Tag Archives: puerto rico

These People Now Hold Puerto Rico’s Purse Strings

by AimeeBergmann Posted on August 31, 2016

Mother Jones

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President Barack Obama announced the appointment on Tuesday of seven people to the financial review board established by Congress to control Puerto Rico’s finances as the island attempts to manage $70 billion in outstanding debt. The board, made up of three Democrats and four Republicans, will not only approve any budgets created by the island’s politicians, but also attempt to negotiate with the island’s nearly 20 creditors.

The board’s Republican members are Andrew Biggs, a resident scholar at the American Enterprise Institute; Carlos Garcia, former president of Puerto Rico’s Government Development Bank; David Skeel, a University of Pennsylvania law professor; and Jose Carrión, an insurance broker. The Democrats are Arthur Gonzalez, a senior fellow at the New York University School of law and a former US bankruptcy judge; Jose Ramon González, president of the Federal Home Loan Bank of New York; and Ana Matosantos, California’s budget director from 2009 to 2013, according to Bloomberg.

Obama selected the names from a list presented by Republican and Democratic leaders of Congress. It’s unclear when the board will begin its work.

“With a broad range of skills and experiences, these officials have the breadth and depth of knowledge that is needed to tackle this complex challenge and put the future of the Puerto Rican people first,” Obama said in a statement released with the names. “In order to be successful, the Financial Oversight and Management Board will need to establish an open process for working with the people and Government of Puerto Rico, and the members will have to work collaboratively to build consensus for their decisions.”

The announcement of the board members came the same day hundreds of protesters blocked a street in front of a San Juan hotel, which was hosting a Puerto Rico Chamber of Commerce conference for business executives and the financial industry about how to “be a part of Puerto Rico’s recovery” under the new financial control board. At least one person was arrested.

Congress created the board in the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), a measure passed in late June to stave off more than a dozen separate lawsuits against the island’s government and public entities that had taken out billions of dollars in debt over the years to fund operations. Puerto Rico’s colonial status prevented its government from restructuring debt using US bankruptcy courts, and multiple efforts by the Puerto Rican government to negotiate with its lenders failed. Earlier this week, the Centro de Periodismo Investigativo (the Center for Investigative Journalism) in San Juan released a report listing 275 hedge funds and other financial groups that own Puerto Rican debt. The news organization only received the records after battling the government of Puerto Rico for more than a year.

Rep. Luis Gutiérrez (D-Ill.), an opponent of an independent review board, issued a statement calling for the board to conduct as much of its work in public as possible. Referring to the board as the “federal Junta“—a reference to a group put in control after a seizure of power—Gutiérrez called for all votes, meetings, and statements to be made public, in Spanish and English, so Puerto Ricans can keep tabs on their actions.

“We expect nothing less in a democracy and last I checked, Puerto Rico is a colony, but still a democracy of U.S. citizens who deserve respect and the trust of this appointed body,” he wrote in his statement. “This is especially important because the body skews towards appointees from financial institutions and those inclined to be sympathetic to bond-holders at the expense of the Puerto Rican people…My message is simple, if you join the Junta, promise to respect the Puerto Rican people, otherwise you are no better than an occupying force.”

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These People Now Hold Puerto Rico’s Purse Strings

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Deadline Looming, Senate Rescues Puerto Rico From Default

by DesmondBosisto Posted on June 29, 2016

Mother Jones

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Two days before Puerto Rico was set to default on $2 billion in debt payments, the Senate staved off calamity by advancing a measure Wednesday that will allow the island to restructure its debts.

The Puerto Rico Oversight, Management, and Economic Stability Act, known as PROMESA, now heads to President Barack Obama for his signature. It will create an independent financial oversight board that will oversee the island’s budgets and allow the Puerto Rican government to restructure its nearly $70 billion in debts with 18 different creditors. A key provision would halt all pending litigation related to the debt—there are currently 14 different lawsuits—and allow for continued funding of essential public health and safety services for the island’s 3.5 million residents.

The measure was tacked on to a bill in the Senate that will reauthorize the National Sea Grant Program through fiscal year 2021.

