On June 30, 2016, a bill called the Puerto Rico Oversight, Management, and Economic Stability Act, or PROMESA, was signed into law by President Obama. The idea was that a board of experts appointed by the federal government would help Puerto Rico restructure its unpayable debt and get the territory back on a sound footing for its financial future.
The board has been successful by some measures. The Island’s debt has been reduced by about 60%, the Governor of Puerto Rico touts the fiscal responsibility of the territory, and Puerto Rico’s economy has grown. Unemployment is down, tax dollars have been redirected from debt service to service provision for citizens, and Puerto Rico has certified its first balanced budget. After four consecutive balanced budgets, PROMESA will officially have finished its work.
But there have been costs.
Problems with PROMESA
“While the FOMB has overseen a largely successful debt restructuring process,” said George Laws Garcia, executive director of the Puerto Rico Statehood Council, “its continued existence contradicts a basic democratic principle reflected in both the U.S. and Puerto Rico Constitutions: officials who exercise ultimate authority over public funds should be accountable to the people they govern.”
The board members are not elected by the people of Puerto Rico. In fact, President Trump was able to fire most of the board and cripple its functioning, though many of the members were reinstated. The board has had numerous clashes with the territory’s elected officials. It imposed austerity measures that severely cut education and other services. It mandated changes in the electrical system which have not resulted in the needed improvements. It is allowed to strike down laws passed by the elected government of Puerto Rico.
“The Board can reject budgets approved by Puerto Rico’s legislature, signed by its governor and funded by its taxpayers, despite having no electoral mandate from Puerto Rico’s residents,” says Garcia Laws. “It also has not done enough to advance pro-growth fiscal policies that can expand opportunity, strengthen revenues and reduce the pressure that drives residents to leave the island. Congress should complete the FOMB’s mission, dissolve the Board and enact legislation to end Puerto Rico’s territory status, which is the central structural barrier to the island’s full economic potential and long-term fiscal health.”
There are also those who argue that the board has favored the creditors — some say vulture investors — over the people of Puerto Rico. Various members of Congress have proposed ending the board’s tenure many times over the years, often because of this perception.
The legacy of PROMESA
As a territory, Puerto Rico does not have the tools needed for long-term prosperity. PROMESA helped in some ways and may have been harmful in other ways, but the economic progress of the Island is nato the legacy of this controversial legislation.
The true legacy of PROMESA is the clear proof it provides of the fact that Puerto Rico is a “mere territory.” It does not have sovereignty. It does not have “the best of both worlds.” It has a colonial relationship with the United States. This is not only a hardship for the people of Puerto Rico, but also an embarrassment and source of shame for all Americans. It is long past time for Congress to take up its responsibility snf resolve Puerto Rico’s political status. Tell your representatives so.
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