This summer, all eyes turned to Puerto Rico. For a few short weeks, Capitol Hill was forced to acknowledge the problems the American protectorate had been having for years. On June 30th, 2016, the House passed the PROMESA Act (also known as the Puerto Rico Oversight, Management, and Economic Stability Act) which prevents Puerto Rico from being sued for not paying its bond payments. These bond payments have totaled nearly $2 billion, leaving Puerto Rico with no options other than to shut down the government (1). This bill helped to prevent the total shutdown of social services by halting ongoing lawsuits against the country(2). This was by no means a perfect solution, but rather a last minute band-aid to stop the catastrophic economic bleeding.
PROMESA or H. R. 5278 received bipartisan support in Congress by leaders on both sides including House Minority Leader Nancy Pelosi and Speaker of the House Paul Ryan. Still, many criticized the bill for its infringement of Puerto Rican sovereignty and its many unclear long term consequences. This law does not provide Puerto Rico a bailout or allow it to file for bankruptcy, as it is not a state, but rather a commonwealth (3). The law will institute a $4.25 minimum wage for at least four years for people who are under twenty-five (4). The most controversial aspect of the new law is that Puerto Rico’s fiscal plan would have to be approved and monitored by an oversight board chosen by Congress and the President. While many Puerto Ricans wanted the bill to pass in order to save themselves from the immediate consequences, the long term effects could further hurt the island.
Since the bill has passed, Republican and Democratic leaders in the House and Senate have submitted potential members of the board and President Obama has selected its members(5). The six-member board is a mix of Puerto Ricans and Washington economic experts. Two of the Washington experts are Andrew Briggs, a scholar at the American Enterprise Institute, who worked on Social Security Reform under the Bush Administration and the Honorable Arthur Gonzalez who sat on the Southern New York Bankruptcy Court and is now a law professor at NYU Law School. Ana Matosantos, a financial consultant for the Public Policy Institute, is another member who is not Puerto Rican. Still, there are some influential and experienced Puerto Ricans on the board such as Jose R. Gonzalez who previously worked with the Government Development Bank of Puerto Rico and is currently the CEO of the Federal Home Loan Bank of New York. Carlos Garcia also worked on the Government Development Bank of Puerto Rico as chairman and CEO as well as President of Santander Puerto Rico. Garcia also served on the Puerto Rico Public-Private Partnerships Authority where he helped to bring $3 million to the nation. The final member of the board is Jose Carrión III who was the chairman of the Worker’s Compensation Organization in Puerto Rico (6).
This group will work with Puerto Rico’s governor to create a long term economic plan. On November 8, the territory elected its newest governor, Ricardo Rosselló, a pro-statehood candidate, to deal with the economic crisis (7). The possibility of statehood for Puerto Rico is a controversial solution to Puerto Rico’s problem, one that is popular with many Puerto Ricans and much less popular on the Hill. The inclusion of Carlos Garcia, an avid statehood supporter, on the Oversight Board alludes to the potential of statehood discussion (8). Still, legislators on the mainland on both sides of the isle are unlikely to support statehood, especially if would mean offering the “insular territory” the same bankruptcy protection that is offered to states. For now the future is unclear, but with a new governor and a new American president, there is still a lot to be determined for the future of Puerto Rico.
1) White, G. B. (2016, July 1). Puerto Rico's Problems Go Way Beyond Its Debt. Retrieved October 31, 2016, from http://www.theatlantic.com/business/archive/2016/07/puerto-rico-promesa-...