Two Republican state legislators, Sen. Josh Penry of Grand Junction and Rep. Frank McNulty of Highlands Ranch, have promised to introduce a bill in next year's General Assembly to force the Colorado Public Employees Retirement Association to divest from any company doing business with Iran.

The Post opposes that leap onto the slippery slope of "politically correct" investment policies because they could cost state taxpayers more than $100 billion in lost earnings. Such losses could only be made up by higher taxes or reduced pensions to retired teachers, firefighters and other dedicated public employees.

Penry argues that Iran should be targeted because it sponsors terrorist groups such as Hezbollah and Hamas. But federal law already bans U.S. companies from doing business with Iran. Penry and his allies want to go further, forcing PERA to divest from even foreign companies that may have operations in Iran.

If Colorado started down such a path, it's hard to see where it would end. Labor unions would almost certainly demand that Colorado not invest in companies with anti-union policies, such as Wal-Mart. Environmentalists might insist on shunning oil and coal companies.

The Post did support the law passed by the Colorado legislature this spring prohibiting public pension funds from investing in firms with ties to the Sudanese government, which is sponsoring genocide in Darfur.

But that law wisely exempts companies that play a positive role in trying to improve conditions in Sudan. That carefully crafted legislation is a justifiable but rare exception to the general rule that pension funds should be invested on economic, not political, principles.

PERA, which was once underfunded, is back on the road to health after reforms in 2004 and 2006. It now has $40.6 billion invested with a targeted 8.5 percent return. Artificial political restrictions could easily knock that return down 1 percent or more. Would that be too high a price to pay for the warm and fuzzy feeling Penry and McNulty are seeking?

Judge for yourself. The standard investment horizon for a pension fund is 30 years. PERA's current $40.4 billion will grow to $467 billion over that 30 years at an 8.5 percent compounded annual return. Reducing the return to just 7.5 percent brings the total down to $353.7 billion, a loss to taxpayers of $113.3 billion.

The price of political correctness is high — far too high for Colorado taxpayers and public employees to bear.