Clinton Political Director Dodges Question of Puerto Rican Statehood in Newspaper Interview

In an Spanish-language interview with Puerto Rico’s El Nuevo Día published Sunday, Hillary Clinton’s national political director told the newspaper that the Democratic presidential front-runner believes that the island’s political status must be resolved, but did not specifically mention whether Clinton supports statehood for the U.S. territory.

The newspaper included three questions it asked of Amanda Rentería, who was visiting the island to evaluate how Puerto Ricans are coping with the ongoing zika problem. (Rentería’s Twitter timeline includes photos of places she visited while in Puerto Rico.)

Here is a translation of the first question, along with a translation of Rentería’s answer that El Nuevo Día ran in Spanish:

What does Hillary Clinton think about the bill submitted to Congress by Resident Commissioner Pedro Pierluisi, calling for a “yes or no” statehood plebiscite?

Rentería: In 2008, she [Clinton] said that she wanted Puerto Ricans to tell us what they wanted. That position has not changed. She shares the urgency of resolving [the status question] because when you look at everything, whether it is health or the fiscal crisis, you see that people here deserve a solution.

The newspaper pointed out that Rentería did not specifically address Clinton’s position on statehood for Puerto Rico, an issue that Democrats like Pierluisi, who has endorsed Clinton’s 2016 campaign, have been advocating for.

In 2012, the first part of a non-binding plebiscite determined that 54% of Puerto Ricans rejected the island’s current territorial status, with 61% of Puerto Ricans choosing statehood as the top choice to replace the territorial status quo. As a result of that 2012 plebiscite, the Obama Administration earmarked $2.5 million as part of the 2014 omnibus spending bill for a binding status vote designed to put some closure on a topic that has dominated Puerto Rico’s politics for decades. The island’s current governor, Alejandro García Padilla, a defender of the island’s current status and also a Democrat, initially supported the Obama plan, but given Puerto Rico’s current fiscal crisis, the status question has now lost some momentum.

While the island’s previous governor, Luis Fortuño, is a pro-statehood Republican, many Puerto Rican Democrats on the island are also pro-statehood advocates. In recent years, these pro-statehood Democrats have been calling on the Obama Administration to take on a clearer position the statehood process for Puerto Rico, promoting a clearer plebiscite “statehood or independence” vote, where the current territorial status is not an option. Many of these Democrats have asked Clinton to be more specific about her campaign’s position on this issue, given that the Puerto Rican Democratic caucus is scheduled for June 5.

El Nuevo Día then asked Rentería a specific question about the 2012 plebiscite:

Does Clinton recognize that result of the 2012 plebiscite, where 54% of Puerto Ricans rejected the current territorial status?

Rentería: The truth is that 2012 was long ago. She [Clinton] thinks that [the solution about status] must have approval of the Constitution and that the Department of Justice supports it. There are many people who have many questions about the 2012 [plebiscite]. She says that whatever solution must have the support of the Constitution and Congress. She also says that people here should be able to vote for President of the United States.

The final question published had to do with a Tennessee Plan proposed by Ricardo Rosselló, a pro-statehood Democrat who is running for governor of Puerto Rico in 2016. The Tennessee Plan was what made Tennessee a state of the Union in 1796, and many Puerto Rican statehood advocates believe such a strategy would work for the island as well.

Has Clinton shared her thoughts about the Tennessee Plan proposed by Ricardo Rosselló?

Rentería: No, the truth is no. She [Clinton] is a person who wants to support everyone and I think she will have a great relationship with whoever wins.

Last year while campaigning in Orlando, Clinton said that “Puerto Ricans are American citizens” who should be able to vote for President, but did not mention her position on statehood.

Puerto Rico’s Population Continues to Experience Record Decreases

A new post from the Pew Research Center used the latest U.S. Census data to report that Puerto Rico is witnessing population losses of “historic” proportions, resulting in “the largest outmigration in more than 50 years” on the island. The following animated gif from Pew highlights how dramatic the population decreases have been since 1980. The grey areas represent population gains, while the pink areas represent population losses. By the time you get to the 2010–2015 section, most of the island is pink.

FT_16.03.24_PuertoRico_pop

Pew also concluded the following:

“….the island’s population was an estimated 3.47 million in 2015, down 334,000 from 2000 – a 9% decline. Three-quarters of this population loss has taken place since 2010. Puerto Rico’s population declined by 7% from 2010 to 2015, compared with a 2% loss from 2000 to 2010.”

The Census predicts that Puerto Rico’s population in 2050 will be at 2.984 million people.

Pew attributes the island’s population loss to three factors:

  • Puerto Rico’s continued economic recession
  • Puerto Ricans, who are U.S. citizens, continue to move to the mainland United States for better economic opportunities. Thousands have moved to Florida in the past several years.
  • The island’s low fertility rates

Earlier this year, Latino USA dedicated an entire hour to what is happening in Puerto Rico, focusing on the social and economic consequences of a $72 billion debt crisis that has plagued the island.

Rep. Gutiérrez: ‘Free Puerto Rico’

Earlier this morning Rep. Luis Gutiérrez (D-IL) spoke once again in Congress about the ongoing debt crisis in Puerto Rico. His office posted a YouTube video of his speech. A Facebook version of this video has already gotten more than 25,000 views as of this posting.

Here is the transcript provided by Gutiérrez’s office:

Mr. Speaker, I come with a humble message from the Puerto Rican people to the House of Representatives:  Free Puerto Rico.