“Obviously, the bill isn’t perfect,” Senate Majority Leader Mitch McConnell (R-Ky.) said after its passage, according to the Washington Post. “But here’s why we should support it: It won’t cost taxpayers a dime; it prevents a bailout; and it offers Puerto Rico the best chance to return to financial stability and economic growth over the long term so we can help prevent another financial crisis like this in the future.”

On Monday, Treasury Secretary Jack Lew sent a letter to McConnell arguing that failure to pass the bill by July 1 could lead to Puerto Rico defaulting on a $2 billion debt and interest payment and a possible court order forcing the island’s government to pay creditors before providing essential services for its people. The result could have been that Puerto Rico would have stopped paying police officers and firefighters, shut down public transit, and even closed medical facilities.

The next day, Puerto Rico Gov. Alejandro Garcia Padilla wrote an op-ed for CNBC and argued that there was no choice but to pass this bill. He noted that the island’s government has already cut millions in spending, eliminated thousands of public jobs, raised taxes, and withheld tax returns, and is currently $2 billion behind in payments to suppliers (in addition to the $2 billion debt payment due July 1).

“The emergency measures we have taken are unsustainable, harm our economy, reduce revenues and diminish our capacity to repay our debts,” he wrote. “Puerto Rico cannot endure any more austerity.”

The governor’s op-ed echoed many Democrats, Puerto Ricans, and observers and said the independent financial review board—which has broad powers over the island’s budget decisions and is not accountable to any local elected leaders—”unnecessarily undercuts the democratic institution of the Commonwealth of Puerto Rico.” Democracy Now’s Juan González noted Wednesday that a majority of Puerto Ricans oppose the bill and even the concept of an independent review board.

On Tuesday, as the Senate debated the bill, Democratic presidential contender Sen. Bernie Sanders railed against the bill, urging his colleagues not to support it, according to the Washington Post. Sanders has opposed the bill since it was proposed in the House.

“Is this legislation smacking of the worst form of colonialism, in the sense that it takes away all of the important democratic rights of the American citizens of Puerto Rico?” he asked Sen. Bob Menendez (D-N.J.), who was speaking against the bill at the time. “That basically, four Republicans who likely believe in strong austerity programs will essentially be running that island for the indefinite future?”

Here’s how the financial review board works: The president will appoint the seven-member board by September 1, choosing the members from a list of names submitted by congressional leadership. â&#128;&#139;A nominee must have a background in finance, municipal bond markets, management, law, or government operations and cannot have a primary residence or business interest on the island. House Speaker Paul Ryan (R-Wisc.) will nominate three members; McConnell, Senate Minority Leader Harry Reid (D-Nev.), House Minority Leader Nancy Pelosi (D-Calif.), and Obama will each nominate one. The governor of Puerto Rico, or his designee, will have a non-voting spot on the board.

The cash-strapped Puerto Rican government is responsible for coming up with the initial $2 million to establish the board—which will operate without any local oversight— and then will also be responsible figuring out its budget and permanently funding it to cover salaries for an executive director, other staff members, and overhead. The board will continue to be in charge of Puerto Rico’s financial existence until the island’s government has “adequate” access to short-term and long-term credit markets at reasonable interest rates and develops and maintains four consecutive years of on-target, board-determined budgets.

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Deadline Looming, Senate Rescues Puerto Rico From Default

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Hillary Clinton Wins the Puerto Rico Democratic Primary

by CassandGrassi Posted on June 6, 2016

Mother Jones

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With two days to go before Hillary Clinton likely secures the 2,383 delegates she needs to win the Democratic presidential nomination, voters in Puerto Rico handed Clinton a victory on Sunday. When the race was called by the major networks, Clinton was winning 64 percent of the vote to Sanders’ 34 percent, and a likely majority of the territory’s 60 pledged delegates.

On Tuesday, Democratic voters will go to the polls in six states, including delegate-rich California and New Jersey. Barring overwhelming victories for Sanders, the contests will ensure that Clinton wins both a majority of pledged delegates and a majority of overall delegates, assuming her support does not erode significantly among party-insider superdelegates.

