Editorial: Congress Must Take Action in Puerto Rico
Vulture funds must accept debt cuts so the island can come out of its financial crisis
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The serious financial crisis endured by Puerto Rico continues to be ignored by U.S. Congress. They must act to alleviate the pressure currently exerted on the island. Intense lobbying on the part of high-risk investment funds is preventing the island from finding an exit that does not include negotiating on the terms of financial vultures.
Two bills have been proposed in Congress – S.1774, by Democratic senators Richard Blumenthal (CT) and Chuck Schumer (NY,) and H.R 870, by Puerto Rican legislator Pedro Pierluisi, – both of which allow the island to file bankruptcy just like any other state in the U.S.
So far, the projects have been stalled due to a lack of Republican support. The conservative majority is not sympathetic about the island’s problems, which they see as the result of failed Democratic policy. They also believe the argument posed by investment funds that the Puerto Rican crisis is a deficit problem – not a debt problem – easily solved by cutting expenses and raising taxes.
Budget problems may have been manageable earlier but under the current conditions – which include low tax revenue – it is impossible for Puerto Rico to pay the $70 billion it owes. The solution is to allow the island to file for Chapter 9 bankruptcy and restructure its debt. A few creditors have said that they would be willing to negotiate a reduction of the debt, but they are the exception.
The U.S. cannot wash its hands in front of this crisis because it is greatly responsible for those problems. The island has long been seen as a tax haven for corporations and not much more, and draconian laws – such as forcing the island to pay its external debt before covering its domestic expenses – were imposed by the U.S.
Today’s problem is only a result of the colonialist policy of the U.S. The mainland used the island to serve its interests and, now, it leaves it at the mercy of high-risk speculators who, with the blessing of Congress, want to make all Puerto Ricans pay for their bad deals.