Free Puerto Rico so she can solve the problem of her crushing debt without being handcuffed by Congress, its distant and inattentive colonial master. 

Free Puerto Rico so that her hospitals can stay open for sick moms and dads and her schools stay open for children.  Nobody should fear that their house will burn down because the firemen have not been paid.

So far, the response to Puerto Rico’s debt crisis from Washington — the one place that Puerto Rico is forced to rely on, has been very little.

Greedy bond-holders and hedge-fund managers only care about Puerto Rico as a wager – a way to make money whether Puerto Rico sinks or swims. 

Right now, Puerto Rico needs serious, sustained attention from Washington to find a path forward such that Puerto Rico is neither absolved of her obligations nor mortally wounded by them.

Because, Mr. Speaker, here is what it comes down to:  When the US Supreme Court said that Puerto Rico belongs to, but is not part of, the United States, the responsibility to care for her and her people came along with that judgement.

Congress must take responsibility for the fact that we expect Puerto Rico to pay its obligations, but we force her to play by a particular set of rules.

Puerto Rico cannot declare bankruptcy because Congress passed a law saying they cannot.

Puerto Rico is under the chokehold of the Jones Act – a law passed right here in this room without any consultation with the Puerto Rican people – that says, by law Puerto Rico cannot shop around for the best deal on shipping.  No, they must buy the most-expensive, which means double the import costs and an estimated $500 million extra on Puerto Rico’s food bill alone.

Oh, and when it comes to producing for themselves, a large chunk of the best agricultural land – the land that sustains and feeds a nation – that land is taken from them for military bases with no compensation — 13 percent of the land – gone.

Puerto Rico is a tropical Island, but a lot of its fruit and food and vegetables and almost all of its food is imported.  We must allow Puerto Rico to create agricultural economy that allows Puerto Ricans to feed themselves.

The economy produces goods the people do not consume and the people consume goods they did not produce.

Even when the U.S. is caught red-handed stealing water from Puerto Rico’s fresh-water supply — not paying a dime for it – what happens?  The U.S. Government is not held responsible or made to pay. 

When the military pollutes Vieques or Culebra, does the U.S. government feel any obligation? Not really.

So, Mr. Speaker, when Congress talks about Puerto Rico’s debt, I say we look at the totality of the debt; the part owed to Puerto Rico, not just the part Puerto Rico owes to Wall Street.

Every soldier she has sent to war, every time the U.S. has stepped in to override her courts or her government – these debts add up but are not accounted for.

And now, what is the solution that everyone in Washington is lining up behind?  A Federal Control Board.

Imagine that.  An Island that cannot determine its own destiny, that has to play an economic game with a stacked deck and all the rules rigged against them – what is the solution in Washington? 

Take away what little autonomy they have left and add a new layer of Washington control over the colony.

If Congress were smart, we would find a way to get out of the way.

Free Puerto Rico’s people to unleash their inherent hard-working character, spirit, and dedication.

Free Puerto Ricans to work and toil and build and create.  Free Puerto Rico so that she can build a sustainable economy that keeps her people at home, in the land of their birth and their heritage.

And we cannot get side-tracked by seeing Puerto Rico’s economic health exclusively through a lens of Food Stamps, Medicaid, government programs and further dependency on Washington.

We must make the conversation about jobs for Puerto Ricans. Jobs that build the economy and the tax base and the self-sufficiency of the Island.

Mr. Speaker, Puerto Rico’s problems were a long time in the making, but I have utter confidence in the Puerto Rican people’s ability to solve them, if we in Congress begin listening to them, working with them, and recognizing them as equal partners. 

We must free Puerto Rico so that the Puerto Rican people can free themselves.

Gutiérrez’s remarks come at a time when Congressional leaders and President Barack Obama have begun to formally address the island’s fiscal problems. Earlier this week, NPR’s Latino USA dedicated a segment to the latest from Capitol Hill about Puerto Rico:

The segment was part of a one-hour “Puerto Rico Underwater” show.

Why Is Puerto Rico Billions of Dollars in Debt?

Puerto Rico is drowning in $72 billion of debt. Over the last few years, an accelerating fiscal crisis has brought an unusual amount of attention to the U.S. territory and the unique issues it faces. News media has been calling it the “Greece of the Caribbean.” But for those that aren’t experts in municipal finance, it can be all a little abstract. How did Puerto Rico rack up such a huge bill, and how is it affecting life on the island?

Latino USA answers that question, with help from a few experts: Robert Smith of NPR’s Planet Money, economist Rosario Rivera from the University of Puerto Rico and Hector Cordero-Guzman of Baruch College.

The Battle for Puerto Rico on Capitol Hill

As the debt crisis carries on in Puerto Rico, Congress debates on how to address the issue. Democrats are pushing to grant the island access to bankruptcy protection, which it lost after a 1984 amendment to U.S. bankruptcy code left Puerto Rico out. Republicans —and the financial industry— are not in favor of bankruptcy, and have offered other solutions, including a fiscal control board that would be appointed to manage Puerto Rico’s finances.

Regardless of the approach, everybody agrees something must be done. House Republicans have pledged to bring a bill to the floor by the end of March, and it appears that there is an appetite for compromise between the demands of both parties.

Making matters more complicated are the one million Puerto Ricans in the Orlando area with the potential to swing Florida in the 2016 presidential election. They may vote based on what federal government does —or fails to do— for Puerto Rico.

