Gov’s Running Mate Attacks President’s Response to Territory’s Economic Problems

Governor Alejandro Garcia Padilla’s 2012 running mate today harshly criticized the White House’s response to Puerto Rico’s fiscal problems.

Rafael Cox-Alomar, Garcia’s failed “Commonwealth” party candidate to represent the territory to the Federal government, wrote in reaction to an explanation of the Obama Administration’s initiative by David Agnew, Obama’s White House Co-Chair of the President’s Task Force on Puerto Rico and Director of Intergovernmental Affairs.

The Obama effort is providing the Commonwealth government with technical assistance in accessing Federal funds to which the territory is entitled and in managing its finances.

It was launched after a recent, precipitous fall in the value of Commonwealth bonds and sharp downgrades and negative outlooks regarding the risks of Commonwealth debt obligations.

The financial market developments were due to excessive borrowing and deficit spending by the Commonwealth and a persistent worsening of the territory’s economy.

Cox-Alomar charged that Agnew used diplomatic language to cover the fact that the Obama Administration “imposed on us a kind of government receivership without our consent,” asserting that, “Obama stubbornly prefers to further imprison Puerto Rico through the tongs of a management receivership.”

The Garcia running mate characterized the Obama actions as “outrageous” and “the same paternalism that Washington has been wielding regarding Puerto Rico since 1898” (when the territory was taken by the U.S. from Spain).

Recognizing “the systemic collapse of Puerto Rico,” the “Commonwealth” party leader argued, however, that the Commonwealth’s economic problems “cannot be resolved even by colonizing our Governmental structure.”

Cox held that the problems related to “the apparent inability of all U.S. administrations, from Nixon to Obama, to choose what to do with Puerto Rico, along with the lack of courage of the conservative leadership” of the “Commonwealth” party.

He also denied that the problems stemmed from Puerto Ricans being “lazy and complacent” about the territory’s economy “as Economic Development Secretary Alberto Baco concluded” in an interview with The Washington Post.

Cox contended that “if indeed the White House is so committed to the right to self-determination, as it says” it “should push Congress to amend the [Puerto Rican] Federal Relations Act and give the Commonwealth most economic authority, releasing the deadly grip” of the provision of the U.S. Constitution allocating to the Federal government the power to regulate commerce and of  “the odious monopoly” of the Federal laws requiring that ocean freight between the States and Puerto Rico be on American built, owned, flagged, and crewed ships.

Cox’s attack came as two government finance experts from the U.S. Department of the Treasury wrapped up a weeklong investigation of Puerto Rico’s financial situation in San Juan.

The senior advisor and an outside consultant who work with the Under Secretary for Domestic Finance were in the territory to get a deeper understanding of the Commonwealth’s fiscal situation, operations, and plans, particularly in light of conflicting data and worrisome statements from the Garcia Administration and in light of the Commonwealth’s poor record in managing Federal funds and complying with program requirements.

Last month, Puerto Rico’s Treasury Department reported receipts in October that varied substantially from the revenue expected.  Additionally, a Federal report contradicted the Governor’s claim that 25,256 jobs had been created in the territory during his administration by finding that, in fact, 17115 jobs had been lost this year.  Earlier, the Puerto Rico Planning Board projected that the territory’s economy would continue to shrink significantly rather than barely expand, as previously claimed by Garcia.  And also this year, hundreds of millions of dollars in Federal assistance to the territory has been held up because of the Commonwealth’s failure to adhere to grant plans and project commitments.

The U.S. Treasury finance specialists will be followed to San Juan by experts from Federal agencies with major programs operating in Puerto Rico.  They are to come from the Departments of Education, Health and Human Services, and Housing and Urban Development, and the Environmental Protection Agency.

Agnew’s explanation of the assistance that the Obama Administration would give the territory responded to questions from bond investors about whether the Federal government would bailout the Commonwealth from its budgetary shortfalls so that the Commonwealth would not default on its debt.  After U.S. Treasury spokespeople said that no special funding would be provided, Agnew clarified what type of help would be provided the U.S.’ most populous possession.

In his written explanation, Agnew explains that the Federal officials will also “offer strategic advice to assist Puerto Rico in promoting its economic development and maximizing the impact of existing federal funds flowing to the Island.”