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If it fails it doesn't give anyone ammo against us for anything. A failed initiative doesn't set any kind of precedent that can be pointed at or used to support a legal argument.
The "BS" that you mentioned wasn't written by the AG, it was a court decision (State v Kessler) that actually answers the argument that the arms protected by the Oregon constitution are only the arms suitable for militia use. The decision pointed out that the Oregon constitution protects a larger range of firearms, including those suitable for self-defense.
"If the text and purpose of the constitutional guarantee relied exclusively on the preference for a militia "for defense of the State," then the term "arms" most likely would include only the modern day equivalents of the weapons used by colonial militiamen. The Oregon provision, however, guarantees a right to bear arms "for defense of themselves, and the State." The term "arms" in our constitution therefore would include weapons commonly used for either purpose, even if a particular weapon is unlikely to be used as a militia weapon."
No, I don't think that was their intention. In fact, they specifically didn't want to threaten current gun control because opponents of IP 008 would use that to scare away voters by claiming it would nullify current gun control.
You have to remember the tactical situation we are in. We are trying to pass a measure that would do something very important - prevent bans on semiauto firearms and standard capacity magazines, which are under the most threat of a ban - in a very blue state. If we try to do too much more it would have ZERO chance of passing in blue Oregon. The gun owners who whine that IP 008 doesn't protect NFA items that are not under imminent threat of a ban the way ARs, AKs, and "large cap" magazines are just don't get it.
Thanks for the education. If I'm here when it's on the ballot, I'll be voting for it enthusiastically! We need to stack that ballot with other items that might attract folks who are on our side, and if possible, run good 3rd party liberal candidates to steal votes from the Ds.