Latino USA took a visit to Washington to learn into the politics surrounding this issue. We spoke with Congressman Luis Gutiérrez (D-Illinois) and Pedro Pierluisi, Puerto Rico’s lone non-voting member of Congress.

Featured image: (Kevin McCoy/Wikimedia Commons)

Puerto Rico’s Political Status Dealt Another Blow in Supreme Court

Originally published at LatinoRebels.com by Juan Antonio Ocasio Rivera

Puerto Rico’s political status has been thrust into the spotlight once again, this time in dramatic fashion.

Last Wednesday, the Supreme Court heard arguments for Commonwealth of Puerto Rico v. Luis M. Sanchez Valle, et. al., a case that considers the constitutional issue of double jeopardy, or in other words, whether states can charge persons for a crime that they have already been charged with at the federal level.

Normally, the courts consider that only “separate sovereigns” can charge a person for the same crime, and because the states of Union are considered by the U.S. Constitution as “sovereigns” as well as the federal government, then both as separate jurisdictions can process persons for the same charges separately. However, in this specific case, the entity seeking to process someone for gun charges after federal prosecutors have already done so is the Commonwealth of Puerto Rico, bringing to the fore the age-old debate over power and sovereignty, and of course, the island’s political status.

The island’s lawyers argued that they are in fact “sovereign” and can charge the person for the crime. They stated that in 1952 the island’s political status changed from that of being a classic colony and territory of the United States to a “Commonwealth” that enjoys political autonomy including the passage of criminal law, and that this fact makes them a “sovereign” with the power to process crimes already prosecuted in federal courts. They claimed that Puerto Rico, upon instituting its own Constitution, enjoys the powers of sovereignty in this context.

However, lawyers for the defendant were joined by lawyers from the Obama administration in arguing, for the first time in a Supreme Court setting since the famous “insular cases” (which held that Puerto Rico, as an unincorporated territory, belongs to, but does not form a part of, the United States), that the archipelago is merely a territory of the United States subject to the authority of the U.S. Congress and as such is not a “sovereign” and has no power to process these charges. Their argument holds that since Congress authorized the Commonwealth status and reviewed and authorized Puerto Rico’s Constitution (and even eliminated sections of it), that the ultimate wielders of power over the island are not its residents but the U.S. Congress.

At one point in the proceedings, Justice Stephen Breyer directly stated that the outcome of this ruling has “enormous implications” because if the Court rules that Puerto Rico has sovereignty or if the Court rules that the island has none and is simply a powerless territory of the U.S., then it will lead to enormous debates within the United States, Puerto Rico and international arenas such as the United Nations—which was told in 1953 that the island was no longer a colony and removed the island from its list of non-self-governing territories allowing the U.S. to cease annually reporting on the progress of their colony.

As Justice Breyer puts it, “How did we tell the UN it wasn’t a colony? Why are we not reporting on this colony every year?”

The exchanges, which featured arguments from the Obama administration saying that the Commonwealth status of Puerto Rico could be changed unilaterally by an act of Congress and reiterating that Puerto Rico is basically a territory of the United States subject to the authority of Congress, provoked an eruption of heated debate and rhetoric on the island.

Read more at Latino Rebels

In New Supreme Court Amicus Brief, Obama Administration Questions Puerto Rico’s Commonwealth Status

While the mainstream English-language press continues to shed more light on Puerto Rico’s current economic crisis (see yet another New York Times editorial), a new Supreme Court amicus brief filed last week by the Obama administration has revisited the decades-long questions about the island’s current political relationship with the United States. In 1952, Puerto Rico officially became the Commonwealth of Puerto Rico, an entity with its own local constitution that is neither a state of the Union nor an independent nation. With the Supreme Court expected to hear January 13 oral arguments for Puerto Rico v. Sanchez Valle —a case which asks “whether the Commonwealth of Puerto Rico and the federal government are separate sovereigns for purposes of the Double Jeopardy Clause of the United States Constitution”— the Obama amicus brief repeats the long-held stances from previous administrations, arguing that Puerto Rico has never been separately sovereign and that Congress controls the fate of the island territory, home to about 3.5 million American citizens.

Here are some excerpts from the latest Supreme Court brief filed by the federal government:

What the Federal Government Says About Puerto Rico’s Current Political Status

Puerto Rico’s transition to local self-government was a significant development in its relationship with the United States, and it has yielded many benefits for Puerto Rico and the United States in a relationship of mutual respect. Congress has evinced no intention to revoke the local autonomy it has vested in the government of Puerto Rico. But as a constitutional matter, Puerto Rico remains a territory subject to Congress’s authority under the Territory Clause….Residents of Puerto Rico have voted several times on whether to seek a change in Puerto Rico’s constitutional status but have not sought statehood or independence from the United States.

The events of 1950-1952 did not transform Puerto Rico into a sovereign. Before 1950, Congress had progressively authorized self-government in Puerto Rico. As a further step, in 1950 Congress permitted the people of Puerto Rico to adopt a constitution, which Congress approved with revisions in 1952. Those events were of profound significance for the relationship between the United States and Puerto 8 Rico, but they did not alter Puerto Rico’s constitutional status as a U.S. territory. The United States did not cede its sovereignty over Puerto Rico by admitting it as a State or granting it independence. Rather, Congress authorized Puerto Rico to exercise governance over local affairs. That arrangement can be revised by Congress, and federal and Puerto Rico officials understood that Puerto Rico’s adoption of a constitution did not change its constitutional status. The ultimate source of sovereign power in Puerto Rico thus remains the United States.

