An analysis by Nelson A. Denis on the “new” Financial Control Board bill…
A new Caribbean dictatorship will soon take charge of Puerto Rico. The final PROMESA bill finally arrived…and it is the WORST one of all.
After five months of “hearings” and “analysis,” the US Congress announced HR 5278…the law which will officially kill the economy of Puerto Rico. Here is the bill, all 148 pages of it:
The economy of Puerto Rico will soon be handed over to a “Financial Oversight and Management Board,” and the billionaires behind them.
AUTHORITY TO RECEIVE GIFTS
One of the more astounding “good government” powers of the Board will be its right to “accept, use, and dispose of gifts, bequests, or devises of services and real and personal property.” There is no explanation of how these gifts will “aid or facilitate” the work of the Board.
This incredible invitation to bribery, influence peddling, and money laundering appears on pages 24-25 of the PROMESA bill.
ABSOLUTE BUDGET POWERS AND POLITICAL CONTROL
The Board will “re-structure the workforce of the Commonwealth government,” ensure “the payment of debt obligations,” and reduce or freeze public pensions.
It will also supervise the budget and finances of the entire Commonwealth government, its pension system, courts, legislature, public authorities, and all leases, union contracts, and collective bargaining agreements.
Anyone (public official or otherwise) who defies or obstructs the Board, will be found guilty of “criminal misdemeanor” and will be subject to suspension without pay, and removal from office.
NO MINIMUM WAGE
Section 403 of the bill contains an extreme wage cut, from $7.25 to $4.25 an hour. It will apply to everyone aged 20-24 in Puerto Rico, whenever they start a new job.
If this bill is passed then over 200,000 young people, many of them paying student loans, will soon be working for $4.25 an hour in Puerto Rico…because that will be their new “minimum wage.”
The supply side argument that this will “create more jobs and economic development on the island” is woefully myopic. At $4.25 an hour, $170 a week, $8,840 a year, a young worker will make 25 percent of the per capita income of a resident of Mississippi, the poorest state in the US. Someone needs to explain to the House Committee on Natural Resources that this is not “economic development.” It is indentured servitude that smells of racism.
No tortured logic, no trickle-down theorist or hedge fund hustler can credibly argue that a minimum wage reduction to $4.25 will help the island — especially when the rest of the US is pushing for $15 an hour in all 50 states.
CREATION OF DEBT, WITH NO ACCOUNTABILITY
The government of Puerto Rico must appeal to the Board for any possibility of bankruptcy. Through a “certification procedure” controlled by the Board itself (see Sections 206 (a) and 206 (b) of the bill), the Board decides if and when any bankruptcy re-structuring will be allowed. The Board will also decide which part of the Puerto Rico physical infrastructure (electrical grid, water supply, roads, bridges, highways, schools, prisons, airports, beaches) will serve as collateral for the debt re-structuring.
The Board can also directly encumber the physical infrastructure of Puerto Rico…because any and all debt issuances of the Puerto Rican government must receive the prior approval of the Board. In other words, the Board will be the debt issuing authority of Puerto Rico.
The physical infrastructure of Puerto Rico (highways, bridges, schools, prisons, electrical grid, water supply, public housing, prime coastal real estate) will all be available as “collateral” for the debt decisions of this Board.
Despite all of this power, neither the chairperson nor any of the seven Board members, will be accountable or liable to the government of Puerto Rico.
The PROMESA bill is careful to mention that “the United States is not responsible for any principal or interest on any bond, note, or other obligation issued by the Board.” This means that Puerto Rico – its taxpayers and its physical infrastructure – will be solely and exclusively responsible for repayment of the Board’s debt decisions.
The Board will also have prosecutorial powers.
It is authorized to “conduct necessary investigations” into the government of Puerto Rico. It is empowered to hold hearings, secure government records, demand evidence, take testimony, subpoena witnesses, and administer oaths (under penalty of perjury) to all witnesses.
Anyone who fails to appear, refuses to testify, or withholds evidence, can be held in contempt of court. The result of any Board investigation can lead to criminal and civil penalties – including, but not limited to, getting fired from your job.
AN EMPTY PROMESA
This Financial Control Board will be the governor, banker, judge, jury, and prosecutor of Puerto Rico.
It will manage the entire Puerto Rican economy, and be accountable to no one on the island. It will tell the entire Puerto Rican government what to do, when to jump, and how high. It will issue debt, spend the money in any manner it sees fit, and leave Puerto Rico to pay the bill.
It will do nothing about Jones Act reform, the privatization of the island’s public schools, or the hedge funds that will own the physical infrastructure of Puerto Rico – its schools, prisons, highways, electrical grid, and water supply.
This is where our “Commonwealth” relationship to the US has gotten us: a dictatorship in the Caribbean, owned and operated from Wall Street, all disguised as a “management assistance board.”
The branding is very catchy, though.
With a wink and a nod to George Orwell, the US Congress took five months of hedge fund bribe money, slapped some lipstick and high heels on Senate Bill 2381, and called it PROMESA for Puerto Rico.
There is no “promesa” in this bill. It simply creates a collection agency in the Caribbean.
It is one great big lie.