But even if its vote won’t change the outcome of the race, Puerto Rico was in the relatively rare position of playing more than a bit role in this year’s election because of its colossal debt crisis. Candidates from both parties weighed in on whether the US government should allow the island to restructure debts under US bankruptcy laws. Puerto Rico’s government, which owes more than $72 billion, has already defaulted three times on various debt payments.

Clinton and Sanders have different opinions on legislation that would help Puerto Rico restructure its debt but would also create a financial review board with oversight of the island’s finances, harking back to the island’s colonial roots. Clinton said she had “serious concerns” about the review board but urged swift passage. Sanders, on the other hand, said the bill would prioritize creditors over Puerto Rico’s residents and encouraged other Democrats not to support it.

Puerto Ricans are American citizens who can vote in primaries but not in the general election while they live on the island. However, if they move to the mainland United States, they can vote in the general election. That’s made Puerto Ricans a key voting bloc in places like Florida and New York and forced the presidential candidates to devote more attention than usual to the island and its struggles.

On Saturday, the US Virgin Islands also held its Democratic caucuses, and Hillary Clinton easily won the 12 delegates that were at stake.

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Hillary Clinton Wins the Puerto Rico Democratic Primary

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Puerto Rico Puts Rubio in a Political Pickle

by BetsyHoutz482 Posted on February 27, 2016

Mother Jones

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During the GOP presidential debate Thursday night, Florida Sen. Marco Rubio was asked to defend his position on Puerto Rico and his belief that the island shouldn’t be permitted to file for bankruptcy as it struggles with more than $72 billion in debts.

Telemundo’s María Celeste Arraras, who is Puerto Rican, asked the question, framing it as an electoral problem in his home state of Florida, where as many as 1 million Puerto Ricans live. And even though Puerto Ricans in Florida are a solid Democratic voting group, Rubio, the son of Cuban immigrants, will need every vote he can get in the March 15 primary.

“You say that it is only a last-resort measure, but the government of Puerto Rico has said that bankruptcy is its last resort,” she said. “How do you explain this very strong stance to the hundreds of thousands of Puerto Ricans that vote across the US, and particularly in your state of Florida?”

Rubio said bankruptcy wouldn’t fix the underlying issues driving Puerto Rico’s debt problems, and that “it’s too expensive to do business there, the tax rate is too high, the government regulations are too extensive.” He said that was the primary reason for the flight of working professionals moving from the island to places like Florida, New York, and elsewhere on the mainland. Any bankruptcy protection for Puerto Rico must come later, he said, after bigger budget cuts—”but not as the first resort…because it will not solve the problems on the island.”

Economic experts agree there are a variety of reasons the island amassed such unwieldy debts over the years, including government mismanagement, waste, and bloat. But Rubio omitted key context and a couple of pertinent facts from his answer.

First, despite the Puerto Rican government’s slow response, it has taken major steps to address its budget issues. Puerto Rico’s government has already raised sales taxes to the highest in the nation, raised gasoline taxes, cut tens of thousands of public jobs, and cut hundreds of millions of dollars from education spending.

Second, as pointed out by Latino USA‘s Julio Ricardo Varela, the debt crisis has been growing for decades under politicians of all political stripes, and Wall Street has profited all along the way. Since 2000, Wall Street banks and hedge funds have made more than $900 million managing various bond sales, according to Bloomberg News. Several of the same hedge fund executives who stand to benefit if the island is barred from restructuring its debt through bankruptcy have donated to Rubio’s campaign.

“The GOP are touting Marco Rubio, a Latino candidate for president of the U.S., as ‘proof of the American dream,'” wrote Nelson Denis, a former New York State assemblyman. “But Rubio’s attitude toward millions of Puerto Ricans is actually a nightmare…In 2016 and beyond, that is a lot of voters…and they will not forget Rubio’s political calculus.”

