February 25, 2020 at 5:00 am ET
Puerto Ricans are natural-born U.S. citizens, and the Island is under the sovereignty of the United States. Yet the lack of interest from our leaders in Washington on helping the Island through its recent crises is deeply discouraging. Without question, the president’s attitudes and actions toward Puerto Rico have been disgraceful and are a constant barrier for the Island to get back on its feet.
Time and again, therefore, the Puerto Rican people have had to rely on Democrats in Congress to help ensure the Commonwealth is not cast aside, and left to collapse from disasters including an economic and financial collapse, Hurricanes Irma and Maria in 2017 and now ongoing earthquakes.
Without question, the greatest threat to Puerto Rico’s long-term wellbeing is the debt crisis, which stands in the way of a full socioeconomic recovery.
On that front, the latest potential disaster for Puerto Rico is a new debt adjustment deal announced by the Financial Management and Oversight Board (FOMB) on Feb. 9. Led by Democrats on Capitol Hill, Congress must use its oversight powers over the FOMB to stop the agreement immediately and pass legislation, such as the U.S. Territorial Relief Act (H.R. 2526 / S.1312), that would call for a full independent audit and a sensible resolution to the Island’s $72 billion public debt.
Earlier this month, over 50 progressive organizations (including a group I regularly advise) sent a letter to leaders in Congress urging them to oppose this proposed deal. The signers expressed several primary concerns, including that the deal would likely “force another bankruptcy process in a few years” and “would cut vital pensions and burden Puerto Ricans with unsustainable, regressive sales taxes, further burdening Puerto Rico’s people.”
This last point, to me, is the worst aspect of this proposed agreement. It puts a heavy burden on the people of Puerto Rico who have already suffered enough. Worse, public sector workers and retirees with legal claims against the government, locally owned small and midsize private sector contractors and government vendors with billions in past due accounts receivable, and plaintiffs in civil rights violation suits who have been awarded judgments entered against the government, are among the hardest-hit creditors affected by this deal.
Case in point is that under this deal, some hedge funds will come out with a 250 percent profit margin, while contractors and working families face losses of 98 percent. Yet more evidence that not only is this deal unfair, it is also economically unsustainable.
By putting such an outsized burden on these middle-class Puerto Ricans, we are threatening to unravel the fabric of the Island’s society. For too many young people living there, they face too uncertain of an economic future and are leaving. If Puerto Rico is going to flourish in the long-term, we cannot allow the “brain drain” from the Commonwealth.
The research has shown that more and more people are fleeing the Island. We have to stem this tide, or risk creating an imbalance, where too much of the population is too old, or sick to find employment. Again, this is why any resolution to the debt crisis cannot be born solely on the backs of working families — and why this proposal must be defeated.
Lastly, Puerto Rico needs all its stakeholders, including Wall Street investors, to come together and focus on investment, job creation and economic growth. At the end of the day, the debt will not be payable, and Puerto Ricans will not be able to fully recover from recent natural and man-made disasters, without robust and sustained economic development. That includes businesses from the Island and outside to recognize that investing in Puerto Rico is a smart bet. Puerto Rico’s government also needs to step up, as does the federal government, to provide the conditions and tools for the Puerto Rican economy to once again flourish.
I hope Democrats on Capitol Hill will do whatever it takes to defeat this proposal. It does too little to prevent the Island from avoiding another bankruptcy and places too much of the burden on Puerto Rico’s most vulnerable citizens.
Federico de Jesús recently served as deputy director of the governor of Puerto Rico’s D.C. office, and before that was director of Hispanic communications for Speaker Nancy Pelosi, former Senate Majority Leader Harry Reid and then-presidential candidate Barack Obama. He currently serves as principal at the D.C.-based consulting firm FDJ Solutions.
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