The future of Senator Sanders’ “Marshall Plan” for Puerto Rico and the US Virgin Islands

by | Jan 4, 2018 | Economy | Comments

Following World War II, the United States provided Western European countries with over $12 billion in funding in order to assist in the redevelopment of infrastructure and capital projects to rebuild the shattered economies in the wake of years of armed conflict. On Tuesday, November 28, Senator Bernie Sanders (I) of Vermont and Senator Elizabeth Warren (D) of Massachusetts released a similarly targeted “Marshall Plan” for Puerto Rico.

The proposed plan includes $146 billion worth of overall funding for Puerto Rico and the US Virgin Islands, and would provide $13 billion for the Federal Emergency Management Agency (FEMA) to continue redevelopment of the damaged electrical grid, $62 billion in direct government funding, and $27 billion for infrastructure repairs.

A unique aspect to Sanders’ bill is the inclusion of funding and development goals for renewable energy sources. As it stands, the plan would provide $468 million for grants targeted at improving energy efficiency in homes and providing individuals and municipalities with solar panels and wind turbines. Puerto Rico is now being seen as an area where renewable energy could thrive under a redeveloped economy. The U.S. Virgin Islands is also location where development and advancement of solar and wind energy takes place. Despite Democratic co-sponsors that include Senators Richard Blumenthal of Connecticut, Ed Markey of Massachusetts, Kirsten Gillibrand of New York, and Kamala Harris of California in addition to Elizabeth Warren, the plan proposed by Sanders is not expected to reach a vote in the Senate as a result of partisan disagreements.

Besides providing significantly greater amounts of funding than previously proposed, with only $36.5 billion being approved in October that was also split between relief efforts in California, Texas, and Florida, Sanders’ relief plan would restrict the privatization of current public entities in Puerto Rico and the US Virgin Islands from receiving federal funding.

This specific stipulation would directly interfere with the aspirations of many Republicans in Congress who hope to partially or completely transition government-owned entities in Puerto Rico and the US Virgin Islands, such as the Puerto Rico Electrical Power Authority (PREPA) and the US Virgin Islands Water and Power Authority, into private corporations. The bill as it stands would primarily place recovery efforts and discretionary funding in the hands of public institutions, such as the Puerto Rico Energy Commission, to implement plans for future power restoration and development, as well as overall debt relief, using the allotted funding.

Aside from the partisan divisions the bill would likely face based on its protection of government-owned entities, there will also be little chance of the bill making it to the Senate floor while Republicans in both the House and Senate are preoccupied with pushing through a new tax plan. In addition to redirecting congressional focus from relief efforts in Puerto Rico and the US Virgin Islands, the proposed tax plans that have recently passed through both the House of Representatives and Senate would take a major toll on the already fragile economies in the U.S. territories. The tax plan passed by the House of Representatives would increase the excise tax on offshore business transactions by 16%, likely causing major US manufacturers with operations based in Puerto Rico, such as Amgen and AstraZeneca, to cut jobs and abandon production based on new changes in the tax code.

The new “Marshall Plan” proposed by Senator Sanders reflects a sense of commitment and unity to Puerto Rico and the US Virgin Islands in the wake of immense economic and infrastructural difficulties. However, in contrast to the original Marshall Plan implemented almost seven decades ago following the end of World War II, Sanders relief plan is set to face staggering levels of contemporary partisan gridlock. Despite the widespread assistance Sanders’ plan would provide in the redevelopment of Puerto Rico and the US Virgin Islands, the bill appears to be set for an uphill battle to achieve bipartisan support moving forward.