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Bernie Sanders Files Bill to Tackle Puerto Rico’s Fiscal, Economic Woes

By on June 9, 2016

SAN JUAN — On the same day the U.S. House approved the Puerto Rico Oversight, Management & Economic Stability Act, or Promesa, Sen. Bernie Sanders (I-Vt.) filed a measure that seeks to present yet another alternative to tackle the island’s fiscal and economic woes.

As previously reported, the Vermont senator and Democratic presidential hopeful announced last week his plans to file legislation to help the commonwealth restructure its debt and spur the island’s battered economy. The Puerto Rico Humanitarian Relief Act, or S. 3044, was referred to the Senate Finance Committee, which is chaired by Sen. Orrin Hatch (R-Utah).

Democratic presidential candidate Sen. Bernie Sanders, I-Vt., speaks during a campaign stop at Great Bay Community College, Sunday, Feb. 7, 2016, in Portsmouth, N.H. (AP Photo/John Minchillo)

Sen. Bernie Sanders, I-Vt. (AP Photo/John Minchillo)

The filing takes place amid legislative discussion of Promesa — a bipartisan bill that would establish an independent, fiscal oversight entity, which would be in charge of administering debt-restructuring tools and efforts for the island. Promesa is being touted by a majority of Republican lawmakers as the only option to address the commonwealth’s fiscal crisis without spending U.S. taxpayer money — a key condition for the GOP’s support.

Sanders’ measure would recognize the Federal Reserve’s authority to provide emergency financing to the commonwealth. The bill would grant the island’s public corporations with access to Chapter 9 bankruptcy protections, on a prospective basis.

Moreover, the bill would create the Reconstruction Finance Corp. of Puerto Rico — an entity to be run by a seven-member board and designed to assist in the commonwealth’s debt-restructuring efforts.

What’s more, the bill calls for ensuring that the Puerto Rico Commission for the Comprehensive Audit of the Public Credit continues its work and allow Puerto Rico not to pay any debt issued against the island’s Constitution. Holders of affected bonds would be prompted to “seek redress from the investment banks that helped market and sell these unconstitutional instruments,” reads a copy of the bill obtained by Caribbean Business.

Last week, the commission unveiled a preliminary report in which they question the validity of a couple of recent debt issuances by the commonwealth, while urging for the need to receive the necessary funding to continue its auditing process.  

Meanwhile, Sanders’ measure would also seek to improve federal healthcare funding, and calls for providing $10.8 billion over the next five years to modernize Puerto Rico’s infrastructure, an initiative that would create 140,000 jobs, according to a summary of the bill. It would also grant Puerto Rico with access to the federal earned income and child tax credits.

A process would be established to allow Puerto Rico and municipal governments to file for insolvency with the proposed public corporation, which would also be allowed to lend money to the commonwealth and its instrumentalities. It would be capitalized through the U.S. Treasury’s Exchange Stabilization Fund.

Upon an insolvency filing, a legal stay and a moratorium on debt payments would be imposed, and affected bonds “would be written down to whatever the current owner paid for [it],” reads a summary of the bill. The new entity would then buy those bonds at said price, resetting their par value.

“This section makes clear that the pensions of ordinary investors should be protected, and that Wall Street speculators should not be able to profit from the misfortune of [Puerto Rico’s people],” the document further states.

The entity’s board members would need to be all Puerto Rico residents, to be chosen by the island’s governor (2), Legislature (4) and the U.S. President (1).

As for the island’s political status, the bill calls for “a vote or a series of votes” in which Puerto Rico’s people can decide whether to become a state, an independent country or be allowed “to reform the current commonwealth” status. The federal government would be required to “respect and honor the will of the people of Puerto Rico,” and votes would need to take place by January 31, 2018, with a transition process be put into place by January 31, 2022.

As for the bill’s healthcare provisions, they seek “to ensure Puerto Rico receives payments under Medicare and Medicaid that are at least equal to payments received by all states,” reads the bill’s summary. For instance, it would increase Medicare payments to healthcare providers, remove caps on Medicaid funds and fully apply the federal poverty level limitation.

Another section would add Puerto Rico, particularly Vieques, to the Centers for Disease Control & Prevention’s National Environmental Public Health Tracking Network, which studies health, exposure and environmental hazard information in 26 states. It would also award a grant for a three-year study of Vieques’ environmental and health factors.

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