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Puerto Rico Puts Rubio in a Political Pickle

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Democratic Congressman: "Free Puerto Rico"

by MiguelLeddy Posted on February 11, 2016

Mother Jones

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On the House floor Thursday, Rep. Luis Gutiérrez (D-Ill.) called on the US Congress to “free Puerto Rico so she can solve the problem of her crushing debt without being handcuffed by Congress, its distant and inattentive colonial master.” The speech came as Congress continues to debate what should be done to assist Puerto Rico in coping with its debt crisis.

Gutiérrez, who is of Puerto Rican descent, said that Congress has offered “very little” tangible help for the island as it grapples with its crushing $72 billion debt. House Speaker Paul Ryan (R-Wisc.) said in December that Congress would propose a debt relief package by the end of March. Previous legislative proposals have stalled out, whether offered by Democrats, Republicans, or Pedro Pierluisi, the island’s non-voting representative to congress.

The island’s government and public institutions owe money on more than a dozen separate loans involving a number of different lenders, all with competing interests. Since Puerto Rico’s cities and public institutions cannot seek bankruptcy protection in the same way as their counterparts on the mainland, debt restructuring has to be handled by each individual creditor separately, which has made the process slow and unwieldy.

The Obama administration and Congressional Democrats support the idea of amending US law to let Puerto Rico seek bankruptcy protection, but Congressional Republicans have been resistant, arguing that the island’s government must get its financial affairs in order—and honor its debts—before congressional action should be taken. Republican proposals have included the idea of an independent financial oversight board, an idea Gutiérrez blasted on Thursday.

“And now, what is the solution that everyone in Washington is lining up behind? A federal control board,” he said. “Imagine that. An island that cannot determine its own destiny, that has to play an economic game with a stacked deck and all the rules rigged against them, what is the solution in Washington? Take away what little autonomy they have left and add a new layer of Washington control over the colony.”

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Democratic Congressman: "Free Puerto Rico"

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Puerto Rico Keeps Getting the Shaft from Congress

by LaurelHampton Posted on December 17, 2015

Mother Jones

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The House reached a deal on a $1.1 trillion spending bill on Tuesday night that avoided a government shutdown with agreements that included lifting the ban on crude oil exports, delaying the implementation of certain parts of the Affordable Care Act, and tightening visa requirements. Also included were nearly $680 billion in tax cuts.

But missing in the massive bill was any debt assistance for Puerto Rico, which is on the brink of insolvency due to more than $72 billion in debt. Despite some recent Republican proposals that would have provided short-term relief (along with strict financial oversight) for the largest US territory, in the end, lawmakers did not include any assistance that would permit the federal bankruptcy provisions that US cities and states are able to use.

“It is unconscionable that Congressional Republicans refused to include in the year-end spending bill meaningful provisions to allow Puerto Rico to restructure its debt,” Rep. Nydia M. Velázquez (D-N.Y.) said in a statement released Wednesday morning. “This would not have cost the taxpayer a dime, but could have helped solve what is rapidly disintegrating into a humanitarian crisis.”

The island is facing a $957 million interest payment on January 1, putting its government in the position of having to choose between paying government workers, public university workers, and other school teachers, or paying its creditors. Unlike cities and publicly owned entities in the states, Puerto Rico cannot restructure debt under federal bankruptcy laws. Pedro Pierluisi, the island’s nonvoting representative to Congress, introduced legislation in 2014 and 2015 that would offer Puerto Rico’s government that option, but neither bill received any Republican support. Last week, Rep. Sean Duffy (R-Wis.) introduced a bill that included a bankruptcy provision for Puerto Rico, but also included a financial oversight board that Pierluisi and others said was too heavy-handed. Duffy’s bill is in committee.

In her statement, Velázquez listed the many efforts the Puerto Rican government has made to bridge its funding gaps, which include spending less on students, closing a total of nearly 160 schools over the last two years, increasing the local sales tax to 11.5 percent, and laying off 21 percent of its government employees since 2008. “Yet hedge funds continue demanding further, unreasonable austerity measures, rather than accepting a lower rate of return on their investments,” she said.

