The Supreme Court heard arguments in the case of José Luis Vaello-Madero, a resident of Puerto Rico who is being sued by the Social Security administration for $28,081 which they overpaid to him. He applied for and began receiving SSI disability benefits while living in New York City. When he moved to Puerto Rico, he was no longer eligible for the benefits. However, he did not realize this, and Social Security continued paying the benefits for three years before realizing that he was no longer eligible.

When they discovered their mistake, they sued Vaello-Madero for the benefits they had paid him. He won the case in court, but the United States government appealed and pursued the case all the way to the Supreme Court. Arguments began on November 9th, 2021.

The brief from United States vs. Vaello-Madero gives the argument of the United States: that Puerto Rico has a “unique” status, so. Congress is allowed to discriminate against the U.S. citizens who live there.

“Congress can treat Puerto Rico differently subject only to rational basis review, which, according to petitioner, is satisfied by invoking the constitutional distinction between states and territories,” says the brief, describing the position of the United States. In other words, Congress can treat Puerto Rico differently from states because Puerto Rico is a territory.

The DOJ’s lawyer said this in oral arguments: “Much of the revenue that would have flowed into the federal treasury can instead be tapped by territorial government, which therefore has greater leeway to make different fiscal or economic choices consistent with its distinctive status as a self-governing commonwealth.” In other words, since Puerto Ricans don’t pay federal income tax, Puerto Rico has access to the money residents would pay in federal income tax if Puerto Rico were a state.

Justice Sotomayor objected to this claim. “It’s hard to imagine that Puerto Rico has the ability, given that it’s in temporary bankruptcy, to do what you say to be able to raise taxes to help the needy.”

Puerto Rico: separate and unequal?

“Puerto Ricans have contributed in meaningful ways to the nation during the past century. Puerto Ricans have served in the United States military since World War I, with one of the largest per capita enlistments in the United States Armed Forces,” the brief points out. “Today, Puerto Ricans serve throughout the federal government as agency employees, ambassadors, and federal judges.”

They could also have pointed out that Puerto Ricans have contributed significantly in the arts and sciences in the United States, in sports and entertainment, and in business. And yet, as the brief states, “Congress’s ambivalence towards Puerto Rico has led to its ‘unique’ status—an indefinite state of limbo in which more than three million Americans on U.S. soil lack federal voting power and the ability to change this situation on their own.”

The arguments continue to examine the contributions of Puerto Rico, because one of the arguments by the Department of Justice was that Puerto Ricans do not pay federal income tax. The brief points out that people who receive SSI can not work — that is why they receive these benefits. Since they do not work and therefore do not receive any income, they do not pay income tax, even when they live in a state. It therefore makes no sense to exclude Puerto Rico on these grounds.

Congress could change the law tomorrow to require Puerto Rico’s residents to pay income tax, the brief says, and they still would not be eligible for SSI.

The brief also states that Puerto Ricans pay Social Security taxes at the same rate as people living in the states, but receive less in federal benefits.

The outcome of the Vaello-Madero case could have far-reaching consequences for Puerto Rico and for the other U.S. territories.



One response

  1. From SCOTUS Transcript on Vaello- Madero case:

    JUSTICE BREYER: What I’m actually
    thinking is — is — I’m not thinking something
    simple, and I haven’t got it quite worked out,
    but those words “locally inapplicable” and the
    Federal Relations Act were designed to put
    Puerto Rico in a status that isn’t in practice
    quite that of a territory, although it’s not a
    state. It’s a commonwealth.
    It’s the Estado Libre Asociado, and no
    one knows exactly what that is. And so
    shouldn’t we, in fact, look at the purpose of
    the Federal Relations Act and say it takes a
    little bit more, a little bit more in terms of a
    good reason to exclude Puerto Rico from a
    benefit than it would the Marianas and Guam and
    the other territories that have no such act? Or
    is it totally irrelevant? Did we tell the
    United Nations something that wasn’t true?

    MR. GANNON: We did not tell the
    United Nations something that wasn’t true. And
    we’ve said that we think that one of the reasons
    why this is justified is because it does,
    indeed, help promote territorial autonomy
    because it is related to the fact that, as
    Congress is taking fewer federal tax dollars
    from the Puerto Rico economy, it leaves greater
    leeway for the territorial government to have —

    JUSTICE BREYER: But the government —

    MR. GANNON: — its own tax structure.

    JUSTICE BREYER: — is this the same
    government that is bankrupt and that is being
    run, the economy, by people, some of them
    anyway, not from Puerto Rico but from — under a
    law that applies from the mainland to the
    mainland? And is this the same program that
    would, in fact, give the people on average who
    need it $418 a month, as opposed to what Puerto
    Rico can afford to give them, which is $58 a

    MR. GANNON: It — it is the same
    program. We think that the PROMESA statute,
    which was enacted about two months before the
    benefits that are actually at issue in this
    case, but we don’t — we don’t think that that
    affects the analysis here — PROMESA itself is a
    temporary bankruptcy measure that was intended
    to assist in restoring Puerto Rico’s fiscal
    economy and its security. It is itself intended
    to promote autonomy by restoring Puerto Rico’s
    fiscal footing.
    And, therefore, as here, Congress is
    seeking to make locally applicable laws. It has
    made the determination — the federal
    relationship principle here is something that’s
    been overridden by Congress’s specific
    determination with respect to the applicability
    of this program.

    As a lifetime pro-statehood supporter, the above comments were, for me, among the most significant in the hearings.

    1-ELA: is and remains a constitutional legal enigma impacting the local residents of PR in every aspect of their lives.

    2-In our current world, there is no need for the USA to continue the territorial colonialism of Puerto Rico.

    3-Local Puerto Rican residents are politically powerless under ELA but will be politically powerful under statehood.

    4: Puerto Rico’s “autonomy” has created a plutocratic government where public and private sectors merge to benefit only their own.  As a result, decades of rash administrative, legislative, and executive performance have harmed the less fortunate sectors. The wasted and misused federal funds cannot be ignored nor underestimated, hence, the PROMESA board congressional response.

    Regardless of the outcome of the Vaello-Madero case, Puerto Rico and the US Congress are at their final crossroads:

    It is outrageous, preposterous, and devoid of any good will toward the PR local residents for ELA supporters to continue to insist on the Commonwealth limbo. Their only way out is a Free Association status, which will be a form of independence without USA citizenship, without a resident commissioner, and a gradual phase-out of federal funds and federal programs.

    Puerto Rico’s statehood is the only permanent path forward to finally allow the American citizens of Puerto Rico equal rights and responsibilities under our USA Constitution.

    Furthermore, Puerto Rico’s statehood is in our nation’s national (regional and global) security interest and should not incur further delays.

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