On the day set aside to celebrate Puerto Rico’s constitution, a group of U.S. senators introduced a bill to forgive Puerto Rico’s debt.
Puerto Rico owes more than $70 billion to creditors. Then Governor Alejandro Garcia Padilla declared the debt “unpayable” in 2015. The PROMESA fiscal oversight board was put in place to help, among other things, restructure Puerto Rico’s debt.
Senators Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) introduced the U.S. Territorial Relief Act of 2018, along with cosponsors Sens. Kirsten Gillibrand (D-NY), Ed Markey (D-MA), and Kamala Harris (D-CA). The bill offers debt cancellation for territories meeting two of the following criteria:
- The population has decreased by more than 5% over ten years.
- The territory has received disaster relief within 5 years.
- The debt is over $15,000 per capita..
Pointing out that U.S. territories are inhabited by millions of U.S. citizens (this point being primarily related to Puerto Rico) and that “the Federal government owes a special duty of care and stewardship to the citizens of territories of the United States” because of a history of discrimination, the bill allows the territorial governments to vote to erase unsecured debt.
The bill specifically states that an oversight board cannot overrule such a vote.
A fund would be established by the bill to compensate individual investors — not hedge funds — who lost money because of a discharge of the territory’s debts.
Warren described the bill as “a chance to get back on their feet” for island territories suffering from natural disaster. “Our fellow citizens in Puerto Rico have been suffering through an economic crisis for years, and Congress hasn’t done nearly enough to help,” she said in a statement.
Bernie Sanders said, ““Greedy Wall Street vulture funds must not be allowed to reap huge profits off the suffering and misery of the Puerto Rican people for a second longer. It is time to end Wall Street’s stranglehold on Puerto Rico’s future, return control of the island to the people of Puerto Rico and give the territory the debt relief it so desperately needs to rebuild with dignity.”
At the same time, the bill also demands that the source of the debt be examined and made public. A special audit would be required, and the auditors would be required to report on their findings.
Nydia Velazquez (D-NY) expressed her intention to introduce a similar bill in the House of Representatives.