Thursday, December 14, 2017

[Editorial] Masterpiece Kabuki Theater

By on September 11, 2017

Editor’s note: The following editorial originally appeared in the Sept. 7 print edition of Caribbean Business.

“Here I come to save the day,” a declaration made popular by Mighty Mouse on the well-liked animated character’s TV show, may seem an adequate battle hymn for all players in the Promesa drama. The latest act features Gov. Ricardo Rosselló in a fracas with the Federal Oversight & Management Board (FOMB) because he refuses to implement a two-day-per-month furlough of Puerto Rico’s public employees.

Truth be told, the stance is playing out more like Kabuki theater, defined by dictionary.com “as a type of popular Japanese drama, evolved from the older Noh theater, in which elaborately costumed performers, nowadays men only, use stylized movements, dances and songs to enact tragedies and comedies.” To be certain, these are stylized movements—call them motions with very real implications.

At this writing, the oversight board filed an Adversary Complaint for Injunctive Relief and Declaratory Sentence, which is nothing more than a sheep in wolf’s clothing (pun intended); the complaint does not include a hearing and, therefore, lacks teeth.

Without an additional filing of a motion for injunctive relief, Judge Laura Taylor Swain is not forced to expeditiously demand Rosselló’s implementation of a furlough. Under the actual lawsuit, the usual procedure is to have the court grant time for the defendant to answer the complaint. The justice could ask for a reply within 48 hours or she could give the governor as much as one month, which raises the question—why didn’t the FOMB file a motion for injunctive relief in tandem with the adversary complaint? The board chose the conservative route normally employed in federal bankruptcy procedure.

By putting the ball in the judge’s court—no pun intended—the board opened the possibility that the issue could drag on for at least another month. FOMB Chairman José Carrión told this newspaper that the longer this drags out, the worse it will be because the number of days in the furlough will likely be greater to fill the gap in a measure that was scheduled to start on Sept. 1, 2017.

Although it came off as a veiled threat by the board chairman, the possibility of increasing the furlough to more days per month would have a greater impact on the economy. As it is designed right now, the furlough would affect about 130,000 government employees, excluding the more than 13,000 front-line public safety employees (police). La Fortaleza’s macroeconomic projections of a two-day-per-month furlough of those public workers would result in a contraction of 3.3% in gross domestic product (GDP) for the current fiscal year, which ends June 30, 2018.

A 2016 Caribbean Business analysis has found that a possible 20% cut in pay for 80,000 public sector workers would result in a minus-0.7% contraction in the Puerto Rico economy. A more drastic austerity measure of a 40% cut in pay would result in a minus-1.7% economic contraction.

A report by Advantage Business Consulting found that reducing the workweek by one day, meaning a 20% pay cut for most public sector workers, would have a “significant impact on the family budget of the typical public servant,” particularly since average salaries in the government are low.

Where there are control boards, there is usually Hell to pay. And, there are people on Capitol Hill with ties to the GOP—real power brokers, not staffers—who are rankled by the whole Promesa process thus far. Still, they are very well-acquainted with political gamesmanship and perceive Rosselló’s stance as a smart ploy in which the governor wins even if he loses this fight over the furlough in federal District Court.

Still more disturbing news surfaced as this newspaper was going to press when two separate sources—one on the Hill with ties to the GOP and one with ties to advisers for the FOMB—told Caribbean Business that the Rosselló administration advisers negotiated the furloughs with the FOMB lawyers and accountants to avoid layoffs with the governor’s blessing. Carrión made reference to these alleged meetings during a recent media tour. And Rosselló denied those allegations in a press conference soon thereafter.

Should the FOMB prevail in their complaint that the Rosselló administration must implement the furlough and this charade takes more than three months to resolve, the lawyers hired on both sides will make out handsomely and the people will have lost.

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