Sam Rodriguez, one of the leaders of the Borinqueneers Congressional Gold Medal Ceremony National Committee , has spoken out about PROMESA, the Puerto Rico Oversight, Management, and Economic Stability Act.
“Congress should enact comprehensive, bipartisan legislation to address Puerto Rico’s fiscal crisis by July 1st,” says Rodriquez. “H.R. 5278, the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), has already been passed through the House Natural Resources Committee on an overwhelmingly bipartisan basis. Doing nothing would consign Puerto Rico to a chaotic, disorderly downward spiral that risks a worsening humanitarian crisis.”
Rodriguez is concerned about some of the misconceptions many people have about PROMESA. First on his list is the belief that “Puerto Rico can get a better deal through Congress after July 1st or next year.” Whether they think that waiting until after elections would change the mood in Washington or hope that Puerto Rico’s likely default on July 1st will change the thinking of creditors, Rodriguez says believers in this idea are wrong. “Puerto Rico is out of time and out of cash. It has already begun defaulting on debt payments, stretching its luck with suppliers, and cutting back on essential services,” he points out. “It would be irresponsible to allow the situation to get even worse when there is no real alternative to the current bill.”
Rodriguez also disputes the claim that PROMESA favors creditors over the people of Puerto Rico. There are, as Speaker Ryan Paul pointed out, no special carve-outs or bail-outs for creditors. The fiscal oversight board which will be established by PROMESA will have the authority to restructure the debt, which the government of Puerto Rico does not. Without PROMESA, decisions about paying back creditors will probably be made — much more expensively — in the courts.
The third myth Rodriguez wants to dispel is that Puerto Rico will have no voice in the actions of the fiscal oversight board. In fact, “The Governor of Puerto Rico has a role on the board, and the Administration is committed to ensuring that Puerto Ricans will be well-represented in board membership,” Rodriguez says. “This independent oversight board is designed so Puerto Rico’s elected leaders remain responsible for initiating and driving economic policy.”
PROMESA includes details on how economic decisions will be made, and the board will only come up with plans if Puerto Rico’s government fails to do so.
Some people also believe that PROMESA will force austerity measures and additional cuts in services on the people of Puerto Rico. In fact, this kind of measure could be required by courts if creditors sue Puerto Rico, but PROMESA protects Puerto Rico from further cuts in services and gives the government of Puerto Rico tools to negotiate with creditors outside of the courts.
Once Puerto Rico is on track financially, the fiscal oversight board will disband and Puerto Rico will be able to move ahead without the problem of unsustainable debt. Currently, debt service makes Puerto Rico send more than a third of its budget off the island.
