Congress works to bring Puerto Rico out of debt


Private investors, Puerto Rican residents, bondholders and American citizens are in trouble because the Governor of Puerto Rico declared unofficial bankruptcy earlier this year.

The country has landed in $72 billion of “not payable” debt, according to the Governor of the U.S. territory, Alejandro García Padilla. According to When the Government Development Bank missed a major payment of about $400 million on Monday, private investors and Congress alike realized that Puerto Rico was drowning.

27 March 2012 - Washington, DC - Secretary of Labor Hilda L. Solis meets with Senator Alejandro Garcia of Puerto Rico and Cecille Blondet, Mr. Garcia's media assistant. *Official Department of Labor Photograph*** This official Department of Labor photograph is being made available only for publication by news organizations and/or for personal use printing by the subject(s) of the photograph. The photograph may not be manipulated in any way and may not be used in commercial or political materials, advertisements, emails, products, and/or promotions that in any way suggest approval or endorsement of the Secretary, or the Department of Labor.
Governor of Puerto Rico Alejandro Garcia Padilla called out for help for the island last summer, even saying Puerto Rico was in a “death spiral” of debt, according to the New York Times. In December of 2015, Padilla announced that he will not be running for reelection in November according to the New York Times.

The massive debt is icing on the cake of Puerto Rico’s financial problems, including a nearly 10 year recession. Unlike official states in the United States, Puerto Rico was able to issue tax-free debt, which was appealing to foreign private investors. Puerto Rico took out more loans than payable during the early 2000s in an attempt to stabilize the budget.

The island was then hit with another financial issue. In 2006, Congress took away tax breaks for Puerto Rico, and Residents started fleeing the island, leaving Puerto Rico with less tax revenue and more economic problems.

While the laws of being a territory of the U.S. helped bring Puerto Rico into their debt crisis, they stop the island from getting out of the debt. Territories of the United States aren’t allowed to declare bankruptcy like Detroit did in 2013. The federal government, as of now, does not have a plan of action to keep Puerto Rico afloat.

The Puerto Rico Stability Act of 2016, currently fighting through Congress, will fix that. The bill, if passed, will give power to the Secretary of the Treasury to help any U.S. territories with budgeting, make sure every business on the island uses the same financial system and anything else he/she thinks the country needs according to the official Congress website.

The bill will also give territories of the U.S. the ability to form a nine-member Fiscal Reform and Stability Board. The board, appointed by the President of the United States, Governor of the territory, chief justice and legislature of the territory, will work as a security net for regulation of government loans and taxes, and work to boost the economy. The bill even establishes a Chief Financial Officer to keep an eye on all government financial expeditions, and to report any financial interactions publically.

This bill would give Puerto Rico a plan to get out of this major debt crisis, and a security blanket for future financial emergencies. Congress is also working to get Puerto Rico admitted as a state with the Puerto Rico Statehood Admission Process Act according to

While the debt crisis hits the private investors’ wallets first, Puerto Rican Americans are concerned about Puerto Rico’s state.

Popular playwright of the musical Hamilton, Lin Manuel Miranda voiced his worries about Puerto Rico’s debt crisis in a rap. The Last Week Tonight with John Oliver show on April 24 was mostly discussing the Puerto Rican debt crisis, and included Miranda’s sharp performance of his Puerto Rican rap.

The rap, including a call-out from Miranda to Speaker of the House Paul Ryan to take immediate action, is not all Miranda has done to convince Congress that Puerto Rico needs American help.

Miranda also wrote an editorial in the New York Times, bringing the debate to a personal level for Puerto Ricans.

I am the son of Puerto Rican parents,” Miranda said. “What can I say to persuade elected officials and policymakers to act? What influence do I have to change the minds and hearts of those in Congress to put aside their differences and deal with the crisis confronting 3.5 million American citizens in the Caribbean?”

In his editorial, Miranda describes his summer visits to Vega Alta, Puerto Rico where he would sell candy to new students from his aunt’s school supply store. Now, according to Miranda, that shop, along with 150 schools and major parts of the San Jorge Children’s Hospital, are closed.

Miranda calls for Congressmen and women to forget about their political stances and come together to focus on the humanitarian issues of Puerto Rico’s dilemma.

“This is not a Republican issue. This is not a Democratic issue. This is an American issue,” Miranda said. “When 3.5 million of our citizens face the consequences of financial collapse, we should act.”

Giving Puerto Rico a way to reorganize its financial systems is sufficient Congressional action for Miranda. He says that issue of statehood is less important to consider while Puerto Rico is still in a state of emergency.

Luckily for Miranda, Congress is sending bills for both issues of statehood and emergency recovery.

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