Give Puerto Rico Bankruptcy Protections
Time is running out for Congress to help save Puerto Rico from a financial debacle that could very soon turn into a humanitarian crisis. The magnitude of this emergency, and its effect on all Americans, cannot be overstated. We have heard from Puerto Rican, congressional and local leaders across the country that we need urgent action. We are joining a coalition of mayors representing more than 1 million Puerto Ricans on the U.S. mainland in urging Congress to help our fellow Americans by restoring the commonwealth's bankruptcy protections in the omnibus appropriations funding bill.
The problem is straightforward, and so is its solution: Most analysts agree that Puerto Rico has run out of money to pay its creditors and is deploying onerous and unsustainable emergency liquidity actions.
Governor Alejandro García Padilla has warned that Puerto Rico is close to defaulting on $72 billion in loans owed by the island and its public corporations. Forcing the island to pay this debt would lead to severe layoffs and furloughs. The failure to pay its obligations would result in the gradual collapse of local institutions, higher unemployment, further brain drain and loss of critical services -- unless the federal government intervenes now.
Our obligation to support and protect Puerto Rico in its time of need -- to help our fellow Americans -- should be self-evident.
From Tampa to New York, from Philadelphia to Milwaukee, our cities are strengthened by Puerto Rican communities. This crisis creates unsustainable financial burdens for many of our cities’ families and touches us very closely.
It should also hit close to home for all Americans, as Puerto Ricans’ commitment to our nation is unwavering. We must not forget that more than 3.5 million Puerto Ricans residing on the island, and about 5 million living stateside, are U.S. citizens who have contributed immeasurably to this nation. Since World War I, they have given their lives for the U.S. when it has needed protection. It’s our duty to honor our shared bond and bring our brethren back from the brink.
This fall, President Barack Obama acknowledged the magnitude of the problem, and released a legislative package designed to help Puerto Rico. But Congress hasn’t acted, dangerously letting the economic fate of Puerto Rico fall victim to partisan bickering and inaction -- despite the good, persistent work of many members who understand the seriousness of this issue. The situation worsens with every day of delay.
There is legal precedent to allow bankruptcy protections. Congress previously allowed Puerto Rico’s municipalities and public corporations to seek federal bankruptcy relief, but in 1984, Congress singled out Puerto Rico and barred it from the same protections given to the 50 states. There is no basis for this unequal treatment.
We are not asking Congress to do anything it would not do for other parts of the U.S., and when we remember that our federal government bailed out Wall Street with a $700 billion investment, the money needed to save the island from a humanitarian crisis sounds pretty reasonable.
Leaving Puerto Rico in a state of fiscal uncertainty is not only unacceptable but also un-American. There is too much at stake for too many people to delay any further.
The legislative solutions proposed by the president and members of Congress would give Puerto Rico bankruptcy protections and debt-restructuring powers; strengthen the economy by creating parity between Puerto Rico and the 50 states in access to health care, and to the earned income and child tax credits; and establish a framework for oversight of reform on the island, while preserving its local decision-making power.
We are encouraged by President Obama’s commitment to Puerto Rico. We are encouraged that Puerto Rico was able to make its debt service payment this month. But we need Congress to take meaningful steps to avoid the terrible consequences of an imminent default, with another debt deadline approaching on Jan. 1.
Although the island is in dire straits, its fate is not yet sealed. Congress must step up quickly, compassionately and patriotically. Provide Puerto Rico with the protections, equal treatment and support it needs to overcome its fiscal and economic crisis. The island’s future hangs in the balance -- and with it, the health, well-being and livelihood of millions of our fellow Americans.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the editor responsible for this story:
Stacey Shick at email@example.com