Monthly Archives: March 2016

8 posts

Rescue Plan Strips Puerto Rico of Authority

Energy Resources committee

A congressional committee unveiled a proposal to address Puerto Rico’s $72 billion debt crisis – a plan that would impose a financial control board over the island, leaving little doubt about who’s in charge – Congress.

The board – with the unlikely name of PROMESA or promise in Spanish – would be appointed by the president but wouldn’t be subject to either the island legislature or the governor, who would be demoted to an ex oficio board member without voting rights. Only one of five board members would be required to reside on the island.

Thus stripped of its autonomy, strapped with mountains of debt it cannot pay and suffering from a 10-year recession, Puerto Rico has hit rock bottom. Naturally, many islanders are furious.

“The establishment of a financial control board would have the effect of amending Law 600, which gave Puerto Rico the right to self government,” wrote lawyer Jaime Picó in El Nuevo Día, the island’s major newspaper. “What’s more, the mere intention to establish a financial control board eliminates all doubt about our colonial status…”.

Pretty much.

I confess, however, a limit to my astonishment. For decades hyper partisan Puerto Rico undermined itself via sloppy governance and little financial accountability. It was bound to break badly. Even now, the island cannot produce several years’ worth of financial statements requested by Congress’ Natural Resources Committee, which oversees U.S. territories, stating it needs more time.

In a U.S. Supreme Court case heard last week about whether Puerto Rico agencies or municipalities can seek debt relief via federal bankruptcy – possible up to 1984, after which Congress excluded Puerto Rico from federal bankruptcy law – the lawyer representing bondholders stated that Congress has “always” had a mistrust of Puerto Rico’s finances.

“Congress for a long time has micromanaged Puerto Rico’s debt,” attorney Mathew McGill told the court, explaining why the court ought to reject extending Chapter 9 of the federal bankruptcy code to Puerto Rico.

Congress appears to agree, continuing to misspeak about a “taxpayer bailout.”

“This draft is thoughtful, comprehensive legislation that gives the U.S. territory the tools it needs to deal with its systemic fiscal and budgeting problems — without a taxpayer bailout,” Ryan said in a statement. However, bankruptcy wouldn’t involve taxpayer dollars.

A portion of Puerto Rico’s debt is guaranteed by the island’s constitution, meaning it must be paid or the island would face more lawsuits for nonpayment. Already, nearly one-third of the island’s budget goes to debt payment, a level considered unsustainable.

And so Puerto Rico and its over 3 million people likely will return to a micromanaged financial and political state of affairs not seen on the island since the 1950s.

˜˜Maria Padilla, Editor

U.S. Supreme Court Hears Puerto Rico Bankruptcy Case

Supeme Court - supremecourt.gov
The U.S. Supreme Court will decide later this year if Puerto Rico can use federal bankruptcy laws to alleviate its current debt crisis. / photo courtesy of U.S. Supreme Court

The U.S. Supreme Court heard a crucial case this week that may settle whether Puerto Rico can use federal bankruptcy laws to alleviate its $72 billion in debt.

Puerto Rico argued that it should be able to allow its municipalities and certain agencies to file for Chapter 9 federal bankruptcy protection – or at the very least be able to enact its own quiebra criolla to help its municipalities and agencies.

It was a lively discussion with Justice Sonia Sotomayor pouncing on the opposition, mostly creditors or bond holders, and Justice Ruth Bader Ginsburg breaking through the gobbledygook with direct statements or questions.

“Why would Congress put Puerto Rico in this never ­never land? That is, it can’t use Chapter 9, and it can’t use a Puerto Rican substitute for Chapter 9”? Ginsburg asked.

Indeed, why? The island’s municipalities and agencies have always been able to file for bankruptcy – until 1984, when Congress excluded Puerto Rico (and the District of Columbia) from Chapter 9 under a bankruptcy law revision. Nobody knows why.

It’s a Black Box

“It is a black box. …There is no legislative history directly on point either way,” said Christopher  Landau, arguing in favor of Puerto Rico, implying it’s a mystery.

Puerto Rico Legislature’s sought relief two years ago by approving an island bankruptcy law, but was shut down by a Boston federal court, effectively denying Puerto Rico any bankruptcy protection.

Justice Elena Kagan, who seemed to change her mind during the arguments – favoring Puerto Rico – hinted at a backhanded attempt to strip the island of certain powers.

It’s an “extremely kind of cryptic odd way to make such a major change,” she said of the 1984 congressional change. “I mean it’s almost like  somebody doesn’t want everybody to recognize what a major change is being made.”

The creditors’ attorney Mathew McGill argued that Congress intended to lock out Puerto Rico. “Congress for a long time has micromanaged Puerto Rico’s debt,” McGill stated, adding that at the time of the 1984 bankruptcy revision Puerto Rico already had $9 billion in debt.

McGill pointed out that over 20 states also exclude their municipalities from Chapter 9 bankruptcy, implying Puerto Rico is no different. To which Ginsburg shot back, “But that’s up to the state. It’s up to the state to make that decision. Puerto Rico isn’t given that option.” McGill conceded the point, saying “Well that – well, that is, of course, true.”

