Once Upon a Time in Puerto Rico

Puerto Rico is in financial difficulty, owes a lot of money to many different creditors on different terms, and is having a hard time coming up with funds to pay back debts while also maintaining services for the residents of the Island. These facts aren’t in dispute. But, in the recent hearing on PREPA’s debts and in the press since then, two stories are showing up.

The first presents Puerto Rico’s creditors as greedy villains and the fiscal board as the cruel taskmaster they have put in place to take the last shred of hope and dignity from the poor people of Puerto Rico. We know this story — it’s the Sheriff of Nottingham wringing pennies from the peasants. Robin Hood should be on his way any minute.

The Militant has a candidate for Robin Hood in this scenario: Osborne Hart, Socialist Workers Party candidate for Mayor of New York.  “Workers in the U.S. join their sisters and brothers in Puerto Rico demanding an end to the colonial arrogance of Washington and the disaster it is imposing there,” Hart was quoted as saying. “As I talk to workers on their doorsteps across the city, I urge them to join protests against the Junta, which holds most of its meetings here on Wall Street, and to back Puerto Ricans fighting to throw off the boot of U.S. colonial rule… The debt is unpayable. I demand it be canceled.”

The Militant also described the problem in characteristic style:

Washington’s Financial Oversight and Management Board for Puerto Rico is stepping up instructions to the island’s elected officials to implement crippling budget cuts and other attacks that will batter working people to keep paying the U.S. colony’s $70 billion debt to wealthy bondholders.

Those who present this story want the debt washed away. Rep. Nydia Velazquez represented this position at the recent hearing, though in less colorful language.

The other story being presented is that of hundreds or thousands of individuals, usually represented by unspecified elderly people in Puerto Rico and in the States, who trustingly invested in Puerto Rico, and who now will be thrown into poverty by corrupt government lackies who have wantonly spent all the money they should have used to pay their debts. This story was represented at the most recent hearing by Stephen Spencer, on behalf of Franklin Advisers, Inc. and OppenheimerFunds Inc.

Both sides claim to be taking care of the innocent ordinary people who are being unfairly treated by powerful villains.

Lacking an even more powerful wizard who could do away with the debt (the Fed has already said that it doesn’t have the power to do that), Puerto Rico needs to improve the economy and come up with additional funds to cover both the debt service and the needed human services. There are limits to austerity, because residents of Puerto Rico can easily move to a State to escape the austerity measures. There are limits to economic growth, because Puerto Rico doesn’t have the resources of a State.

Choosing a political status that works better than the current territorial status will be part of the plan. On June 11, Puerto Rican voters will decide between independence, which could conceivably allow the Island to refuse to pay the debts; or statehood, which would result in additional federal support, if only in the form of equitable payments in healthcare and infrastructure investments.

At the same hearing, Puerto Rico’s Residential Commissioner, Jenniffer Gonzalez-Colon, said, “Make no mistake about it: Puerto Rico’s territorial status is the real problem.” Acceptance of this more accurate claim might be more useful than either of the competing narratives observers are being offered.

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