Congress did not enter into an irrevocable “compact” with Puerto Rico, and as a constitutional matter, Congress cannot irrevocably cede sovereignty to Puerto Rico while it remains a U.S. territory. The designation of Puerto Rico as a “commonwealth” reflects Puerto Rico’s significant powers of self-government, but it does not denote a constitutional status. Puerto Rico’s autonomy over local affairs does not itself make Puerto Rico a sovereign.

Puerto Rico exercises significant local autonomy, with great benefit to its people and to the United States. But it remains a territory under the sovereignty of the United States and subject to the plenary authority of Congress.

1898 Military map of Puerto Rico (Wikimedia Commons)
1898 Military map of Puerto Rico (Wikimedia Commons)

Puerto Rico is a United States territory. It has been since 1898, when Spain ceded it to the United States…. Although Puerto Rico had significant autonomy before it became part of the United States, it was a Spanish colony, “under Spanish sovereignty….” And Puerto Rico did not become a sovereign when it came under United States jurisdiction, because it did so as a territory, not as a State…. (“The civil rights and political status of the native inhabitants of” Puerto Rico “shall be determined by the Congress.”). As a territory, Puerto Rico is subject to the “paramount” authority of Congress under the Territory Clause.

Puerto Rico’s transition to self-government did not change its constitutional status as a U.S. territory. The United States did not cede its sovereignty over Puerto Rico, and Puerto Rico did not become a State or an independent nation…. Rather, Congress, in an exercise of its authority under the Territory Clause, authorized Puerto Rico to pursue self-government, under which local officials would exercise power under a framework approved by Congress. Although Public Law 600 granted the people of Puerto Rico an unprecedented amount of control over internal affairs, it did not change Puerto Rico’s status under the U.S. Constitution.

Puerto Rico’s authority to issue its constitution emanated from Congress, and the constitution could not become effective without congressional approval….Congress did not accept the constitution as drafted. Instead, it deleted Section 20 of Article II of the proposed constitution (which included rights to obtain work; to food, clothing, housing and medical care; and to protection in sickness, old age or disability) and it prevented Puerto Rico from restoring those provisions later…. (requiring language specifying that any amendment or revision of the constitution must be consistent with, inter alia, Congress’s approving resolution); Congress’s oversight of Puerto Rico’s transition to local self-government is consistent with Puerto Rico’s status as a territory; it is not consistent with sovereignty.

Federal and Puerto Rico officials understood that Puerto Rico’s adoption of a constitution would not change its status under the federal Constitution.

Old San Juan (Via Flickr)
Old San Juan (Via Flickr)

How the Federal Government Views Puerto Rico’s Territorial Status

United States territories are not sovereigns. The Constitution affords no independent political status to territories but instead confirms that they are under the sovereignty of the United States and subject to the plenary authority of Congress.

This Court has consistently recognized that although Puerto Rico is locally self-governing, it remains a U.S. territory under the Constitution. For example, because Puerto Rico is a territory, it has “no sovereign authority” that could justify a border search under the Fourth Amendment…

The Executive Branch has recognized that Puerto Rico remains a U.S. territory subject to Congress’s authority. A 1994 Office of Legal Counsel opinion explained that Congress may not create a sovereign territory consistent with the Constitution, and since then, the Department of Justice has repeatedly stated the same view to Congress in connection with proposed legislation about Puerto Rico. Presidential task force reports in 2005, 2007, and 2011 have likewise confirmed that Puerto Rico is not a sovereign and that it could become one only if it were to attain statehood or become an independent nation. Those principles confirm that Puerto Rico is not a separate sovereign for purposes of the Double Jeopardy Clause.

Within the territory of the United States, the Constitution contemplates three sovereigns—the States, the United States, and the Indian Tribes. The Court has appropriately treated those entities, and only those entities, as domestic sovereigns under the Double Jeopardy Clause.

The Constitution neither recognizes nor affords independent sovereignty to territories but instead grants plenary authority to the United States: “The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States….” As a constitutional matter, “[a]ll territory within the jurisdiction of the United States not included in any State must necessarily be governed by or under the authority of Congress” because territories are “political subdivisions of the outlying dominion of the United States.”

More fundamentally, Congress cannot irrevocably cede sovereignty to Puerto Rico while it remains a U.S. territory.

Petitioner observes…that Congress could irrevocably cede authority over Puerto Rico by allowing it to become a State or gain independence. That is true. But Congress cannot cede sovereignty while Puerto Rico remains a U.S. territory. While nothing suggests that Congress intends to revoke its authorization of self-government in Puerto Rico, its power to do so is incompatible with Puerto Rico’s characterization of itself as a sovereign.

In a series of reports issued over two decades, the Executive Branch has rejected the view that Puerto Rico is, or could become, a sovereign territory. A 1994 Office of Legal Counsel opinion concluded that Congress may not cede sovereignty to a U.S. territory, absent statehood or independence, because all land under the sovereignty of the United States that is not a State is subject to “the authority of Congress,” and Congress may not irrevocably delegate its authority over such land.

