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U.S. Treasury Secretary Lew Visits Puerto Rico

U.S. Treasury Secretary Jacob Lew visited Puerto Rico today to meet with island officials and discuss how to provide relief to the U.S. territory.

“This crisis is already imposing real hardship on the people of Puerto Rico in terms of basic healthcare, legal and education services, and significant unemployment,” Lew said, speaking of the debt crisis that has led to default on some of Puerto Rico’s obligations.  “And that hardship will only get more intense as the fiscal situation deteriorates. The population is shrinking as 3,000 Puerto Ricans leave the Island every week in search of better opportunities on the mainland.”

Lew went on to describe the fiscal situation facing Puerto Rico, saying, “Puerto Rico is already in default.  It is shifting funds from one creditor to pay another and has stopped payment altogether on several of its debts.  As predicted, creditors are filing lawsuits.”

He pointed out that pensions and tax refunds are already being affected, and assured his listeners that the Treasury Department is doing what they can to help. “But the fact is that no administrative authority can put an end to this emergency,” Lew went on. “Only Congress can enact the legislative measures necessary for Puerto Rico to resolve this problem.”

The Territorial Clause of the U.S. Constitution states that “Congress shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States.” 

Lew went on to describe the preferences of the Treasury Department. “The Administration submitted a proposal to Congress that would establish an orderly process for Puerto Rico to restructure its debts, paired with independent fiscal oversight that respects Puerto Rico’s self-governance.  In addition, we proposed initiatives that improve health care policies and provide incentives for employment to help solve Puerto Rico’s longer-term challenges.  A broad array of business, labor, and community leaders – in Puerto Rico and across the nation – strongly support this comprehensive package.”

Lew acknowledged that Congress has been discussing options and intends to continue to do so, with a March 31st deadline provided by House Speaker Paul Ryan. “Congress,” he insisted, “must pass legislation for the President to sign into law without delay.”

Lew met with the Governor of Puerto Rico and with the Resident Commissioner, Pedro Pierluisi, as well as holding roundtable discussions with leaders of the business community, labor leaders, and leadership from the Legislative Assembly of Puerto Rico. He emphasized that everyone in Puerto Rico is affected by the debt crisis, and that he is interested in the perspectives of a wide range of leaders.

The Secretary ended his remarks on an upbeat note, saying, “I believe that Puerto Rico can and will emerge from the current crisis and return to growth.  The fundamental question is when and at what cost.  The people of Puerto Rico are sacrificing, but unless that sacrifice is shared by creditors in an orderly restructuring, there is no path out of insolvency and back to growth. Without congressional action, Puerto Rico will face a long and difficult recovery that could have harmful consequences for the American citizens who call the island home.  That is why we have called on Congress to act without delay.”

However, some of the leadership in Puerto Rico wants more than a call to action for Congress. Pierluisi expressed his desire to see Lew use the power of the Treasury Department to make Puerto Rican leaders sit down with creditors and work out a plan, something they have not yet been able to do. Sources in Puerto Rico say that members of the Island’s legislature are determined to ask for concrete action on the part of the Treasury, with or without Congress.

The visit follows a letter sent by Secretary Lew to Congressional leaders last week, in which Lew explained how he would like to resolve the current fiscal problems:

“To address the crisis, Puerto Rico needs federal legislation that pairs an orderly process to restructure its debts with strong, independent fiscal oversight to remedy its history of fiscal mismanagement. This combination is not new and has proven effective in other jurisdictions in the United States addressing financial crises like that facing Puerto Rico today. Federally legislated restructuring and oversight would cost taxpayers nothing and is essential to put Puerto Rico on a sustainable path forward. In addition, legislation that improves health care policies and encourages work would help solve Puerto Rico’s longer-run challenges. A broad array of business, labor, and community leaders strongly support this package of proposals.

No administrative authority can put an end to this emergency; only Congress can enact the legislative measures necessary to fully resolve this problem. Six congressional hearings have been held by five different committees in the past year, with another hearing scheduled for later this month. It is time for Congress to act to provide order to a chaotic and worsening situation. The Administration remains committed to working with you and your colleagues to help put Puerto Rico on a sustainable path forward.”


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