Yves here. In this Real News Network segment, notice the parallels between the treatment of Puerto Rico and that of Detroit. But the added feature is the role of vulture funds.
GREGORY WILPERT, TRNN: Welcome to the Real News Network. I’m Gregory Wilpert, coming to you from Quito, Ecuador.
The U.S. Senate gave solid approval on Wednesday to a relief plan to help Puerto Rico address its $72 billion debt.
SPEAKER: The Ayes are 68, the Nays are 30. Motion to concur is [read.].
WILPERT: This sends the measure to President Barack Obama for his signing into law just ahead of a possible default by the U.S. territory on its next debt payment. Obama said in a statement he looked forward to signing the bill into law.
The legislation would create a federal oversight board appointed by Washington with the power to restructure Puerto Rico’s unimaginable debt load. Many Puerto Ricans are leery of the proposed oversight board, fearing it could usurp the island government and place investor concerns over local priorities. A Republican provision might also lower the minimum wage for some young workers from $7.25 to $4.25 per hour, and weaken overpay rules.
Senators Bob Menendez and Senator Bernie Sanders lead the opposition in the Senate, decrying the bill as “neo-colonialism,” and U.S. Senator Elizabeth Warren also voted against the bill. But many Democrats and liberal groups such as Jubilee USA and Center for American Progress supported the bill. Its CEO, Neera Tanden, said in a statement there are parts of the bill that could be improved, but, quote: “Given the severity of the situation in Puerto Rico, this legislation represents necessary and immediate aid for the territory to prevent a needless catastrophe. I applaud Congress for working to pass this bill, and look forward for its swift and fair implementation.”
Now joining us from Bridgeport, CT to discuss this is Julio Lopez. Julio is a lead organizer for the group Make the Road, an immigrants’ and workers’ rights organization based in Bridgeport, CT. Julio also leads the Puerto Rican work on the hedgeclipper campaign that looks to hold accountable the Wall Street hedge fund billionaires for their impact that they’ve had on the Puerto Rico crisis. Thanks, Julio, for joining us.
JULIO LOPEZ: Thank you for having me.
WILPERT: Puerto Rico was supposed to pay a nearly $2 billion debt payment on July 1, which it would have defaulted on. And Neera Tanden, who I quoted earlier, says a default would have led to a needless catastrophe for Puerto Rico. Would you agree with that assessment? Will the PROMESA bill, as it’s called, rescue Puerto Rico from a catastrophe?
LOPEZ: I think the PROMESA bill will help Puerto Rico restructure its debt, that is true. Part of what it does is it puts a moratorium on the debt payments for two years. Unfortunately, our concern is apart from putting that moratorium for two years it’s not really addressing the needs of the Puerto Rican people, the working people of Puerto Rico, and what it’s doing is actually accentuating what’s happening by imposing many more austerity measures.
WILPERT: Tell us about–and I mentioned one of the austerity measures, which was the reduction of living wage for young workers. What other measures does this bill include that would harm the population?
LOPEZ: Well, in Puerto Rico for the last three years we’ve seen how austerity measures have been creeping up. So we’ve had the fact that taxes have been raised to a point where people in Puerto Rico pay about 11 percent of taxes in whatever they buy. There’s been closings of 150 schools, hospitals have gone without electricity, and you know, special services providers have been unpaid for months.
PROMESA doesn’t have any type of an economic incentive, which means that we can argue on the letter of the law. It talks about consolidating agencies, it talks about lowering the minimum wage, it talks about taking really drastic measures to make sure that, you know, at the end of the day we pay the bond holders. So we don’t foresee this having any sort of direct impact on things that are getting really bad.
On the contrary, we think things are getting worse, are going to get worse, because the fiscal control board is going to have power to not only oversee the budget of Puerto Rico, but also review it to a point that they can actually deny a review board. And the fiscal control board is made in a way that is not really about making sure people eat in Puerto Rico. It’s about making sure that the people that we owe money to are paid.
WILPERT: Well, that was actually going to be my next point, about the fiscal review board. Bernie Sanders actually referred to it as a form of colonialism. I mean, would you agree with that assessment? I mean, what, would it basically be able to pretty much take over the responsibilities of the government and in effect place an administrative body that’s unelected in control of the territory of Puerto Rico?
LOPEZ: Well, you tell me. It’s seven people who are not from Puerto Rico, most of them. I think there’s a requirement for one or two to have a resident in Puerto Rico. They are going to have power to review the budget. They are going to have power to take down laws that don’t necessarily, aren’t in line with what the PROMESA bill has. The ironic part is we already know Puerto Rico is a colony, so I don’t think anybody’s saying, oh, Puerto Rico is now a colony. What really this brings into light is the fact that we are a colony, and what they’re doing is imposing this imperialistic control board that’s really going to determine the livelihood of Puerto Ricans for the foreseeable future.