Although Puerto Rico exercises significant local authority, with great benefit to its people and to the United States, Puerto Rico remains a territory under our constitutional system. Puerto Rico does not possess sovereignty independent of the United States, and its prosecutions cannot invoke the dual sovereignty doctrine under the Double Jeopardy Clause.

The very popular SCOTUS blog offers a comprehensive analysis about the amicus brief, concluding that the Obama administration has “thus challenged the island commonwealth’s claim that since 1952 it has had the status of a self-governing entity with its people free to have their own legislature write the island’s own laws, including criminal laws.”

What the Puerto Rican Government Says

Over the weekend, the Puerto Rican government officially reacted to the amicus brief in a letter governor Alejandro García Padilla wrote to the United Nations Secretary-General Ban Ki-moon. Here is the entire García Padilla letter (h/t @jayfonsecapr):

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What the Puerto Rican Bar Association Says

Additionally, another brief submitted to the Supreme Court by the Puerto Rican Bar Association offers a different perspective from that of the Obama administration brief:

The Constitution is the supreme law of the Nation. But for more than three million U.S. citizens who live in Puerto Rico, only portions of our foundational document apply.

Pursuant to the Insular Cases —a series of decisions by this Court dating from 1901— Puerto Rico is undeserving of the full panoply of constitutional rights because the island is “inhabited by alien races, differing from us….” That holding reflects views from a bygone era. But while the views have long since disappeared from mainstream American thought, this Court’s racially motivated precedents remain in force, limiting the rights of millions of U.S. citizens living in the territories.

The complete 43-page brief from the Obama administration is below:

US Amicus Brief in Valle by Latino USA

This is the 35-page brief from the Puerto Rican Bar Association:

Insular Cases Amicus Brief

The Political Money Behind Puerto Rico’s Crisis

As Puerto Rico’s government anxiously awaits a decision from Congress as to whether the federal government will play a more direct role in solving the island’s fiscal problems, a report from the Center for Investigative Journalism (CIJ) this week examined the political money behind the debate, including how investment firms who would collect on the island’s $72 billion debt have donated to U.S. senators working on ways to resolve the crisis.

CIJ provided Latino USA a version of the English article it published on December 9. (A Spanish version was also published.) The CIJ reporters are Joel Cintrón Arbasetti, Laura Moscoso and Carla Minet. The following italicized text is a condensed version edited from CIJ’s report, with some revisions to reflect new developments, including measures from Republicans to offer the island $3 billion and establish a federal financial oversight board:

The investment firms waiting to collect on the $72 billion debt from Puerto Rico and its corporations have separated into two groups: those who oppose the restructuring of the debt or that the island be included in Chapter 9 of federal bankruptcy law, and those who support it. Democrats have said that they back H.R. 870 (introduced to the U.S. House of Representatives by Puerto Rico’s Resident Commissioner Pedro Pierluisi). That bill seeks to include Puerto Rico in Chapter 9 protection. Republicans, who control both houses of Congress, are opposed to Pierluisi’s measure, although a new measure to assist the island was introduced on December 9. That measure is called the Puerto Rico Assistance Act of 2015.

Politicians from both parties who are members of the U.S. Senate Finance Committee, which has to evaluate the Chapter 9 measure for Puerto Rico and held a hearing about this issue in September, have received $327,250 in donations from mutual fund and hedge fund companies that hold the island’s bonds, the Center for Investigative Journalism found out. The 14 Republicans committee members and 10 of the 12 Democrats members have received donations from companies between March 2014 and October 2015, according to Federal Electoral Commission documents.

On the other hand, the Senate Judiciary Committee, which held a Puerto Rico hearing last week, is made up of 11 Republicans and 9 Democrats. Seven Republicans and seven Democrats of that committee have received donations from investment firms that hold Puerto Rico government bonds. The political donations were made through investment firm employees or through political action committees.

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The politician who has benefitted the most from donations made by investment firms holding Puerto Rico bonds was Chuck Schumer, the senior Democratic senator from New York and member of the Finance and Judiciary Committees. Schumer has expressed his support for Chapter 9 legislation. Between March 2014 and October 2015, he received $99,150 from these companies.

Among Schumer’s donors who hold Puerto Rico bonds are hedge and vulture funds firms York Capital, Fore Research & Management, Appaloosa Management, Fir Tree Capital, Davidson Kempner, Redwood Capital, Centerbridge Capital, Avenue Capital, Blue Mountain, Apollo Management and D.E. Shaw.

In addition, law firms hired by different bondholder groups in Puerto Rico have also made donations: Quinn Emanuel Urquhart & Sullivan, the firm hired by the Ad Hoc Group of bondholders of COFINA (Puerto Rico Sales Tax Financing Corporation); Davis Polk & Wardwell, hired by the Ad Hoc bondholders group of Puerto Rico’s GDB (Government Development Bank) and Gibson Dunn, hired by the bondholders of the AEE (Puerto Rico Electric Power Authority).

Schumer has also received donations from companies hired to lobby for or against including Puerto Rico in Chapter 9 legislation: Podesta Group, hired by the government of Puerto Rico to lobby in favor, and Venable LLP, hired by the investment firms to lobby against Puerto Rico.

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The Investment Company Institute of Mutual Funds, MassMutual Life Insurance and the Oppenheimer Fund have also made donations to Schumer. MassMutual and its subsidiary company, the Oppenheimer Fund, which according to Morningstar holds more than $4 billion in Puerto Rico bonds, are opposed to the restructuring of the debt. Besides donating to Schumer, MassMutual and the Oppenheimer Fund made donations to Iowa senator Chuck Grassley (R), who chairs the Judiciary Committee and is also a member of the Senate Finance Committee. Grassley has opposed including Puerto Rico in Chapter 9. This week, however, Grassley co-sponsored the Puerto Rico Assistance Act of 2015.

