Trump and his unwitting attacks against the Oversight Board, in context
On October 23, the federally-appointed Puerto Rico financial oversight board unanimously approved a new plan to address the the bankrupt territory’s debt crisis in the wake of Hurricane Maria.
The revision, called an “austerity plan” by Governor Ricardo Rosselló, calls for a reduction of $427 million in government spending this fiscal year, with cuts climbing to $926 million by 2020. Included in the plan is an estimates $80 billion in federal disaster relief funding over the next $15 years, of which the federal government has already earmarked $60-65 billion. Both figures are considerably less than the $139 billion the governor estimates is needed for the recovery.
Projected in the plan is an estimated $15 billion budget surplus in 15 years, after all cuts to government spending.
The projection prompted President Trump to claim on twitter, without evidence, that unnamed politicians intended to use disaster relief funds to solve the territory’s debt crisis.
The people of Puerto Rico are wonderful but the inept politicians are trying to use the massive and ridiculously high amounts of hurricane/disaster funding to pay off other obligations. The U.S. will NOT bail out long outstanding & unpaid obligations with hurricane relief money!
— Donald J. Trump (@realDonaldTrump) October 23, 2018
The president has long criticized Puerto Rican officials, blaming them for both the Puerto Rico’s unique budget woes and for allegedly mismanaging the response to Hurricanes Irma and Maria, despite the territory having limited control of its own budget due to its relationship with the federal government.
In an October 23 press conference, Executive Director of the Oversight Board Natalie Jaresko rejected the claim that relief funds will pay off other obligations, and stated that the surplus projections aren’t affected by the funds except indirectly through the impact they will have on the territory’s economy. The board expects that spending relief funds on repairing the damage from the storms will stimulate economic growth, but does not intend to spend funds on existing debt.
President Trump did not follow up on his claim in further tweets.
Governor Rosselló also levied criticism on the board’s revised plan, even stating claiming on Twitter that he agrees with the president, although for different reasons.
I agree with you Mr. President, that’s why I’m opposing the Oversight Board’s outrageous plan that would severely hamper Puerto Rico’s recovery and growth.
— Ricardo Rossello (@ricardorossello) October 23, 2018
Rosselló has previously criticized the oversight board’s plans as too austere, and would cause hardship to the people of Puerto Rico. Though the territory’s government has a representative officer to the board, its seven voting members are unelected and not accountable to the people of Puerto Rico. The separation of Puerto Rico’s government from the board created by Congress in the Puerto Rico Oversight, Management, and Economic Stability Act explains the divergence of policy.
“Money will be available to bondholders, but to the detriment of the most vulnerable and our people. This is simply unfair,” said Rosselló, who argues that government services for citizens shouldn’t be drastically cut to pay down debt. In March, the governor said that “[the board members] intend to dictate public policy, reducing health benefits while striking public
employees and the economy of the island.”“I cannot allow the board to award itself powers that it does not have, much less when they intend to use this power to impose measures that negatively affect the quality of life of our people,” Rosselló added.
Rosselló’s comments echoed those of the Puerto Rican Independence Party, which recently submitted legislation that would trigger a referendum on the future of the board.