It’s good to finally see a bill that could help Puerto Rico climb out of their debt crisis. Then again, that’s like saying it’s good to see the fire department come to a house where it’s almost completely burned down.
The Puerto Rican debt crisis has been going on for a while now. Hell, we even did multiple stories on it last summer talking about the entire mess. The situation is tricky because Puerto Rico is a US territory and not a state, so it has less of a say than states do in how they can handle their budgetary matters. The hope was that Congress would give Puerto Rico enough autonomy, so they could pull themselves out of this financial death spiral that they had created.
It’s been nine months, so you know the drill on Congress and legislation they REALLY should pass. Nothing happened.
But there looks to be some hope on the horizon. Senate Democrats this week unveiled a plan that would allow Puerto Rico to declare bankruptcy on its debts, thus allowing the US territory to restructure its finances so they could eventually climb out of their financial troubles! The Senate bill proposes that the US would allow Puerto Rico to restructure their $72 billion in outstanding debt – essentially letting them file for Chapter 11 bankruptcy – and create a fiscal oversight board where they would work with the governor to create a five-year plan to get their finances in order. Sadly however, the plan doesn’t look to have the backing to pass in Congress.
Senate Republicans would rather not let Puerto Rico claim bankruptcy on major parts of its debt because numerous investment firms have major holdings in the US territory and claiming bankruptcy on the debt would mean those firms might not get paid.
[PLEASE INSERT YOUR MONEY INFLUENCES POLITICS HASHTAGS HERE]
Worse, the Obama administration will probably not back the Senate Democrats outlined debt relief proposal, since they have made it clear while they DO want to restructure the majority of Puerto Rico’s debt, however they DON’T want the island to have full Chapter 9 bankruptcy status. In turn, President Obama’s plan would put Puerto Rico just short of the powers given to all states to handle their debt problems responsibly.
To make things worse, in May if Puerto Rico can’t come up with a debt consolidation plan, they would have to default on their payments meaning the few services the government provides to its citizens would completely shut down. As of right now, government services that are entitled to many US citizens can’t be accessed by 3.5 million individuals living on the island currently. A debt relief plan would help millions of Puerto Ricans get access to healthcare coverage and vital tax cuts that the majority of Americans currently benefit from. So here’s to hoping that Puerto Rico’s debt crisis gets figured out sooner rather than later.
Oh shut it Morgan Freeman, what do you know…
(Photo Credits: Google Images)