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‘Cancel the debt’: Wall Street sabotages Puerto Rico’s earthquake recovery by hoarding $8 billion cash reserve

01/15/2020 5:59 pm ET Armando Santiago Pintado and Julio López Varona

'Cancel the debt': Wall Street sabotages Puerto Rico's earthquake recovery by hoarding $8 billion cash reserve

Even as Puerto Rico is working to recover from two historic earthquakes, Wall Street executives get ready for a 2020 payday at the island’s expense. Here’s the story, the solution, and two groups fighting for justice you can support.

Tremors continue a week after Puerto Rico was hit by two historic earthquakes. Over 4,400 people are reportedly living in shelters, and many thousands more are in makeshift tent cities, scared to return indoors for fear of having their homes collapse on them as they sleep. Schools remain closed and the electrical grid is hanging by a thread. Recovery is estimated to cost upwards of $1 billion.

As the Trump White House digs in further on their post-Maria actions blocking federal funds for emergency response and disaster relief in Puerto Rico, people fear that history will repeat itself.

However, this time things are different.

A growing movement of grassroots and advocacy organizations, in the states and on the island, is calling for Puerto Rico’s illegal debt to be canceled or discharged in court to give Puerto Ricans a fighting chance to recover from their mounting crises.

These efforts have met with success. Congressional members and the federal board appointed to resolve the island’s public debt have openly admitted that billions of dollars of the debt was acquired illegally.

Today Puerto Rico has an $8.7 billion cash reserve that didn’t exist in the aftermath of Hurricane María, just over two years ago. These funds could be used to help rebuild and repair, as well as prevent significant damage in future emergencies. However, this money has been sequestered by the federal government for one purpose: to pay off Wall Street.

There are significant differences between the effects of recent earthquakes and those of Hurricane María. But, in both instances, the damage and suffering to the people of Puerto Rico has been needlessly magnified by over a decade of budget cuts in public infrastructure, emergency management services, personnel layoffs, and quietly dipping into the emergency fund. All of this was done in the name of “fiscal responsibility,” to pay off illegal debts to Wall Street and compensate for the loss in public revenues borne from the 1996 congressional repeal of a federal tax break that kept the island’s economy afloat until its complete phase-out in 2006.

In the driver’s seat of this “Fiscal Responsibility” push is the Financial Oversight and Management Board (FOMB), an Obama-era bipartisan beast created to placate Wall Street ahead of Puerto Rico’s impending default on all of its debts in 2016. Since its inception, the FOMB has responded to the crisis with crushing budget cuts in education and healthcare, anti-worker labor and pension reforms, and increasingly unsustainable debt restructuring deals that threaten to impose over 40 years of tax and utility rate hikes for Puerto Rico’s majority low-income families.

The deep austerity measures pushed by the FOMB created an artificial budget surplus that has ballooned in 2 years to a $8.7 billion cash reserve, the same size as Puerto Rico’s entire operating budget in 2017. Instead of bailing out the flailing hedge fund industry, the federal government should direct the FOMB to free these funds to rebuild a stronger Puerto Rico for all.

To make this happen, the FOMB needs to feel the pressure from members of Congress, the Puerto Rican government, and the people of Puerto Rico to introduce a plan of adjustment before the court zeroes out Puerto Rico’s capacity to sustain any significant debt service in the near future, as the available funds are earmarked for essential public services and infrastructure to rebuild a better, safer, cleaner, and sustainable future for the people of Puerto Rico.

The federal government’s (lack of) response to Hurricane Maria made it crystal clear that this administration does not care about Puerto Rico. Given Trump’s racist disdain for our people, our priority needs to be to fight for a just recovery by any means necessary.

That means providing transitional and permanent housing options for families who lost their homes, without the threat of mass displacement. It also means rebuilding and redesigning the power grid to industry standards, and keeping it in public hands to prevent profit-seeking price surges for ratepayers. Schools, roads, bridges, and dams must also be repaired or rebuilt to code. Healthcare services, especially mental health and counseling, should be available around the clock to anyone who needs it.

We must use all of the resources at our disposal to recover.

Wall Street cannot keep piling on the excess profits while people in Puerto Rico suffer.

The time is now to cancel the debt.

Armando Santiago Pintado is the National Coordinator of VAMOS4PR, a network of stateside labor, community, cultural, and human rights groups committed to fighting for justice for Puerto Rico and empowering the Puerto Rican diaspora.

Julio Lopez is Co-Director of Community Dignity Campaigns for The Center for Popular Democracy, which supports partners in the U.S. building campaigns that organize the growing Puerto Rican community to advocate for a just recovery for the island. It also works to create policies that support the community in the US, while holding corporate players accountable for the actions they have taken on the island.

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