Madagascar Development

Washington DC  - The religious development coalition Jubilee USA is launching  radio spots  focused on Puerto Rico's debt crisis ahead of "Super Tuesday" presidential primary elections. The radio placements will air on 125 stations in the "make or break" state of Texas asking the presidential candidates to address the crisis in the US Territory. Puerto Rico's government is $72 billion in debt and closed 200 schools, cut health care and used pension funds to make debt payments. Puerto Rico's 3.5 million residents - nearly half of whom live in poverty - are US citizens and are eligible to vote in the US presidential primaries. The debt crisis helped push 10% of the island's population to leave for the US mainland over the past decade. Many of those citizens will vote in primaries on Super  Tuesday  in states like Texas and in later contests, particularly in Florida, Pennsylvania and New York.  " Puerto Rico's crisis impacts the race t...

Congress is considering potential responses to Puerto Rico’s depression and fiscal crisis. Fiscal conservatives are considering whether outside oversight by a “control board” would force feckless local legislators to make difficult choices, such as consolidating rural schools and laying off bureaucrats. However, if Congress only gives the board authority to cut government spending and raise taxes, it will be unable to clear out the failed policies that have choked growth in Puerto Rico. Puerto Rico has European-style labor laws that make it difficult to hire and fire workers and force employers to pay higher wages and benefits than are merited by productivity. Red tape slows growth, too—the World Bank rates Puerto Rico between Costa Rica and Mongolia in its “ Doing Business ” rankings, 50 places below the U.S. Any successful reform effort must focus on cutting past the cronyism that keeps local anti-growth policies in place. In addition, Congress must give Puerto Rico’s policymaker...

A senior Treasury official urged Congress on Thursday to help Puerto Rico restructure its debt quickly, warning that failing to do so would lead to a decade of financial decline. But some lawmakers questioned the Treasury’s approach, saying it might not help Puerto Rico in the long run and could even be financially harmful to some states. Antonio Weiss, counselor to Treasury Secretary Jacob J. Lew, said in testimony before the House Natural Resources Committee that time was running out for the island. It has big debt payments coming due in May and July, and not enough money to pay. By law, contracts — including bond pledges — cannot be unilaterally broken except in bankruptcy, but as a United States territory Puerto Rico has no standing to seek protection under bankruptcy statutes. So Mr. Weiss called on the lawmakers to enact a special law that would give Puerto Rico a bankruptcylike framework for reducing its debts — and to do so quickly, before the big bond payments come due and s...

This week, Puerto Rico faces another critical juncture in its debt crisis, as the House will devote simultaneous hearings to the island’s fiscal situation on Thursday. I will appear alongside a panel of other witnesses at the hearing before the House Financial Services’ Oversight and Investigations subcommittee, while Treasury Counselor Antonio Weiss will be the lone witness to testify before the House Natural Resources Committee. Puerto Rico’s complex and increasingly severe debt crisis demands federal intervention  and, ultimately, a significant debt restructuring. The urgency of this need is not lost on Washington, where there is rare bipartisan consensus in Congress and within the administration that lawmakers must act to offer the island debt relief and put in place policies to foster long-term economic growth. As noted by Puerto Rico’s government and other observers, this is a task that presents significant challenges. The commonwealth has amassed a spiders’ web of de...

Puerto Rico does not need a fiscal control board that would destroy the Commonwealth's ability to provide essential services to its people. A fiscal control board designed to create a new government "of the hedge funds, by the hedge funds, and for the hedge funds," is an affront to basic democratic principles. Congress has recently taken an unprecedented interest on Puerto Rico issues. This week alone, two congressional committees are holding hearings on the subject. Speaker Paul Ryan Paul Ryan GOP beginning to face Trump reality Speaker likes Kanye's free-market philosophy Overnight Finance: Romney targets Trump on taxes MORE (R-Wis.) set a March deadline for Congress to address the Island’s fiscal crisis. After decades of 'benign neglect,' pressure from special interest groups will probably push Congress to impose a fiscal control board on the Commonwealth.  Fiscal control boards were imposed on New York City during the 1970's, and Washington DC in the...

Puerto Rico’s debt exchange isn’t the only security swap for investors burned by the island’s financial collapse. Franklin Resources Inc. plans to close the $147 million Double Tax-Free Income Fund, whose strategy of plowing more of its assets into Puerto Rico than any other municipal-bond fund turned it into one of the worst performers. After the fund shriveled when investors pulled out money, Franklin is asking those remaining to exchange their shares for a piece of the $8.3 billion High Yield Tax-Free Income Fund, which has far less exposure to the island. “It parallels the life cycle of Puerto Rico in the debt markets,” said Matt Fabian, a partner at Municipal Market Analytics, a research firm based in Concord, Massachusetts. “As the island becomes increasingly insolvent, investing strategies dependent on the island also become insolvent.” U.S. mutual funds for years were eager buyers of the Caribbean territory’s debt, which is tax-exempt everywhere in the nation and provided ...

This Thursday two House committees will hold two hearings on the financial and economic crisis of Puerto Rico.  Congress needs to understand this is not simply a local crisis.  There is a shared responsibility and the consequences of inaction or inadequate actions might have legal implications upon the U.S.  With great powers come great responsibilities; with plenary powers come plenary responsibilities.  The most recent report from the government of Puerto Rico says our more than $70 billion debt is unpayable and we are very close to insolvency.  So far, Congress has been resistant to restoring the pre-1984 legal status that gave us the same access as the states to Chapter 9 of the Bankruptcy Code and to fix the unfair treatment under Medicaid, where we have to comply with the standards established by Congress, but that same Congress denies us the funding the fifty states receive. Even worse, the “solutions” that have been discussed are to partially revoke the...

If it’s up to the Treasury Department, public employees in Puerto Rico who were promised pensions could be better off than investors who bought the island’s bonds. A broad plan being put forward by the Treasury Department to ease Puerto Rico’s financial crisis would put pension payments to retirees ahead of payments to bondholders — a move that some experts fear could rattle the larger municipal bond market. The proposal was being driven by evidence that Puerto Rico’s pension system is nearly out of money, leaving retirees who are dependent on it financially vulnerable. “The major problem is, the entire pension system is close to being depleted,” said Antonio Weiss, counselor to Jacob J. Lew, the Treasury secretary. “But 330,000 people depend on it. It’s unfunded, and they have to be protected.” Shielding retirees from pension cuts, the thinking goes, would not only protect thousands of older residents on the island, but it might also encourage younger retirees to stay there, ra...