The Senate Is Finally Trying to Help Puerto Rico With Its Crazy Debt Crisis
Three weeks after Puerto Rico's governor announced that the island's debts were "unpayable," the US Senate stepped in with a measure that could finally ease the worsening fiscal crisis. But the bill's odds of becoming law remain slim, leaving Puerto Rico's debt woes as far from resolution as ever.
The island's government, facing a $72 billion public debt, has said it needs the flexibility to allow its cities and publicly financed utilities—such as the electricity company and the highway authority—to reorganize their debts under US bankruptcy laws. US cities have that right under federal law, but territories like Puerto Rico don't. Restructuring the debt would mean adjusting repayment terms on its various loans by lowering payments, for example, or stretching out repayment periods. Without the ability to do so, island officials say, Puerto Rico could default on some of its debts. If that happened, pension and retirement funds that are invested in Puerto Rican bonds could take heavy losses. Public workers in Puerto Rico would also suffer, because the island would have less money to meet its ongoing expenses.
Last week, Sens. Richard Blumenthal (D-Conn.) and Chuck Schumer (D-N.Y.) introduced a bill that would grant Puerto Rico the ability to reorganize its debt in the same way US cities do. "This measure is vital to prevent a humanitarian and financial catastrophe—a clearly avoidable disaster," Blumenthal said in a statement introducing the legislation. "Creditors, investors, ordinary citizens, all will be harmed if the Congress fails to act. This measure is not a bailout—involving not a dime of federal funds. It enables an orderly, rational restructuring of debt, instead of a financial free for all and potential free fall."
As Mother Jones has reported, Puerto Rico's debt calamity is complicated by its murky status as, essentially, a colony of the United States. Unlike every other state, Puerto Rico's central government cannot authorize its cities to reorganize debt—federal courts have held that only Congress can authorize debt reorganization on the island. But Congress hasn't intervened. Because Puerto Rico's constitution requires that debt payments be prioritized over other costs, the government is paralyzed and the crisis is mounting. Without congressional action, Puerto Rico would have to try to renegotiate with creditors individually and directly or default on debts that US taxpayers—including Puerto Ricans—would ultimately have to pay.
Pedro Pierluisi, Puerto Rico's non-voting representative in Congress, introduced an identical bill in the House in February. That bill got a hearing in a House subcommittee shortly thereafter, but the measure stalled.
In a statement, Pierluisi said that Blumenthal's bill will offer Puerto Rico short-term relief but will not not fix the deep poverty, high unemployment, and unequal economic treatment under federal law that cripple the island. "This bill is not intended to, and will not, resolve all of Puerto Rico’s economic and fiscal problems," he said. "It must be complemented by other reforms at both the federal and local level. However, if it enacts this legislation into law, Congress will be empowering a U.S. jurisdiction to help itself, at no cost to federal taxpayers."
Despite vocal support from congressional Democrats, it's unclear whether either the House or the Senate bill has the backing needed to move forward. The Senate Judiciary Committee didn't respond to questions about the bill. Reps. Tom Marino (R-Pa.) and Bob Goodlatte (R-Va.), the Republican committee chairs who control the bill's fate in the House, said in a July 8 statement that they will "continue to monitor the developments in Puerto Rico and are actively assessing the merits of any potential congressional response." A House Judiciary aide who was not authorized to speak on the record told Mother Jones that there's no imminent action scheduled on the House bill in light of the new Senate counterpart. Unless the measures gain newfound momentum, Puerto Rico's debt mess seems unlikely to be cleaned up soon.
Puerto Rican public teachers protest outside the Senate Capitol in San Juan, Puerto Rico in 2013 as the Senate discussed reduced pensions for teachers.
By AJ Vicens
The Senate Is Finally Trying to Help Puerto Rico With Its Crazy Debt Crisis
The island's government, facing a $72 billion public debt, has said it needs the flexibility to allow its cities and publicly financed utilities—such as the electricity company and the highway authority—to reorganize their debts under US bankruptcy laws. US cities have that right under federal law, but territories like Puerto Rico don't. Restructuring the debt would mean adjusting repayment terms on its various loans by lowering payments, for example, or stretching out repayment periods. Without the ability to do so, island officials say, Puerto Rico could default on some of its debts. If that happened, pension and retirement funds that are invested in Puerto Rican bonds could take heavy losses. Public workers in Puerto Rico would also suffer, because the island would have less money to meet its ongoing expenses.
Last week, Sens. Richard Blumenthal (D-Conn.) and Chuck Schumer (D-N.Y.) introduced a bill that would grant Puerto Rico the ability to reorganize its debt in the same way US cities do. "This measure is vital to prevent a humanitarian and financial catastrophe—a clearly avoidable disaster," Blumenthal said in a statement introducing the legislation. "Creditors, investors, ordinary citizens, all will be harmed if the Congress fails to act. This measure is not a bailout—involving not a dime of federal funds. It enables an orderly, rational restructuring of debt, instead of a financial free for all and potential free fall."
