Republicans may have dodged a bullet by reaching a compromise on legislation (H.R. 5278) to restructure Puerto Rico’s $70 billion debt, but there’s more incoming fire.
Puerto Ricans living on the island can’t vote for president, but that changes once they move to the mainland. And they’ve been coming to Florida (where they’ll soon outnumber Cuban-Americans) in record numbers, swelling to 1 million. Since they tend to vote Democratic, they may turn Florida from battleground to blue.
{mosads}This is terrible news for presumptive Republican nominee Donald Trump, who’s banking on the Sunshine State. Nonetheless, Trump came out against the bill, agreeing with many Republicans that it was a bailout. But Speaker Paul Ryan (R-Wis.) did the electoral math and made resolving the Puerto Rican crisis a priority.
And it is a crisis. Since 2006, a severe recession has crippled the island’s economy and left a budget deficit of over $20 billion. Puerto Rico has the highest unemployment rate in the nation, above 12 percent, and a poverty rate of 45 percent, higher than any state. Home foreclosures are up 89 percent from 2008, and 20 percent of housing units are empty. Public services have been curtailed because the government has run out of cash, and more than 100 schools and a children’s hospital have closed, despite an outbreak of the Zika virus. The island has seen a 10 percent drop in its population over the last 10 years. Over 100,000 left for the mainland last year, causing a brain drain and further depleting the tax base.
The Obama administration’s point man is Antonio Weiss, a former Lazard investment banker whose nomination for the No. 3 job at the Treasury Department was torpedoed by Sen. Elizabeth Warren (D-Mass.), yet now serves as an adviser to Treasury Secretary Jacob Lew. Weiss (not Latino, though Latin, as in Italian) is a Yalie who was formerly publisher at the Paris Review. Warren felt he was too close to Wall Street. And according to Presente.org, Weiss “received a golden parachute from Lazard after helping them target Puerto Rico for predatory lending, and it’s outrageous for him to lead the Treasury’s response to the crisis he helped manufacture.”
The cornerstone of the bill known as the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) is the creation of an oversight board to restructure the debt. In Spanish, promesa means promise, a sad irony to some. Puerto Rican Governor Alejandro García Padilla has grudgingly relented, despite fears it will infringe upon the island’s self-governance. But he has few options and time is running out, since $1.5 billion in debt payments comes due on July 1.
There are 5 million Puerto Ricans in the U.S. (compared with 3.5 million on the island), just 9.5 percent of the Latino community. So while the issue is not top of mind for most Latinos, members of the Congressional Hispanic Caucus have supported the legislation with some reservations. “Real progress has been made to make a comprehensive restructuring process truly accessible for Puerto Rico, which is the most critical component of the bill,” said Rep. Nydia Velázquez (D-N.Y.).
But the White House has been enlisting Latinos to push for passage of PROMESA. Secretary of Housing and Urban Development Julián Castro just returned from the island with a delegation of community leaders that included José Calderón, president of the Hispanic Federation; Janet Murguía, president of the National Council of La Raza; and Brent Wilkes, executive director of the League of United Latin American Citizens.
Currently, one-third of Puerto Rico’s income goes to pay creditors. Holders of the municipal debt in question include hedge funds Monarch Alternative Capital, Davidson Kempner Capital Management and Stone Lion Capital Partners. Are they worth all the fuss? They’ve hired lobbying muscle in former Rep. Connie Mack IV (R-Fla.), who argues that debt restructuring will give them only cents-on-the-dollar, and encourage other municipalities in the U.S. to back out of their obligations as well.
But according to Treasury Secretary Lew, “The reality is if the economy of Puerto Rico doesn’t come back, the bondholders are not going to do well.”
This fiscal havoc muddles the broader issue of Puerto Rico’s status. According to a recent poll, only 43 percent of Americans think Puerto Ricans are U.S. citizens. But they have been since the Jones Act in 1917, when the U.S. needed soldiers for World War I. The U.S. had gobbled up the island in 1899 following the Spanish-American War.
Though only a small percentage of Puerto Ricans support independence, many are deeply skeptical of statehood. So in the foreseeable future, they’ll remain between a rock and a hard place, as a “commonwealth” which resembles a colony. Puerto Ricans pay no federal income tax but have only one member of Congress, who can’t vote on the House floor, and no say in the laws that govern them.
Meanwhile, they keep moving to Florida, and could well decide the election.
Estrada is the editor of LATINO Magazine.