Hillary Clinton and a very diverse majority of senators and representatives believe they have a plan to solve Puerto Rico’s debt crisis. Clinton is apprehensive about certain details in the bill but eager to resolve the situation. CNN Money reports Clinton’s statements.
“We must move forward with this legislation, Otherwise, without any means of addressing this crisis, too many Puerto Ricans will continue to suffer.”
Bernie Sanders, however, is not pleased with the solution at all, and we know from his voting record that sometimes, when everyone else is ready to rush in, Sanders has an uncanny way of predicting an unfavorable outcome to popular legislation. We know he’s been right before, simply because in the past, he was unable to stop a disasterous bandwagon effect. The situation is most common in any scenario presented as a crisis. Sanders was unable to stop the war in Iraq or the Patriot Act for example. but he did try. Hillary Clinton voted for the Patriot Act and the Iraq war. Politifact has a list of examples.
Bernie Sanders stood against the crowd again on Friday according to CNN Money.
“I am proud to stand in strong opposition to this bill. [the plan would benefit Wall Street] while workers, senior citizens, and children are punished.”
Hillary Clinton, though cautious about endorsing the bill, says she believes it would help the islanders, but Bernie Sanders thinks it would only aid Wall Street bankers in collecting a debt, or at least a portion of it. Sanders sees that the people would suffer, even more, being forced to repay an unpayable debt, by sacrificing needed services indefinitely in the midst of a recession. Puerto Rico’s Governor compares the board to colonial overlords. He feels it is a breach of America’s democratic principles.
Puerto Rico owes $72 billion, and while that sounds like a lot, a quick check of state debt in the U.S. proves it really isn’t that unusual. State Budget Solutions reports that California owes $778 billion, New York owes $388 billion. Even Alaska owes about $30 billion. All American States owe billions so what is so unusual? Is it because they are in default? Is it because there is no feasible way they can ever pay it off? Is it because they already have a small population and unemployed islanders are leaving by the thousands?
Or, is Bernie Sanders right? Is this congressional effort being created because the big bank hedge fund creditors aren’t being paid promptly enough and want congress to put the screws to the tiny island? Are bankers holding the economy hostage again after even more risky investments? Is this like the housing bubble crisis? Will this legislation help people as Hillary Clinton hopes, or just cover the corrupt bankers caught in yet another risky practice? Why is this happening to Puerto Rico?
Puerto Rico’s bonds had unusual tax advantages. The New York Times explains that bonds for commonwealths and territories give tax-free interest while bonds related to states are taxed. That law created an unrealistic demand for bond loans to Puerto Rico. The island was feeling the recession and used the money to buffer their population from the poverty.
Hillary Clinton has reservations about the new bill but sees it as the best compromise solution. The deal, as explained by Vox, was made between the White House and House and now must pass the Senate. It has two major provisions, one is to create an appointed seven-member board to have jurisdiction over Puerto Rico’s future budget. The other provision allows the U.S. territory to file what amounts to bankruptcy in order to pay less than 100 percent on its debts. The bill would cost the U.S. Government virtually nothing, and hopefully, allow Puerto Rico to rebuild its failing economy.
Is Bernie Sanders right this time? Is this a really bad bill?
“We must never give an unelected control board the power to balance Puerto Rico’s budget on the backs of children, senior citizens, the sick and the most vulnerable people in Puerto Rico while giving the people of Puerto Rico absolutely no say at all in the process. That may make sense to groups representing Wall Street, but it makes absolutely no sense to me,”
Hillary Clinton says the bill protects the island from greedy bankers, but does it?
“We can no longer sit idly by while hedge funds seek to maximize their profits at the island’s expense.”
Puerto Rico used the borrowed money to give aid to individuals during the recession. Some pundits are critical of their investment in simply staying alive, rather than investing in infrastructure. None of the states find it easy to make debt payments in this distressed economy. Many states combat the lack of funds by purging needy welfare clients, cutting benefits, lowering teacher salaries, scrimping on school lunches, and putting off infrastructure maintenance. It is still hard to balance a state’s budget. If the recession does not improve, many states could follow Puerto Rico into default, so legislation around this issue is important to everyone.
Hillary Clinton and Bernie Sanders are exploring a difficult question. Is it right for an appointed board, bent on paying off a state or territory’s debt to decide whether to feed children, subsidies medical care or pay the debt?
Is Hillary Clinton giving in to peer pressure against better judgment, or is Bernie Sanders overstating the issue?
[Photo by Scott Olson/Getty Images]