House Bill for Puerto Rican ‘Debt Relief’ Is an Obscenity
May 19, 2016 (EIRNS)—The bill released late last night by the House Natural Resources Committee (HNRC), H.R. 5278, allegedly providing Puerto Rico with a debt-restructuring mechanism to prevent a horrific humanitarian crisis, is a real obscenity. Its central feature is blackmail—Puerto Rico can only restructure its debt if it accepts a draconian, three-year financial control board, six of whose seven members will be chosen by Barack Obama.
Governor Alejandro García Padilla said today that the control board, which strips Puerto Rico’s government and Congress of any power to determine financial and budgetary matters, is "unacceptable," and violates the island’s "self-governance." This bill, said Senate President Eduardo Bhatia, demands "that we be prisoners in our own land, telling us we can’t have any mechanisms to restructure the debt, and yet will impose on us...a board that will tell us when we can enter and leave the prison." He likened this to 18th- or 19th-Century debtors’ prison, El Nuevo Dia reported.
HNRC chairman Rob Bishop (R-Utah) says he will submit the bill to a committee vote next week, and then to the full House next month. But brawls within the committee are ongoing, and there is no guarantee the bill will even be passed there.
According to the HNRC’s summary of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), the control board has "exclusive control" over the island’s finances. The government must produce a "fiscal plan" which the board will enforce. It has full authority to enforce balanced budgets and government reform, if the island government doesn’t, and can force the sale of government assets and reduce the size of the workforce. Bottom line? PROMESA holds "supremacy over any territorial law or regulation that is inconsistent with the Act" and can "prevent the execution of legislative acts, executive orders, regulations, rules and contracts that undercut economic growth initiatives or violate the Act." One of its provisions reduces the minimum wage to $4.25 per hour for youth under the age of 25.
The bill specifies that "pre-existing debt priorities" must be respected, and the control board, "in its sole discretion," will determine which public entities can even be "certified" as debtors, after they meet a set of stringent conditions.