Keep the Lights On – Water Too

He said the idea is for Puerto Rico to “come to Congress.” But Congress, divided along party lines, appears reluctant to help Puerto Rico, equating any help with a rescue or “giveaway.”

Sotomayor likened the situation to Puerto Rico trying to keep the lights on. “So you think Congress intended to stop Puerto Rico … from passing emergency legislation that said don’t shut off the lights tonight,” she said. “[T]hat Congress intended that that kind of temporary provision could only be subject to Congress, who may be on recess, who might be wherever it is, that it could not do that?”

Puerto Rico’s attorney seized the opportunity on rebuttal to remind the Supreme Court that people’s lives are at stake. Over 3 million people live in Puerto Rico.

“But this is also a flesh-and-blood situation in Puerto Rico,” Landau said. Puerto Rico is “facing a crisis in providing essential services to its citizens. … [T]hat’s the question: [w]hether people in a village in Puerto Rico will be able to get clean water.”

The court will announce its decision on the case, known as Puerto Rico v Franklin Cal. Tax-Free Trust, later this year.

˜˜Maria Padilla, Editor

Cuba: Closer than Ever

Castro - Obama
Cuban President Raúl Castro shakes hands with U.S. President Barack Obama. /White House photo

Barack Obama will be the first U.S. president to step on Cuban soil today in nearly a century. Cuba, just 90 miles off Florida’s shores, has always been so near and yet so far in American political imagination.

Near enough for thousands of Cuban refugees to push off in rafts, braving shark-infested waters, to reach these shores – although nowadays they make the trek on foot, crossing Central America, traveling through Mexico and literally walking across the U.S.-Mexico border.

And yet Cuba and its 11 million people are so far off that no American president has visited the island in 90 years, a reflection of the frosty relationship between the two powers, as the U.S. fought the communist Castro brothers –Fidel and Raúl – in a war of words and economic embargo since the two overthrew Fulgencio Batista in 1959.

The visit,  jumpstarted in 2014 when Obama announced he would re-establish relations with Cuba, sets the clock for a new beginning. And what a beginning. Air Force One takes to the air with the help of influential Cuban business titans in Miami. Yes, Miami, the frenetic South Florida city historically known as “the seventh province of Cuba” and fanatically anti-Castro, is undergoing a political transformation. Younger generations are taking a second look at the embargo and concluding it’s a disaster.

Less than 50 percent of Cuban-Americans support the embargo, based on a Florida International University poll conducted in 2014. In spirit, will and imagination Florida, too, is joining Obama on this trip, ending, perhaps forever, decades of emotional anguish between Cubans here and Cubans there.

“We view national reconciliation as both a process and a goal. We recognize its difficulties, but are convinced of its necessity,” writes the Cuba Study Group on cubastudygroup.org. “Our process of reconciliation must be focused on Cuba’s future, not its past.”

The Cuba Study Group comprises prominent Cubans who once were big supporters of the embargo: Florida sugar magnate Alfonso Fanjul, health care entrepreneur Mike Fernández and former  U.S. Commerce Secretary Carlos Gutierrez, who served under George W. Bush.They, along with Cuba Study Group Chairman Carlos Saladrigas, will join Obama on the trip.

About 20 or more members of Congress will visit Cuba with Obama, including former House Speaker Nancy Pelosi of California and New York Congressman Charles Rangel. Republican Senator Jeff Flake of Arizona, a proponent of lifting the Cuban embargo, is scheduled to make the trip, one of few Republicans to do so.

Another Republican, Florida Sen. Marco Rubio, is being left behind. Rubio opposes Obama’s trip to Cuba – as do most of Florida’s GOP congressional delegation. In addition, about 59 percent of Florida Republicans are against the trip, according to a Bendixen survey conducted earlier this month. But in a stunning rebuke of the man and his policies, 67 state counties rejected Rubio in last week’s Florida presidential primary.

Change is coming. Cuba today is closer than ever.

So Far 

• Restored diplomatic relations (summer 2015)

• Opened up travel to Cuba, including direct travel on U.S. airlines

• Increased hotel investments

• Allowed more transactions with  U.S. dollars in Cuba

• Restoration of direct mail between the two countries

Central Florida Primary Results

Rubio loss in Florida
For the GOP, Florida was Donald Trump country, as seen in this New York Times vote map. No love for Sen. Marco Rubio, except in Miami area.

 

Here are some primary election night numbers for Central Florida to think about. All stats are based on supervisors of elections reports in each county.

Osceola was Donald Trump‘s biggest CFLA win : 46.8 percent vs. 41.6 percent in Seminole and 39.7 percent in Orange.

Marco Rubio barely broke 30 percent in CFLA. He won 30.75 percent in Orange, 26 percent in Osceola and 29 percent in Seminole.

No contest between Hillary Clinton and Bernie Sanders in Orange, Osceola and Seminole counties. Hillary won by 19 points in Seminole, nearly 29 points in Orange and 38 points in Osceola.

Voter turnout : 40 percent in Osceola, 40 percent in Orange and 47.8 percent in Seminole, which nearly always has much higher turnout.

˜˜Maria Padilla, Editor