Sen. Harry Reid (D-Nev.), while calling for passage of debt restructuring for Puerto Rico Thursday, noted that 200,000 Puerto Ricans have served in the US military since 1917, and that at some point next year Congress will honor a mostly Puerto Rican infantry regiment with a Congressional Gold Medal for its service during the Korean War.

“It’s shameful to think that Congress can at once recognize the extraordinary contribution of Puerto Ricans who made the ultimate sacrifice for our country and then do nothing for Puerto Rico when they turn to us for help in a time of crisis,” he said on the Senate floor.

While discussing the budget bill with reporters on Wednesday, House Minority Leader Nancy Pelosi (D-Calif.) also discussed Puerto Rico’s problems. “We’re concerned about ignoring the urgency of the situation in Puerto Rico, where American citizens are really in a situation that we must address,” she said, according to Politico. “It won’t cost the American people one thin dime to allow Puerto Rico to restructure their debt and their bankruptcy.”

Deepak Lamba-Nieves, an economic development researcher at the Center for the New Economy, an economic think tank in San Juan, Puerto Rico, told Mother Jones Wednesday that the lack of congressional action raises the likelihood that on January 1 Puerto Rico will find itself in the unprecedented position of defaulting on its general obligation debts because the government has to, by law, “address the creditors’ needs before the needs of its citizens.”

“It could be a situation where you have a lot of strong lobbying happening from the hedge funds and the financial community,” he says. “This means that the federal government has basically turned its back on over 3 million of its citizens.”

Pierluisi acknowledged that there were two provisions in the spending bill for Puerto Rico’s hospitals. One will reimburse the local hospitals that treat Medicare patients at the same rate as hospitals in the states, giving Puerto Rico’s hospitals $618 million between 2016 and 2025. Another provision provides Puerto Rican hospitals with the same bonuses provided to other hospitals in the United States that implement broader use of electronic health care records under the HITECH Act. (Read about the problems with electronic medical records in this recent Mother Jones story.)

“In total, the omnibus provides nearly $900 million to benefit Puerto Rico hospitals and patients over the next decade,” Pierluisi said in a statement. “Puerto Rico still confronts major disparities under federal health care programs, including the upcoming Medicaid cliff, but it is gratifying to take these two disparities off the list.”

Pierluisi added that the help for hospitals “is largely eclipsed” by the lack of help for the debt crisis.

“Despite our best efforts, the omnibus does not include language empowering Puerto Rico to restructure any of its debt, as every US state is empowered to do,” he said. “Honesty requires me to note that the objections to this provision came exclusively from Republicans.”

Pierluisi closed his statement by saying that a major reason for the current problems facing Puerto Rico is its colonial relationship with the United States.

“Because Puerto Rico is a territory, Congress has nearly complete power over us. We rely on the goodwill of men and women representing the 50 states” he said. “Often, such goodwill is not forthcoming. And sometimes, like today, our treatment can only be described as shameful.”

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Puerto Rico Keeps Getting the Shaft from Congress

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The US May Finally Give Puerto Rico a Financial Lifeline. Here’s What’s Happening.

by ZenaidaNeblett Posted on December 10, 2015

Mother Jones

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After months of pleading by the governor of Puerto Rico and the island’s representative to Congress, lawmakers have introduced legislation in both the House and Senate that would offer tangible help for the island’s debt crisis. On Wednesday, the Republican chairs of three Senate committees proposed $3 billion in cash relief, a 50 percent payroll tax cut for Puerto Rico residents for the next five years, and the creation of an independent “assistance authority” that would help the government of Puerto Rico with its short-term and long-term budgeting process.

A separate House bill introduced Wednesday by Rep. Sean Duffy (R-Wis.) would permit the island’s cities to restructure mounting debts through bankruptcy reorganization, an option available to cities in the United States but not in Puerto Rico. The legislation comes as the US territory grapples with ballooning debt payments on roughly $72 billion in borrowing that the island’s governor, Alejandro García Padilla, has said the island cannot pay. According to Bloomberg, Puerto Rico is in danger of defaulting on $957 million in interest payments that are due on January 1.