“There are political interests that have two sides. They push one side more than the other, but they cover themselves with the other side just in case as to not get too hot. This is the cockfighters’ strategy: I’ll bet on my rooster but I’ll bet on my opponent’s in case I lose. It’s a matter of political maturity and we should not only focus about people in favor and the others against. This is why I don’t have any problem saying that bankruptcy for Puerto Rico is impossible. Money is against it,” said Alfonso Giménez-Lucchetti, political and international issues commentator who has worked with Democrats.

Last July, Schumer introduced another legislative motion in the Senate to allow public corporations and municipalities in Puerto Rico to file Chapter 9, in a bill prepared jointly with Sen. Richard Blumenthal (CT), another Democrat and member of the Senate Judiciary Committee.

Schumer’s July proposal received support from Democrats but not from Republicans. At the last Judiciary Committee hearing about Puerto Rico, Schumer asked Congress to pay attention to financial situation on the island and said that the protection provided by Chapter 9 is a necessary measure but it is not enough to solve the island’s crisis.

“I am not surprised that Schumer has many donations from investment funds because he is a senator from New York and the majority of those funds have their operations base in New York. And Schumer is the first one who is promoting the Chapter 9 bill that I introduced in the House and is one of the co-authors in the Senate,” said Pierluisi, when asked about the influence of donations to politicians as related to Puerto Rico’s debt.

As for the various committee hearings this year in Washington, Pierliusi said that “the reason these hearings are held is that they have to acknowledge the issue or, at least, listen to it. They do not have a choice in the matter, the issue of Puerto Rico has generated so much press coverage, in Washington, in New York, in Europe, that they cannot ignore it… the least [members of Congress] have to do  become acquainted with, become informed.”

60 Plus, Mainstreet Bondholders and the Center for Individual Freedom

Another option available to influence politics is the creation of 501(c)(4) nonprofit organizations, which function as political pressure groups. An example of this type of organization is 60 Plus, which created the “Mainstreet Bondholders” project and has brought together a coalition of bondholders in Puerto Rico. The 60 Plus entity says it represents older people and is primarily financed by multi-millionaires David and Charles Koch.

This type of organization cannot influence political party issues, and they are not required to reveal who their contributors are. Mainstreet Bondholders lobby in the United States and in Puerto Rico against the restructuring of the government debt and are against Chapter 9 legislation. They have invested tens of thousands of dollars in Puerto Rico through media and the Internet.

CIJ asked 60 Plus vice president Matthew Kandrach who the organization’s contributors were and why it has paid for media ads related to the Puerto Rico debt. Kandrach refused to reveal the information.

In 2014, Citizens for Responsibility and Ethics filed a IRS complaint against 60 Plus and its president, Amy Noone Frederick. The complaint alleged that 60 Plus violated federal law by not disclosing the $11 million spent in political activities in 2010 and 2012. 

Another 501(c4) nonprofit organization running a campaign against Chapter 9 for Puerto Rico is the Center for Individual Freedom (CIF), a conservative group that set aside $1.9 million in 2012 for media campaigns against Democratic politicians.  This year, CIF has spent $26,000 in congressional lobbying, which included opposing Chapter 9 for Puerto Rico.

“At the very least, there should be a requirement in the law where contributors have to identify themselves. I believe, that as part of a democracy—people and the press should have access to their names, addresses and, if they are corporations, we need to know which corporations are making donations, as well as individual donors. I am in favor that there should be more transparency in the electoral process and in contributions,” Pierluisi told CIJ.

Chapter 9 Lobbying

The lobbying in the two measures submitted in Congress to extend Chapter 9 to Puerto Rico add up to more than $1,377,800 against it and $1,010,000 in favor, for the first three quarters in 2015. These amounts could be larger, since in some cases, the lobbying reports in the House of Representatives and the Senate several bills can be included under the same budget and the amount assigned to each measure is not specified.

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The efforts in favor of the measure are channeled through the Podesta Group, Smith Dawson & Andrews, The Roth Group and Primer Policy. The Government of Puerto Rico has invested a total of $300,000 in 2015. This total includes lobbying efforts of other issues not related to Chapter 9. Another player that lobbies in favor of Chapter 9 is the Fonalledas Company. It has spent $490,000 in the first three quarters of 2015 lobbying for Chapter 9 through the East Por LLC and Akin Gump firms.

Hedge funds companies Blue Mountain, Knighthead, Marathon Asset and Angelo Gordon & Co. have lobbied against the Chapter 9 measure, as well as insurance company Ambac Financial Group, CIF and the National Public Finance Guarantee Corp.

“The lobbyist group is an industry that thrives on those interests. If you show me opposition, I will lobby against you. I know that you are going to win but I make money lobbying against you. This is barbaric capitalism. To lobby against something that is impossible to defeat is part of the business. The lobbyists know this, but provide hope that we can make you win even though they know it is not going to happen. This is the game of –in parenthesis– American democracy,” stated Giménez-Lucchetti.

But does that strategy work on politicians?

“Not much. When they are clearly in favor of one party, well, no,” Giménez-Lucchetti concluded.

