On Monday, Alejandro García Padilla, Governor of Puerto Rico, told a television audience that the island commonwealth is just days away from a historic economic collapse and is unable to repay its estimated $72 billion in debt. The threat of default has been the subject of talk among Puerto Rican political and community here, on the island and across the United States.
Earlier this month, Bronx Borough President Ruben Diaz convened a coalition of elected officials, healthcare and business leaders and other interested people urging action on Puerto Rico’s debt crisis. “Although we may differ on Puerto Rico’s political future, elected officials from New York have been united in our efforts to ensure that we find solutions to this crisis,” said Congressman José E. Serrano.
BP Diaz, Elected, Business & Healthcare Leaders Demanded Action for Puerto Rico Earlier This Month
Rep. Serrano,the most senior Member of Congress of Puerto Rican descent, urged action by interested parties inside and outside the island to come together and jointly find solutions to get Puerto Rico on the path of long-term sustainable economic recovery.
“The federal government has an important role to play and I encourage the Obama Administration and Congress to give the island the attention it deserves,” said Serrano. He urged his colleagues in Congress to pass the Puerto Rico Chapter 9 Uniformity Act (H.R. 870) which will provide the island’s government with the tools needed to restructure parts of its debt under federal bankruptcy law.
The bill would let certain large public corporations on the island declare bankruptcy, allowing them to reduce debt with a current face value of about $25 billion, out of Puerto Rico’s total $72 billion in bonds. The commonwealth itself would remain excluded from bankruptcy.
“There also needs to be [greater] fairness in how Puerto Rico’s health care system is treated by the US Department of Health and Human Services,” added Serrano.
“The Obama administration’s underfunding of healthcare is blatant discrimination against Puerto Ricans. We are not asking for special treatment,” said Dennis Rivera, Chair of the Puerto Rico Healthcare Crisis Coalition. “We pay the same Social Security and Medicare taxes, but get less than Americans who live on the mainland. I ask President Obama: why is the healthcare of Puerto Ricans worth less than that of other Americans?”
Borough President Diaz called the situation in Puerto Rico dire and demanded immediate action by the federal government. “I have, and will continue to, push for federal legislation that would allow the commonwealth of Puerto Rico to declare bankruptcy and restructure its debt, ” said Bronx Borough President Ruben Diaz Jr.
Yahoo! Financial News reported that stocks tumbled on news of the debt crisis facing Greece and Puerto Rico. MBIA, one of the largest municipal bond issuers, saw its stock plummet about 20 percent on heavy volume in Monday trading.
The Wall Street Journal reported that most observers don’t see any easy way for the U.S. commonwealth to avoid default.
There are also nearly 4 million U.S. citizens currently living in Puerto Rico, plus 4 million more living in the 50 states, who are affected directly and indirectly by this crisis. As a result of the growing debt and joblessness, skilled Puerto Rican residents have left the island.
The debt crisis can be traced to the island’s commonwealth (ie, colonial) status which leaves the island government unable to negotiate trade deals or open its ports to foreign imports and dependent on Congressional goodwill and tax policies benefiting US corporation rather than island residents.
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