And one of the things that the bill says is that it has the power to be extended if things don’t look good. So it’s one of those, like, open-ended fiscal control boards that say, you know, your democracy is as good as your ability to pay your debtors and the hedge fund people that have been really slamming on Puerto Rico for the last year.
WILPERT: And so, I mean, what do you think a better solution would have looked like? I mean, if, I mean, we mentioned earlier in the beginning that a bill saves Puerto Rico at least to some extent from the default and all of the implications. But what should have the bill included instead of what it’s doing right now, in your opinion?
LOPEZ: It should have been just the bankruptcy that Puerto Rico was asking for for the last year. Puerto Rico was taken its ability from being bankrupt in the ’80s. Nobody really understands why. But that means that municipalities and public corporations have no, no sort of, you know, way of restructuring their bill.
So in many ways you’re saying that a person that has no money and really bad credit gets a really bad credit card, and at the end of the day it can’t do anything. It can’t go to the IMF because it’s a colony, it can’t go to other countries because it’s a colony. And the only government that’s supposed to be supporting Puerto Ricans and the 3.5 million Puerto Ricans that live on the island is saying that the only thing that they’re going to do is impose a fiscal control board that is going to watch out more for the billionaires and millionaires in Wall Street than it is going to watch out for the millions of Americans living on the island.
WILPERT: But so many politicians and organizations seem to be supporting the bill, such as I mentioned earlier of the Center for American Progress, and also Jubilee USA. They’re all supporting it, as well as, of course, Obama and most Democrats, it seems. Why do you think that is? Are they lacking information, or they just don’t care about Puerto Rico? What’s going on here?
LOPEZ: It’s difficult for me to say that they don’t care about Puerto Rico. People, you know, the people at Jubilee are really good people that I know have the best interests at heart. We also know that our representatives, congresswomen and men have really been pushing hard to make sure that a good solution is done in Puerto Rico.
Our worry is that when you have, you know, I think there’s five people running for governor in Puerto Rico, and all of them have said no to the PROMESA bill. And when we know that 51 percent of the Puerto Rican people are against this bill, I think it’s rather ironic and sad that the people on the mainland are not respecting the will of the Puerto Rican people, even if they have good intentions.
WILPERT: Of course, one of the big questions that many people [inaud.] we don’t have much time to get into this. But if you could just briefly explain, and just perhaps this part of the problem is, like you said, the people on the mainland don’t really know, perhaps, what’s going on. How did Puerto Rico get into this situation? Just, you know, because we’re almost running out of time. How did this come about?
LOPEZ: So, I would say there’s 118 years of colonialism that have made it difficult for Puerto Rico to create a really robust and effective economics system. We’ve had tax breaks that have gone away for the last 15 years. We’ve had inefficient government.
But I think most importantly over the last two years, a lot of hedge funds and mutual funds came into Puerto Rico like they did in Argentina and Greece. They bought the debt for 30 cents on the dollar, which means that they are now asking for a dollar when they bought it for 30 cents. And when the Puerto Rican government was unwilling to pay, because it had no money, those same hedge funds and mutual funds were like, no, we want our money now, very similar to what they did in Argentina.
And that has meant that the government, because it doesn’t have any ability to pay, has been forced to pay the bond holders and has been forced to make really bad, you know, not bad, but really extreme decisions to keep the government afloat. And really, that has resulted in what we have now: a government that’s extremely broke, a Puerto Rico where 50,000 people or more are leaving the island, and the people that are staying are just suffering through whatever the U.S. government seems to want to impose.
WILPERT: So what do you think would be a way to get Puerto Rico out of that situation? I mean, right now there’s, like you mentioned, an enormous amount of immigration, poverty is at 45 percent, 13 percent unemployment. Given this PROMESA bill, which is going to help only to a very limited extent, what do you think would have to happen in order for the situation to improve right now?
LOPEZ: Well, the United States needs to take responsibility for the colony they took 118 years ago. They should be investing in Puerto Rico instead of making Puerto Rico foot the bill for a terrible fiscal control board. Like, the fiscal control board is going to cost more than $300 billion dollars. And this is a fiscal control board that, important to mention, they can actually receive gifts. So just, I’m just throwing that out there.
What we need to do as a Puerto Rican people is make sure that we’re mobilizing like we’re doing, that we’re moving in the island, that we’re trying to move the base. And now that we have this fiscal control board we need to make sure we hold it accountable. We don’t know who the people that are going to be on the fiscal control board are going to be, but what we know is whenever they are appointed we need to make sure that they are doing the right thing for Puerto Rico.
WILPERT: Okay. Well, thanks so much, Julio, for joining us on the program.
LOPEZ: Thank you.
WILPERT: And thank you for watching the Real News Network.