Trump Administration Calls for Pro-Growth Economic Policies for Puerto Rico

The Trump Administration’s Statement of Administration Policy (SAP) on the recent federal omnibus spending legislation (Consolidated Appropriations Act of 2017) includes a section on the new administration’s position on Puerto Rico.

First, noting the legislation’s inclusion of close to $300 million for Puerto Rico’s Medicaid program, the SAP states that the White House is “disappointed” that the bill does not contain related “reforms to Puerto Rico’s struggling healthcare system.”

“The Administration believes,” the SAP continues, “that any sustainable solution to Puerto Rico’s dire fiscal situation must include the enactment of pro-growth policies for the island.

The administration is not alone in pushing pro-growth policies for Puerto Rico. The Congressional Task Force on Economic Growth in Puerto Rico proposed specific changes designed to help grow Puerto Rico’s economy in its 2016 final report.  The report recommended urgent funding for Puerto Rico’s Medicaid program, equal access to the EITC and Child Tax Credits, and the use of a number of federal economic development services which are legally available to Puerto Rico but which do not currently serve the Island.

Task Force member Congressman Sean Duffy (R-WI) said at that time that “Congress should give serious consideration to providing the island with equal treatment under all federal laws and programs.” The final report included a list of 40 federal programs under which Puerto Rico is at a disadvantage compared with the states.

A recent letter from the fiscal oversight board to members of the Senate reminded Congress of the existence of this report and proposed that Congress take action on those recommendations.

The 2016 Task Force report made numerous practical recommendations to the federal government, leading with Medicaid reform.  The Senate is considering broad health care reform legislation that contains structural changes to the federal Medicaid program.  This bill could provide a vehicle for making, in the words of the SAP, “reforms to Puerto Rico’s struggling healthcare system,” but the U.S. territory is not included in the present proposal at this time.

The National Taxpayers Union reported on the SAP with optimism, asking, “Will public officials on both ends of Pennsylvania Avenue soon pay greater attention to one of NTU’s top priorities for addressing the economic plight of Puerto Rico, as well as severely indebted state and local governments on the U.S. Mainland? Based on the White House’s Statement of Administration Policy (SAP) on recently introduced Omnibus spending legislation covering the remainder of Fiscal Year 2017, there’s hope for a shift in emphasis toward economic growth for the island.”

Tax reform is also on the agenda for Congress.  It remains to be seen whether federal tax reform changes designed to enhance economic growth in the states will similarly apply to Puerto Rico.

Read the full SAP.

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