As Mother Jones has reported, Puerto Rico's debt calamity is complicated by its murky status as, essentially, a colony of the United States. Unlike every other state, Puerto Rico's central government cannot authorize its cities to reorganize debt—federal courts have held that only Congress can authorize debt reorganization on the island. But Congress hasn't intervened. Because Puerto Rico's constitution requires that debt payments be prioritized over other costs, the government is paralyzed and the crisis is mounting. Without congressional action, Puerto Rico would have to try to renegotiate with creditors individually and directly or default on debts that US taxpayers—including Puerto Ricans—would ultimately have to pay.
Pedro Pierluisi, Puerto Rico's non-voting representative in Congress, introduced an identical bill in the House in February. That bill got a hearing in a House subcommittee shortly thereafter, but the measure stalled.
In a statement, Pierluisi said that Blumenthal's bill will offer Puerto Rico short-term relief but will not not fix the deep poverty, high unemployment, and unequal economic treatment under federal law that cripple the island. "This bill is not intended to, and will not, resolve all of Puerto Rico’s economic and fiscal problems," he said. "It must be complemented by other reforms at both the federal and local level. However, if it enacts this legislation into law, Congress will be empowering a U.S. jurisdiction to help itself, at no cost to federal taxpayers."
Despite vocal support from congressional Democrats, it's unclear whether either the House or the Senate bill has the backing needed to move forward. The Senate Judiciary Committee didn't respond to questions about the bill. Reps. Tom Marino (R-Pa.) and Bob Goodlatte (R-Va.), the Republican committee chairs who control the bill's fate in the House, said in a July 8 statement that they will "continue to monitor the developments in Puerto Rico and are actively assessing the merits of any potential congressional response." A House Judiciary aide who was not authorized to speak on the record told Mother Jones that there's no imminent action scheduled on the House bill in light of the new Senate counterpart. Unless the measures gain newfound momentum, Puerto Rico's debt mess seems unlikely to be cleaned up soon.
Puerto Rican public teachers protest outside the Senate Capitol in San Juan, Puerto Rico in 2013 as the Senate discussed reduced pensions for teachers. By AJ Vicens
The Senate Is Finally Trying to Help Puerto Rico With Its Crazy Debt Crisis
Comments
Those who really want to decolonize Puerto Rico should not reinvent the wheel. It is important that we use a decolonization method that the United States (US) government has the least control over, since it was the one who invaded Puerto Rico to make us its colony.
We should therefore protest peacefully and permanently for Puerto Rico decolonization, based on the 1960 United Nations (UN) resolution 1514 (XV). The UN has thus far issued 34 resolutions asking the US government to immediately decolonize Puerto Rico. The US government’s position has been that Puerto Rico is a domestic matter that is out of the jurisdiction of international law. This is obviously a lie. This is why the UN holds an annual hearing about Puerto Rico decolonization.
Resolution 1514 (XV) says that colonialism is a crime against humanity, because it is a threat to world peace. This international law gives everyone under colonialism the right to use any means necessary to decolonize one’s homeland. Therefore, President Obama’s own White House declaration that Puerto Rico is its colony, in essence is a confession that the United States government is a criminal. To make matters worse, it is an outlaw government run by a Nobel peace prize laureate. It should therefore be the US government behind bars, instead of our Puerto Rican political prisoner Oscar López Rivera.
We have 4 peaceful marches and protests lined up for this year. Please join us!
1. To the Town Square with Oscar our National Hero. Oscar has been in jail for 34 years for his struggle to decolonize his homeland. Beginning on January 29th, 2016, we will congregate every 29th of the month in each of Puerto Rico’s 78 town squares, and in the diaspora to protest for his release. When Oscar is finally released, we will wait at our town squares to welcome him back home!
2. The 3rd Oscar – Mandela March in Puerto Rico 2016. On Tuesday, March 22, 2016, we will have this year’s march on the very day that we celebrate the abolition of slavery. We will march at 6 PM from the Capitol Building to the US Courthouse in Old San Juan.
3. The 3rd Independence March in Puerto Rico 2016. We will have this year’s march as usual just before the Puerto Rico UN Hearing. The date will be set as soon as we know the UN’s date for it. We will march over the Dos Hermanos Bridge into the Condado tourist area.
4. The 3rd Oscar – Mandela March in New York City. We will march again from Hunter College to the United Nations on the very day of its annual Puerto Rico decolonization hearing. This hearing is usually on the Monday after Fathers’ Day.
These protests are absolutely necessary, because those who confess they are criminals don’t believe in JUSTICE FOR ALL! www.TodosUnidosDescolonizarPR.blogspot.com