After a public debate on how the debt crisis in Puerto Rico should be addressed, Congress is about to pass strong pro-reform legislation rather than one including a bailout and provision of Chapter 9 bankruptcy. It was clear where each side stood, the government of Puerto Rico demanded Chapter 9 bankruptcy and the administration of President Barack Obama stood for bailout and bankruptcy, while Congressional Republicans advocated reforms to address the crisis and bring about economic prosperity for the Commonwealth. The release of the legislation yesterday shows the pro-reform side as won, and there is a chance Congress will pass, and the president will sign, the strong pro-reform bill.
Given that we have a progressive Democrat as president, and we certainly haven’t been confident that Republicans in Congress will always stand up for what we believe in, there was reason to be skeptical and suspect taxpayers would saddled with paying for a bailout and bankruptcy for Puerto Rico. But sometimes they can surprise us, and the GOP leadership stood firm, and resisted the calls for bankruptcy, and as a result, we have a good strong pro-reform bill to support.
That legislation is the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), introduced by Rep. Sean Duffy (R-WI) as well as Reps. Rob Bishop (R-UT) and Jim Sensenbrenner (R-WI). This bill, if enacted, will create an Oversight Board to assist the Commonwealth in enacting reforms and reign in their out of control welfare state as well as managing their debts. It does not in any way bailout Puerto Rico with taxpayer funds, nor does it include or enable bankruptcy for the Commonwealth.
The current version of PROMESA creates an Oversight Board that will have the authority to enforce balanced budgets and government reform if the Commonwealth’s government fails to do these things. This board will have the authority to sell states assets, reform state-run enterprises, and it’s authority is supreme over that of the government of Puerto Rico. This means PROMESA is a tough pro-reform bill, it gives this Oversight Board the authority to do what is necessary to reform the financial and governmental sectors of Puerto Rico if the government of the Commonwealth fails to uphold their responsibility to get their house in order. This is exactly the kind of “tough love” the Commonwealth needs to fix its economic system and bring about the kind of lasting prosperity the people of Puerto Rico deserve. And it does this all without spending a penny of U.S. taxpayer money on any kind of bailout.
That is also why this legislation is supported by many grass-roots organizations representing American taxpayers, including Citizens Against Government Waste, Americans for Tax Reform, as well as Niger Innis of Tea Party Forward. The bill is clearly a win-win for the pro-reform side and advocates of fiscal conservatism and those who support the interests of U.S. taxpayers, are clearly in strong support of PROMESA.
Some has suggested there is bailout or bankruptcy hiding in the legislation, but this is simply not true. The bill spends absolutely no taxpayer money to bailout Puerto Rico or any of their state-run enterprises. Additionally, there is no provision of or support for bankruptcy in the legislation. While Chapter 9 bankruptcy is an option for municipalities or U.S. states under the 10th Amendment, it does not apply to Puerto Rico given its territorial status. Under PROMESA, the debts of Puerto Rico will be managed by the Oversight Board, and the process will not set any precedent or affect how any other debt crisis in any U.S. city or state will be managed. Puerto Rico, as a territory of the U.S., has its own unique legal status, and the reform and management of their debts under PROMESA will have no effect on any city or state in the United States.
This legislation is a good fiscally conservative, and pro-reform approach, to addressing the debt crisis in Puerto Rico. Anyone who represents the taxpayers of the U.S. and supports good strong fiscally conservative legislation should support Congress enacting, and the president signing into law, the PROMESA bill.