Opinion: Our national obligation is to help solve Puerto Rico’s fiscal woes
When we think of the United States territories most of us picture the white beaches of the U.S. Virgin Islands and Puerto Rico as well as our military bases in Guam. For those unfamiliar with our unincorporated territories they are very important parts of our country that contribute to the national economy and where millions of American citizens reside. These are not foreign lands, they are firmly part of the United States and their residents, for exception of American Samoa, are natural born citizens, many of them veterans.
Our nation took extraordinary steps to stabilize the economy, preserve homeownership and keep our financial institutions from failing. Congress even approved an unprecedented economic stimulus to help jump a stalled economy. We are all deserving of help during times of crisis. As fellow U.S. citizens, the residents of Puerto Rico deserve that same treatment.
Our laws relating to these territories have sadly not kept up with the times. Earlier this year in the DC District Court a case was held over American Samoan citizenship where the only precedents came from the famously obsolete and racist Insular Cases from the turn of the century. And, in the case of Puerto Rico, the island is currently caught in a legal limbo on how to restructure its municipal debt. Not being a state, the island is not afforded the opportunity to utilize chapter 9 bankruptcy protections and not being a foreign nation, neither the U.S. Treasury or the International Monetary Fund are able to assist with emergency loans to restructure their debt.
This is sadly a case of Congressional mismanagement of its territories through the kind of benign neglect that you can easily imagine falling upon those that have no legal recourse or significant political influence. Not having Congressional representation and only few federal advocates, Puerto Rico has seen many of the preferential tax treatments that helped build and sustain their economy erode over time. In many cases Congress simply abandoned their role as a benefactor and in preserving the best interests of this territory while it instead sought to administer it “on the cheap” by cutting assistance and eligibility for federal programs. You can’t blame an elected official for focusing on their constituency, but that does not excuse Congress’ culpability and outright neglect in creating the economic crisis that is now crippling the island of Puerto Rico.
After more than a year of pleading for federal assistance, the U.S. Department of the Treasury announced last month a proposal to address Puerto Rico’s debt challenge. The proposal hinges on Congressional approval, which seems unlikely with legislative leaders like Sen. Grassley and Sen. Rubio already tripping over each other in racing to the cameras and politicizing any assistance to the island by calling it a “bailout.” It should come as no surprise that it has been widely reported that Senator Rubio has taken considerable political contributions from vulture hedge funds that are betting against Puerto Rico. I would not be surprised if other opponents in Congress to our nation fulfilling its obligations to Puerto Rico are equally swayed by special interests.
Through this proposal, the Obama Administration is making it clear that additional tools are needed to secure a stronger and more sustainable economic future for the island. The Administration’s reform and restructuring proposals are a simple and clear recognition that it is no longer reasonable to expect the residents of Puerto Rico to endure the daily challenges and uncertainty that the island’s fiscal challenges pose. It is my sincere hope that Treasury officials that put forward this proposal, like Antonio Weiss, are not punting on a solution by shifting the political onus to Congress. Instead, our hope should be that, much like DACA, DAPA and deferred action, the Administration is exhausting traditional legislative routes towards a solution before implementing some administrative solution of its own.
Puerto Rico doesn’t need or want a bailout, and we must demand that the island repay its debts. Nevertheless, we need to be sympathetic to the legal limbo in which they are caught from a debt that was accumulated over many of its administrations and decades upon decades of mismanagement. Vulture funds and predatory investors on Wall Street should not be dictating public policy, not forcing an island of nearly four million residents to its knees demanding that it offer up the funds used to keep police on the streets and teachers in the classroom towards servicing the debt.
Just seven years ago in my home state of Arizona we saw first hand the effects of the Great Recession. Many families lost their homes, their assets and investments were wiped away, and many others found themselves without a job. Our nation took extraordinary steps to stabilize the economy, preserve homeownership and keep our financial institutions from failing. Congress even approved an unprecedented economic stimulus to help jump a stalled economy. We are all deserving of help during times of crisis. As fellow U.S. citizens, the residents of Puerto Rico deserve that same treatment.