5 takeaways from the U.S. Treasury’s Analysis of the Situation in Puerto Rico Hearing
Last week, the United States House Committee on Natural Resources held a hearing to hear the analysis of the US Department of the Treasury on the Puerto Rico economic crisis. Here are the top five takeaways from the hearing, which is expected to lead soon to the passing of legislation to address the crisis.
1. Puerto Rico needs equal treatment
‘’Puerto Ricans are American enough to fight US wars, but not American enough to vote for president’’ said Pedro Pierluisi, the resident commissioner of Puerto Rico. In this statement he was referring to one of the different inequalities Puerto Ricans face due to their status, which restricts the island’s rights. Pierluisi explained how the lack of federal support has led to a sputtering economy and has pushed local leaders to overtax citizens and businesses in order to compensate for the shortfall caused by this unequal treatment.
2. Oversight and the restructuring are the key to survival
Following the inability of Puerto Rico to achieve parity under Medicaid when Congress enacted the Affordable Care Act, resident commissioner Pedro Pierluisi expressed his concern on how Congress can better deal with this issue. Treasury advisor Antonio Weiss explained that despite the status issue, the best approach, which will assure a long solution for the territory, is the pairing of oversight and debt restructuring.
3. Puerto Ricans should be included in decision making
This point has been discussed in previous discussions in the House Committee on Natural Resources, and for representative Luis V.Gutierrez, there should a fair distribution of power between Puerto Ricans and the US Congress. The main point of representative Gutierrez, is that there has been a burden placed on the people of Puerto Rico through different policies such as the Jones Act of 1920, and for Gutierrez, the solution to these issues is to listen to the people.
4. Negotiations between the government and creditors are inevitable
Although Pierluisi emphasized that the only way out is to grow economically, he admitted to the financial difficulties the island is facing which include massive defaults. According to him, in order to avoid the inevitable, Puerto Rico should have access to the markets, and comply with its payment obligations to the market. Secondly, he stated, the oversight board should have restructuring authority, that would help engage in the negotiation between creditors and the government, hence leading to a compromise between the two sides.
5. There are several economic reforms to consider
In addition to the proposition to extend the EITC (Earned Income Tax Credit) to the people of Puerto Rico, representative Ruben Gallego (D-AZ) suggested that a possible long term solution to the economic difficulties would be extending hubzone status to the islands. He cited the success it has brought to his constituents of Phoenix. To Gallego, this will help increase economic activity and bring new industries which will be helpful to the staggering economy of the territory.