Antonio Weiss, Counselor to US Treasury Secretary, spoke at a panel discussion on Friday at the Bipartisan Policy Center. He made it very clear that the status of Puerto Rico is a root cause of the troubles Puerto Rico currently faces.
Puerto Rico is deeply in debt, losing population at a startling rate, and trying to cope with a new tropical disease while receiving unequal federal funds under Medicaid and other social problems. The number of people living in poverty in Puerto Rico is far greater than in any of the States, and the local government is insolvent and unable to provide needed services for the residents.
The discussion at the Bipartisan Policy Center examined some of the options being proposed to help Puerto Rico deal with the current debt and economic problems. So far, several plans have been proposed, but Congress has taken no action.
“There is no question that status is vitally important,” Weiss said. “I mean, why are we proposing that restructuring authorities, and EITC, and fair Medicaid treatment be provided to Puerto Rico? Well, as a territory, Puerto Rico’s status does not afford it adequate tools in those three areas… [O]ver a long period of time, status has contributed to this crisis.”
Pedro Pierluisi quoted Weiss in a speech before the Congress on February 10th, and emphasized the relationship of the status issue to the ongoing problems in Puerto Rico.
“The record demonstrates that there is not a single crisis in Puerto Rico,” he said, “but a series of intertwined crises. It is an economic crisis, a fiscal crisis, a liquidity crisis, a debt crisis, a migration crisis, and a public administration crisis. If you visualize Puerto Rico as a tree, and each crisis as a withering branch, the root of the tree is Puerto Rico’s unequal and undignified political status. While the immediate aim is to mend the branches, ultimately we will need to attack the problem at its root—and that means Puerto Rico must become a state or a sovereign nation.”
Pierluisi went on to outline three characteristics that a Congressional plan for Puerto Rico would have to show:
- The plan would have to offer some option for restructuring debt. Extending chapter 9 bankruptcy protection is one option that many observers favor.
- “The bill should address the outrageous disparities that Puerto Rico faces under key federal programs, a main driver of our deficits and debt,” Pierluisi said. “Consider that, historically, Puerto Rico received $300 million dollars in annual Medicaid funding, while similar-sized Oregon receives $5 billion dollars. I challenge any state to run a decent Medicaid program with that insulting sum without over-borrowing in the capital markets. Impossible.”
- The bill may need to include a fiscal oversight board, as most participants in the most recent Congressional hearing on Puerto Rico agreed. However, said Pierluisi, “There is no reason why future Puerto Rico leaders cannot embrace fiscal discipline—as distinct from austerity—and rapidly put the oversight board out of business.”
Over the long run, Puerto Rico has not fared as well as even the poorest States. The reason, experts agree, is the status of Puerto Rico. Short-term measures are top of mind for Congress right now, but Congress has a responsibility to resolve Puerto Rico’s status permanently.
Read the full text of the speech.
