v. Gary C. Halbert, et al. (United States District Court for the District of Massachusetts, 03-MBD-10284-RWZ)

The Securities and Exchange Commission today filed an action in Massachusetts federal court to enforce investigative subpoenas against Gary C. Halbert, Bond Halbert, Cherrywood Publishing, Inc. ("Cherrywood"), and John Doe (a/k/a Cherrywood's Keeper of Records"). The Commission alleges in its application filed with the court that Gary C. Halbert, Bond Halbert, Cherrywood, and Cherrywood's Keeper of Records failed to comply with administrative subpoenas requiring them to produce documents and testify in connection with an investigation to determine whether they and others may have violated the antifraud provisions of the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940. In its application and supporting papers, the Commission alleges that, on August 12, 2003, the Commission issued a formal order of private investigation entitled In the Matter of Cherrywood Publishing, Inc., File No. B-01967 ("Formal Order"). The Formal Order directed the Commission staff to undertake a private investigation to determine if there were violations of the federal securities laws. According to the Commission's court papers, the Commission staff is investigating possible material false statements concerning a stock trading system made by or on behalf of Gary C. Halbert and Cherrywood in newspaper advertisements that appeared in USA Today and on a website purportedly operated by Gary C. Halbert. According to the application, the Commission staff issued subpoenas to Gary C. Halbert, Bond Halbert, Cherrywood, and Cherrywood's Keeper of Records on August 12, 2003 and issued a second subpoena to Bond Halbert on August 20, 2003, requiring them to produce documents and testify concerning matters relevant to the investigation. As of September 23, 2003, the Commission alleges that the parties have not produced the responsive documents and have not testified as compelled by the subpoenas.” END QUOTE.

If you would like to read more about the SEC’s investigation into Gary C. Halbert, you can click on the following link:

http://www.sec.gov/litigation/litreleases/app18359.htm

It is interesting reading.  In it you will find that Mr. Halbert apparently left the country last year.  I don’t know what has happened since then. 

If any of you have wondered if I was the same Gary Halbert, or if I am related to him, I trust this clears the matter up for you.  [Because we get many new readers and subscribers, I will reprint the clarification above from time to time.]

Very best regards,

Gary D. Halbert

SPECIAL ARTICLES

Why the Colorado initiative is important.
http://www.msnbc.msn.com/id/5781897/site/newsweek/

Why we need the Electoral College.
http://www.washtimes.com/commentary/20040822-104445-7437r.htm

Long, but good, analysis of the Kerry/VietNam controversy.
http://www.weeklystandard.com/Content/Public/Articles/000/000/004/481yyfvo.asp?pg=2

Bob Dole challenges Kerry’s Purple Hearts.
http://cl.extm.us/?fe921d70716d047f70-fe2b117076650c7c761d76


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Forecasts & Trends E-Letter is published by ProFutures, Inc. Gary D. Halbert is the president and CEO of ProFutures, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, ProFutures, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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