The Senate proposal comes from a trio of Republicans who chair committees with various oversight responsibilities for Puerto Rico: Finance Committee Chair Orrin Hatch (R-Utah), Judiciary Committee Chair Chuck Grassley (R-Iowa), and Energy and Natural Resources Committee Chair Lisa Murkowski (R-Alaska).

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The US May Finally Give Puerto Rico a Financial Lifeline. Here’s What’s Happening.

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Puerto Rico Crisis Goes From Bad to Worse

by AYZShantell Posted on August 5, 2015

Mother Jones

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Puerto Rico’s economic crisis has only gotten worse in the month since Gov. Alejandro García Padilla told the New York Times the island’s $72 billion in debts was “not payable.” Earlier this week, the island missed a key bond payment, making history and setting the stage for a bruising and protracted battle with creditors. There are many reasons Puerto Rico finds itself in this quandary, including its murky political status, and the situation seems to be deteriorating as time goes on.

Here are the direst problems facing Puerto Rico—and the impact they could have on the upcoming presidential election:

Default: In June, when García Padilla called on Congress to pass legislation that would allow Puerto Rico to get its debt in order under the US bankruptcy laws that apply to the 50 states, the idea that the island would default on loan payments was mostly theoretical. That’s not the case anymore. The island’s government paid just $628,000 of a $58 million debt payment due this week, triggering the first default since the island was taken over by the US in 1898. No state has defaulted since Arkansas failed to make its bond payments during the Great Depression in 1933.

The default complicates an already complicated situation. Since current law doesn’t allow Puerto Rico to authorize its cities and publicly owned entities to seek bankruptcy protection through the courts, the island’s government has to negotiate with each of its lenders individually. As anybody who has ever borrowed money knows, interest rates go up when your credit goes down. Puerto Rico’s default, without any congressional intervention to change the bankruptcy laws, will likely lead to much more expensive borrowing in the future. “The default is consistent with our belief that Puerto Rico does not have the resources to make all of its forthcoming debt payments,” Moody’s Investors Service Vice President Emily Raimes said in a statement this week. “This is a first in what we believe will be broad defaults on commonwealth debt.”

No Help From Congress: When American cities and political entities such as towns, water districts, counties, and publicly run corporations face similar financial problems, they reorganize their debt under Chapter 9 of the US Bankruptcy Code. Detroit, which filed for bankruptcy in 2013, is perhaps the best-known example of this, but according to Governing magazine, it has happened nearly 50 times in the US since 2010. Federal bankruptcy law specifically excludes Puerto Rico, which means that the island’s government is forced to negotiate directly with a range of lenders, all of whom have different requirements and some of whom recommended closing schools, cutting university subsidies, and firing teachers to repay the debt.

Pedro Pierluisi, Puerto Rico’s non-voting representative in Congress, has more than once introduced legislation that would allow Puerto Rico to be treated like the states when it comes to US bankruptcy laws, but it has gone nowhere. More recently, Sens. Chuck Schumer (D-N.Y.) and Richard Blumenthal (D-Conn.) introduced an identical bill to Pierluisi’s, but some Republicans continue to oppose the idea on the grounds that it’s a backdoor bailout, so any relief coming from Congress is unlikely.

Medical Issues: Puerto Ricans face a host of problems as a result of the economic implosion, but a looming health care crisis might be the most serious. As the New York Times reported over the weekend, Puerto Rico is bracing for large cuts to a Medicare program called Medicare Advantage, which is being pared back under the Affordable Care Act. The result is that tens of thousands of Puerto Ricans are expected to face higher copays, reduced services, and a shrinking network of already stressed doctors. Puerto Rico’s Medicaid program, which serves nearly 1.6 million people, is also in danger of running out of federal grant money by the end of 2016. If the financially strapped government can’t come up with funding, as many as 900,000 people could get dropped from the program, according to the Times—and funds are hard to come by these days.