Featured image: Puerto Rico’s Capitol building (Wikimedia Commons)

Puerto Rico’s Democracy Gap

Puerto Rico’s current fiscal crisis is unprecedented, drawing worldwide attention to the island’s unique political relationship with the United States. The island is self-governed and receives generous federal funding, but on the other hand does not have voting representation in Congress and is subjugated to U.S. federal law. Island leaders have capitalized on the heightened attention to promote their particular status preferences, be it statehood, increased autonomy or independence. Nevertheless, there are crucial internal deficiencies that if gone uncorrected would result in further chaos regardless of whether Puerto Rico were to become a state or not.

Puerto Rico has a monstrous and bogged-down government apparatus. All of the island’s 1,055 schools are administered by a single agency, with a non-existent role of local governments when compared to other states and countries. The truth of the matter is that the distribution of power within the island is highly centralized, inefficient and frankly undemocratic.

State law also creates a cookie-cutter model for each and every of the island’s 78 city governments. The state establishes each mayor’s pay scale, and even establishes a minimum of nine departments that each mayorship must have. Each and every expenditure carried out by the city must be processed through a state agency. Local property taxes are capped by the state and collected by a centralized agency, who in turn keeps its cut and distributes funding per its own formula. City Councils for most municipalities are composed of 14 members, each hand-picked by the mayoral candidates and elected at large on the mayor’s ticket, as opposed to separate city council districts.

77% of all public revenues are kept by the state. Neither can cities go directly to the bond market to finance their public works and long-term investments, instead having to beg the state for a chunk of whatever bonds the central government bank can get ahold of. If the state has bad credit —which it does— then bond dollars do not trickle down to the local level. Most importantly, local governments cannot roll out basic public expenditures such as trash collection or payroll without state transfers or handouts, which at times are distributed discriminately.

Mayors are heavily partisan, compared to other jurisdictions that at times even prohibit mayoral candidates from running for a particular party. Despite Puerto Rican mayors having absolutely no say in the status question, the pro-statehood and pro-autonomy parties fight over mayorships each election cycle. The mayors thus dangle between caudillo-style politics and the embarrassingly weak local government. Clientelism ensues.

Citizens are rarely consulted, with all elected post up for grabs simultaneously every four years. Occasionally highly political issues are submitted to referendums, but never matters regarding public administration or finance. Bonds and tax proposals are not decided at the polls, but by politicians in San Juan and central bank bureaucrats. Billions of dollars are borrowed each term to divide among legislative pork and big dollar projects that often generate long-term losses or are left incomplete. Mayors and legislators have traditionally won elections promising large public works such as trains, convention centers and sports complexes. Meanwhile, lampposts lack bulbs, community centers paint, and park swing sets broken.

The statewide public utility company is grossly inefficient, with electric costs being the highest in the U.S., after Hawaii. The authority has long been mired by highly paid executives with luxurious bonuses, bureaucracy and political favoritism among its ranks. Nevertheless, legislation recently proposed by Puerto Rico’s executive branch suggests decreasing public participation on the board, lowering the number of elected members from three to two. Meanwhile, many local governments in other jurisdictions stateside and internationally use public utility cooperatives as opposed to centralized authorities. Island leaders are considering privatization before democratization.

It does not stop there: the tendency to centralize even further is predominant, as seen in a 2014 tax code amendment that took away one third of cities’ sales tax revenue and designated into a state legislature pork barrel fund. Though the state has experimented with the delegation of certain functions to local governments, such as school transportation and road maintenance, the central government is still hesitant to let go of its power and decentralize further responsibilities.

The lack of democracy and local governments in Puerto Rico is a subject which has gone largely ignored in previous months. As interest spikes with recent congressional talks on Puerto Rico’s fiscal situation, numerous bills have been filed with the intention to create a President-appointed federal fiscal control board to oversee the island’s finances. The tendency to seek even more top-down oversight, further isolates the already disgruntled electorate from their leaders. The result is a democracy in Puerto Rico that only exists one day each four years, with politicians running amok in between.

Featured image: San Juan, Puerto Rico (Flickr)

The views expressed in the op-ed are the author’s own opinions and do not necessarily reflect the editorial views of Latino USA or Futuro Media Group.

The ‘Must Read’ Pieces About Puerto Rico’s Crisis

If you have been following what is happening in Puerto Rico the last few months (or maybe you haven’t), I thought I would provide with a series of recent links and MUST READ pieces that will give you a better perspective on the current economic crisis down on the island. Curating this list of recent op-eds, news articles and even a few videos will hopefully leave you a bit more informed about Puerto Rico—my place of birth, the place I was raised (with a future stop in the Bronx) and a topic I have been studying/covering as a student/blogger/journalist since the late 1980s.

puerto rico flag

So what is the latest from San Juan? Here is what Bloomberg reported this past Friday:

Puerto Rico said it won’t make a bond payment due Saturday, putting the commonwealth on a path to default and promising to initiate a clash with creditors as it seeks to renegotiate its $72 billion of debt.

The government doesn’t have the money for the $58 million of principal and interest due on Public Finance Corp. bonds, Victor Suarez, the chief of staff for Governor Alejandro Garcia Padilla said during a press conference Friday in San Juan.

“We cannot make the payment tomorrow because we do not have the funds available,” Suarez told reporters. “This payment will be made as we address how to restructure the government’s debt prospectively.”

