Tuesday, July 16, 2019

[Editorial] Back on the Hill

By on February 28, 2019

Editor’s note: The following originally appeared in the Feb. 28 – March 6, 2019, issue of Caribbean Business.

Puerto Rico took center stage on Capitol Hill once again this week as the Senate Committee on Energy & Natural Resources held oversight hearings on the State of the Territories, the economies of which are starting to crawl after having been brought to their knees by Mother Nature in 2017. As pertains to Puerto Rico, today, as then, concerns remain over the recovery of the island.

The White House is also concerned that Puerto Rico is incapable of drafting a plan to properly manage billions in relief funds coming down the pike without some constraints to keep the disaster capitalists at bay. Several weeks ago, those concerns were addressed through talk of a Reconstruction Czar, who would be tied to the executive branch, perhaps through a Homeland buffer. The idea to place a person at the doorstep of the executive mansion has since been abandoned as advisers to U.S. President Donald J. Trump used their powers of persuasion to explain the optics of that move—none positive.

As one adviser told this newspaper, the last thing the President needs is listening to daily reports on the czar being ineffective because no single one person can help to resolve an issue that is inherently structural—tracing to the complexities of traversing the alpine mountain of red tape, a slalom course really—in the federal realm.

As this newspaper was going to press, the conventional wisdom had some advisers to the President considering the creation of a czar ascribed to the Financial Oversight & Management Board (FOMB) created by the Puerto Rico Oversight, Management & Economic Stability Act (Promesa). That thinking took place against the backdrop of the resignation of Noel Zamot, who as the revitalization coordinator under Promesa, was tasked with setting in motion critical projects that would also help to create much-needed jobs in Puerto Rico. Sadly, Zamot threw in the towel because those works came to a screeching halt when projects already deemed critical had conditions—to have contracts with Puerto Rico’s government or RFPs—imposed midstream by the O-board.

It is a crying shame to see more than $8 billion in critical projects adrift because investors from afar see Puerto Rico as a rudderless ship in some very turbulent seas with the captains on deck fighting over who has control of the mop.

Throw in the First Circuit Court of Appeals decision declaring Promesa violates the Appointments Clause of the U.S. Constitution because the O-board members are federal officers. The optics of that decision on the Hill was put into context last week when a ranking committee aide explained that “this is the worst-case scenario for Puerto Rico because the First Circuit read into Promesa that the board has a lot more powers than the law gives it. And so, the fact they say the board has authority over legislation and that sort of thing, really is not power that exists. If the governor believes this renders the board un-empowered—then so be it. But we really don’t think that it is.”

Did they see this coming down the pike?

“So, bottom line, everyone on the Hill is looking to the White House because we don’t drive this process anymore. It is solely on the White House to decide whether they want to appeal or not. At the end of the day, we don’t have a say on the future of this law—it is entirely on the Trump administration,” the aide replied.

President Trump cannot rid himself of his headache in the Tropic of Cancer. It took only a couple of years for former U.S. House Natural Resources Committee Chairman Rob Bishop (R-Utah) to realize he had not disposed of the territory’s debt and hardship with the passing of Promesa. And with Puerto Rico’s $72 billion bond debt looming large on the horizon, it will be interesting to see whether the President will find new names to send to the Senate for confirmation to become members of the FOMB.

Or better still, Trump will come to the grand realization that the only way to rid himself of tropical headaches is to encourage U.S. Congress to enact measures for Puerto Rico’s economic development, much as was done in Washington, D.C. when it was tutored back to good governance in the 1990s. As one source on the Hill with ties to the GOP told this newspaper two weeks ago: “The last thing Republicans want to do is write a big fat check for Puerto Rico.” It behooves Congress to help foster job creation en la isla del encanto.

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