The lack of Medicaid funding is partly responsible for $25 billion of the island’s $73 billion debt burden, because the government has had to borrow to make up Medicaid funding gaps. Puerto Ricans pay Medicare taxes (along with many other federal taxes), but the federal government’s funding to the island is capped, forcing Puerto Rico to try to make up the difference.

All of this helps explain the mass exodus of doctors from the island, who are leaving at a rate of about one per day for work in Florida, New York, or other states. The rate is expected to climb, further exacerbating the health care woes of a place that already has too few doctors serving the population.

The Effect on Mainland Politics: Doctors aren’t the only ones abandoning the island. As US citizens, Puerto Ricans can freely move to the US mainland, so now, there are more Puerto Ricans living on the mainland than on the island. The growing number of Puerto Ricans moving to the US, mainly Florida, will likely play a big role in the coming presidential election. As the Washington Post reported last week, politicians hoping to win Florida will face problems if they don’t have Puerto Ricans backing them up at the polls. “Puerto Ricans are the swing voters in the swing region of a swing state,” former Puerto Rico Secretary of State Kenneth McClintock told Mother Jones in July. “So, come March of next year, the presidential primaries in Florida will be very important in terms of what is done with Puerto Rico in the future.“

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Puerto Rico Crisis Goes From Bad to Worse

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Puerto Rico Is Doomed, and It’s Our Fault

by BrentLeschen Posted on July 17, 2015

Mother Jones

Greece may have overcome a major hurdle in fixing its economy this week, but Puerto Rico faces a more complicated obstacle to managing its crippling debt: its murky status as a US territory.

“If Puerto Rico were a state, there wouldn’t be any question about it,” Jeffrey Farrow, a former adviser on Puerto Rico policy to President Bill Clinton, said of the island’s mounting debt crisis. “If it were a nation, it wouldn’t have to worry about US federal rules, and then it could try to develop its own economy.”

But Puerto Rico is neither a state nor a country. It’s technically a commonwealth, a status given to it in 1950 by the US government, which allowed it to draft a constitution and elect its own officials. But even its commonwealth status is unique. Virginia, Massachusetts, Pennsylvania, and Kentucky are all commonwealths, but they have the full power of states. That’s not the case for this island of 3.6 million, which is, essentially, a colony, subject to the full control of the US Congress. The nature of its relationship with the federal government has left it with few options as it grapples with $72 billion in outstanding obligations that its governor, Alejandro García Padilla, says is “not payable.”

Pedro Pierluisi, Puerto Rico’s non-voting representative in US Congress, called for Puerto Rican statehood in a recent New York Times op-ed. “Puerto Rico is not a sovereign country in a monetary union with the United States. From a constitutional perspective, Puerto Rico belongs to the United States,” he wrote. “It is disheartening to see many self-styled progressives, who otherwise speak eloquently about the importance of voting rights, go silent on this subject when it comes to Puerto Rico.”

The island’s high unemployment, poverty, and low household income, Pierluisi argued, result partly from poor local policy decisions, but the inequity it faces under federal law is a much bigger factor. Even though they are legally American citizens by birth, Puerto Ricans on the island can’t vote for president and have no voting representative in Congress. They pay Medicare taxes but Medicaid funding is capped for them. They are not covered by many provisions of the Affordable Care Act and are not eligible to claim the earned-income tax credit. Excessive borrowing, Pierluisi wrote, is in many ways due to these realities.

“It is little wonder, then, that Puerto Rico is in recession, has excessive debt and is bleeding population,” he wrote.

Pierluisi introduced a bill in February that would allow Puerto Rico’s cities and state-owned businesses to seek Chapter 9 bankruptcy protection in the same way that some US cities that have done, most recently Detroit. The bill has no co-sponsors and is stuck in a House subcommittee. The chair of the committee, Rep. Tom Marino (R-Pa.), has said that “Puerto Rico must make serious, timely, and demonstrable steps towards righting its fiscal ship before anything moves legislatively.” Sens. Chuck Schumer (D-N.Y.) and Richard Blumenthal (D-Conn.) plan to introduce similar legislation for debt relief, according to Politico, but it’s unclear when that might happen.