In short, Puerto Rico cannot pay its debt. What this means is still open for discussion, but that is where we are at right now. (FYI: Of all the U.S. English-language news outlets out there, Bloomberg’s coverage has been pretty stellar in the area of financial reporting. If you go to this link, you will see almost daily stories about Puerto Rico. So, to get a strong sense of the financial implications of this crisis, read Bloomberg or follow @business on Twitter.)

Puerto Rico Struggles With Impending Debt Crisis

Right now, a lot is being written and produced by U.S. English-language media about the crisis. Most of the stories are very informative, like this piece in last week’s Guardian, which breaks down what the hedge funds involved in Puerto Rico are recommending for the island. These are the same hedge funds who have been visiting the island and meeting with elected leaders, former politicians and government officials for a while now. Other good stories include a July 3 news article in The New York Times, a front-page Times article from June 28 and a July 17 article from AJ Vicens of Mother Jones. In addition, I just saw this digital video from NBC News, which gives you a Puerto Rico 101 take on it all.

Puerto Rico is indeed getting more coverage and attention, especially in light of the 2016 presidential race. The political press now understands that Puerto Rican voters in Florida matter. Just yesterday, Martin O’Malley became the first Democratic presidential candidate to visit the island, and even though Republican candidate Jeb Bush was technically not a candidate when he visited Puerto Rico in April, he was the first candidate from either party to say that the island’s public agencies should be allowed to seek bankruptcy. Last week, Bush said this to Telemundo’s José Díaz-Balart about Puerto Rico: “I believe that since [Puerto Rico is] a territory for U.S. citizens, they should receive the respect first for self-determination, and then we should assist them as much as we can in their economic crisis.”

Which leads me to my main point and why I decided to write this post in the first place. For the best information about how to understand the crisis in Puerto Rico, read what actual Puerto Ricans are writing and saying, too. When I tweeted this in early July, I meant it and I still do:

So, if I could choose five essential pieces that you should read right now, here they are. (One thing to note: I am presenting these five pieces because they offer a variety of opinions about the topic. This necessarily doesn’t imply that I am fully endorsing all the views of the writers here, just that I do think that these five links will give you a very good picture of the situation and the challenges involved.)

Puerto Rico’s Symbolic Power by Maritza Stanchich: This July 31 piece published in HuffPost Politics is one comprehensive op-ed. (Full disclosure: Maritza and I are friends). This well-researched and well-argued piece rests on the one very simple question that Maritza poses near the end of her essay: “Now that Puerto Rico is no longer important as a capitalist showcase and U.S. military and intelligence outpost of the Cold War era, are its U.S. citizens expendable?” 

Statehood Is the Only Antidote for What Ails Puerto Rico by Pedro Pierluisi: The island’s Resident Commissioner (a non-voting member of the U.S. House of Representatives and the leader of Puerto Rico’s statehood party) wrote a July 10 op-ed in the Times where he makes this an issue of equality: “Puerto Rico’s illness is a chronic condition. The unemployment rate, poverty rate and median household income have always been far worse than any state’s. The main cause is inequality. Residents cannot vote for president or senators, and have one nonvoting delegate in the House. It is disheartening to see many self-styled progressives, who otherwise speak eloquently about the importance of voting rights, go silent on this subject when it comes to Puerto Rico.”

Puerto Rico in crisis: weighed down by $73bn debt as unemployment hits 14% by Ed Morales: Morales, who has written a few pieces this summer for The Guardian about Puerto Rico, filed this June 28 article from San Juan. Here is a part of his central thesis: “The current debt crisis is largely assumed to have resulted from years of irresponsible borrowing by the Puerto Rican government, as if it were a consumer using one credit card to pay off another. But the US government deserves a considerable share of the blame. The Jones Act that gave Puerto Ricans US citizenship in 1917 in effect made Puerto Rico a US dependent. Puerto Rico’s government cannot make trade agreements with other countries. No trading ships can dock in its ports without flying the American flag.”

What a federal financial control board means to Puerto Rico by Gretchen Sierra-Zorita: The Hill published this op-ed on July 25 (yes, Gretchen is a friend, too and also contributed this earlier article for Latino Rebels). It focuses on what few are talking about: what if the federal government formed a control board for Puerto Rico? The article basically says that politicians must begin to put Puerto Rico first: “But the most important condition for Puerto Rico to succeed is for all its elected officials to show commitment to economic reform even if means losing the next election. This is what Washington and Wall Street expect. This is what the people of Puerto Rico deserve.”

What Exactly Is Going on in Puerto Rico? by Luis Gallardo: This July 21 essay, published in La Respuesta, includes detailed commentary and analysis. I even quoted Gallardo in my own July 23 Guardian op-ed: “Government inefficiencies, paternalist politics, clientelism, and short-term politicking are the primary causes of Puerto Rico’s public debt; characteristics that would persist no matter the island’s political status.” 

If you want to get into deeper historical conversations and discussions about this topic, I will also share the two recent media appearances I made about Puerto Rico. The first one is of me rambling on for 20+ minutes on Houston’s Pacifica Radio (yes, I did say Spanish Civil War and not Spanish American War at one point) from about two weeks ago:

Last Thursday, I was also part of a Nerding Out show on MSNBC Shift:

In addition, Rep. Luis Gutiérrez spoke twice on the floor of Congress last week about the issue. This is the first video.

This is the second one.

Let me know what you think by tweeting me @julito77.