On April 13, the Army’s 65th Infantry Regiment, known as the Borinqueneers, will be awarded the Congressional Gold Medal. This is the highest civilian honor in the nation. Created by Congress in 1898 as an all-Puerto Rican segregated unit, the Borinqueneers are being recognized for their exceptional service in World War I, World War II, and the Korean War.
This is a moment of great pride for Puerto Ricans everywhere. Yet the recognition is bittersweet, because on the same day the House Committee on Natural Resources will hold a hearing and mark-up on legislation to establish a financial control board for Puerto Rico, akin to the one created for the District of Columbia in 1995.
According to the “Puerto Rico Oversight, Management, and Economic Stability Act”, or “PROMESA,” the board will have absolute power over Puerto Rico’s troubled finances and relegate the territory’s governor and legislature to advisory roles. This is a step back in time. Congress gave Puerto Rico permission to write its own constitution and govern itself right around the time the Borinqueneers shipped to Korea.
Most Puerto Ricans, excepting a minority that wants to sever ties with the United States, accept that their battered island needs external control mechanisms to instill financial discipline and jumpstart the economy. Decades of governmental mismanagement have led them to this conclusion. Their choices range from the enactment of fiscal responsibility laws to an oversight board.
They also accept that the White House and Congress will not allow them to restructure their unpayable $72 billion debt without some type of Federal oversight. What Puerto Ricans across the United States will not accept is for the control board to be structured in a way that sacrifices the island’s well-being to its creditors’ interests.
Yet this is exactly the situation the House legislation could create. It establishes a control board in which four of the seven members must be selected by the president from lists provided by the House and the Senate Republican majority. There is no requirement that any of the members be Puerto Rican, and only one member must have Puerto Rico as a primary place of residence or business.
From the beginning of the fiscal crisis, bondholders have been pressuring congressional Republicans to oppose the bankruptcy legislation, which Puerto Rico needs and the White House supports. Republicans have been very receptive and they are likely to select board members who are aligned with Puerto Rico’s creditors. The cards will be more heavily stacked against Puerto Rico if a Republican wins the presidential election.
Puerto Rico’s bondholders insist that debt restructuring is a bailout and that they are protecting American taxpayers. This is nonsense. A debt restructuring will force bondholders — not taxpayers — to take a haircut. Taxpayers would only be affected if federal transfer payments increase to cover the services that an insolvent Puerto Rican government can no longer provide.
Puerto Rico’s bondholders also insist that it is unfair for the federal government to change the rules of the game by allowing the Puerto Rican government to restructure its debt. They conveniently ignore that from 1933 until 1984, Puerto Rico could allow its municipalities to declare federal bankruptcy in the same way as the 50 states, and that this authority was withdrawn because Congress omitted Puerto Rico when the federal bankruptcy code was revised.
Bondholders and their allies have saturated Congress and the media with demands for full payment of the debt and a control board to make sure this happens. Dark money is being spent by outfits such as the Center for Individual Freedom to produce commercials aired on key prime time spots. And who can blame the bondholders? Their job is to make money for their clients. Whether they run Puerto Rico into the ground or not is someone else’s problem.
Congress’ job, however, is to address the needs of all its constituencies, not just the ones with deep pockets. Whatever solutions are crafted by Congress must balance the demands of Puerto Rico’s creditors with the rights of Puerto Ricans to prosper as American citizens. For all parties to benefit, job creation must be as much of a priority as fiscal stabilization.
If a control board is to be enacted it would be a grave mistake to allow it to be dominated by Puerto Rico’s creditors and their narrow interests. To be effective, the board must be modified in very specific ways.
It must include members from different sectors of Puerto Rican society. Members and their staff must be cleared for conflict of interests. The actions of the board must be clear, transparent and subject to the Freedom of Information Act. Abuses of power must be held in check by instituting an appeal mechanism for board decisions.
In short, the board must make space for Puerto Ricans to exercise their American right to self-governance. It cannot strictly rule by fiat. Puerto Ricans need to feel invested in the work of the control board. Otherwise they will resist change and the impact of the board will be limited. We all need and want Puerto Rico to succeed. Even bondholders should recognize that the best board is one with local legitimacy.
Gretchen Sierra-Zorita is a Puerto Rico advocate and a member of the National Puerto Rican Agenda.Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