The crisis pits Puerto Rico’s creditors—including hedge funds, large US banks, and smaller investors—against the island’s public workers, with each side trying to avoid absorbing the inevitable losses. A July 14 report from the Puerto Rican investigative journalism outlet Centro de Periodismo—reprinted in English via Latino Rebels—suggests that since 2013, hedge funds have been particularly active in trying to manipulate the debt crisis to their advantage.

The report points out that hedge funds, some of which were also involved in both the Greek fiasco and an ongoing debt crisis in Argentina, have been lobbying Puerto Rican officials in an effort to reduce their losses as much as possible. The hedge funds have reached out to various past and current government officials—including former Puerto Rico Gov. Luis Fortuño, former Secretary of State Kenneth McClintock, and Pedro Pierluisi, the island’s non-voting representative in Congress—in hopes of preventing wide-scale restructuring of Puerto Rico’s debt.

The issue has worked its way into the presidential campaign, with Hillary Clinton, Bernie Sanders, and Jeb Bush all voicing support for Puerto Rico to have the same bankruptcy options as US states. “We’re not talking about a bailout,” Clinton said in a statement last week. “We’re talking about a fair shot at success.” Sanders issued a statement the same day, saying, “We also should recognize that the reason Puerto Rico has such unsustainable debt has everything to do with the policies of austerity and the greed of large financial institutions.”

Bush is the only Republican to touch the issue so far in the campaign, saying, “Puerto Rico should be given the same rights as the states.”

About 5 million Puerto Ricans live in the 50 US states and can vote in national elections. Maurice Ferré, a Puerto Rican who served six terms as the mayor of Miami, said there are 4,000 to 5,000 Puerto Ricans moving to Florida every month, and noted that they are a pivotal voting bloc in Florida.

McClintock, Puerto Rico’s secretary of state from 2009 to 2013 and president of its Senate from 2005 to 2008, agreed. “Puerto Ricans are the swing voters in the swing region of a swing state,” McClintock said. “So, come March of next year, the presidential primaries in Florida will be very important in terms of what is done with Puerto Rico in the future.”

But McClintock said there are things Congress could do right now to help Puerto Rico. It could change the repayment terms on money paid by the island to the US government for various project overruns, and adjust the way Puerto Ricans are treated under federal programs like Medicare. Or the government could steer more federal procurement dollars toward the island’s struggling economy.

“That’s not a bailout,” McClintock says. “It’s simply giving more federal procurement to Puerto Rico.” But that’s difficult to achieve, he says, without voting members of Congress.

McClintock and Fortuño, among others, have said that much of the island’s debt is payable. Fortuño, who lost his seat to Garcia Padilla in the 2012 election, told Mother Jones that he had “no idea” why the new governor would claim the island’s debts are unpayable. “From a strictly financial point of view, the information is incorrect,” he said, “and the message it sends to the marketplace is terrible.”

Without any intervention, Puerto Rico could default on some of its debts and cause massive turmoil in the US municipal bond market, which affects retirement funds, pensions, and other investments. It could also spur lawsuits against the Puerto Rican and US governments that could take years to work out.

Farrow, the former Clinton adviser, says the governor’s calls for debt relief could help propel legislative relief or Congress could enact other short-term policy fixes, but neither will offer a permanent fix of the underlying problem.

“Puerto Rico can be a state or a nation and can develop a successful economy under either one,” he says, “but right now its current political status makes no sense.”

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Puerto Rico Is Doomed, and It’s Our Fault

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Puerto Rico Debates Who Put Out the Lights in a Bay

by Myrna Posted on June 4, 2014

The prolonged blackout of one of the world’s most famous bioluminescent bays after microscopic plankton called off their shimmering show in January has alarmed scientists. Source:  Puerto Rico Debates Who Put Out the Lights in a Bay ; ;Related ArticlesDot Earth Blog: Behind the Mask – A Reality Check on China’s Plans for a Carbon CapThe Potential Downside of Natural GasNews Analysis: The Potential Downside of Natural Gas ;

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Puerto Rico Debates Who Put Out the Lights in a Bay

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