With the commonwealth in fiscal crisis, the U.S. Senate is considering a bill called the Puerto Rico Assistance Act of 2015. It offers minor assistance: a temporary reduction in payroll taxes and a “development fund” of $3 billion.
But the real purpose of this bill is the installation of a six-member Financial Control Authority. That authority, if it gets the chance, will rule over Puerto Rico. Completely.
Anyone who lived through New York’s fiscal crisis knows that extraordinary measures are sometimes necessary to rescue a state or territory in dire straits.
PUERTO RICO DEBT CRISIS NEEDS TO BE SOLVED, OFFICIAL URGES
What this legislation contemplates is beyond extraordinary; it is essentially the destruction of whatever semblance of genuine democracy currently rules the island.
According to the bill, five members will be appointed by the U.S. President. The sixth will be the Secretary of the U.S. Treasury, who will also serve as Chairman. The chair will have two votes on all matters, and the other five members will each have one.
What are its powers? It will unilaterally “re-structure the workforce of the Commonwealth government” , freeze public pensions and ensure “the payment of debt obligations.”
It will supervise the finances of the entire commonwealth government (page 38), legislature and courts (page 39), public authorities (page 42), pension system (pages 39, 152) and all leases, union contracts and collective bargaining agreements (page 114).
The authority will also make “recommendations” on all the financial affairs of Puerto Rico — including all personnel salaries, firing of workers, reduction of pensions, elimination of services and the use of “alternative service delivery mechanisms, including privatization and commercialization.”
But if the governor or legislature resist any of these “recommendations,” the authority can “take such action as it determines to be appropriate.” In other words, it can ignore the insular government, and implement any recommendation it wants.
Anyone — public official or otherwise — who defies or obstructs the Authority, will be guilty of “criminal misdemeanor” and subject to suspension without pay, and removal from office.
That’s not where the takeover ends. The authority can issue debt, hold it in an escrow account and lend it to Puerto Rico “at such times as it considers appropriate.” Alternatively, these funds could be used for “any other purpose that the Authority considers appropriate.”
The authority will “grant a security interest in revenues to individuals or entities purchasing bonds, notes or other obligations.” In other words, the physical infrastructure of Puerto Rico (highways, bridges, schools, prisons, electrical grid, water supply, public housing, prime coastal real estate) will be held as collateral for the debt decisions of this Authority.
The Senate bill is careful to mention that “the United States is not responsible for any principal or interest on any bond, note, or other obligation issued by the Authority.” Thus Puerto Rico — its taxpayers and its physical infrastructure — will be solely and exclusively responsible for repayment of the authority’s debt.
As they used to say on TV, but wait — there’s more. The authority will also have prosecutorial powers. It is authorized to “conduct necessary investigations” into the government of Puerto Rico, empowered to hold hearings, secure government records, demand evidence, take testimony, subpoena witnesses, and administer oaths — under penalty of perjury — to all witnesses.
The governor of Puerto Rico, Alejandro Garcia Padilla, recently stated that “he would accept a federal fiscal oversight body, as long as it respects Puerto Rico’s autonomy.
This Authority would be the governor, banker, judge, jury and prosecutor of Puerto Rico. It will manage the island’s entire economy and be accountable to noone on the island. It will tell the entire Puerto Rican government what to do, when to jump, and how high. It will issue debt, spend the funds as it sees fit, and leave Puerto Rico to pay the bill.
This is where our “commonwealth” relationship has gotten us: a dictatorship in the Caribbean, created in Washington, operated from Wall Street, all disguised as a “management assistance authority.”
As the leader of the free world, the U.S. can do better than this.