[Editorial] When Steve Met Ricky
Gov. Ricardo Rosselló’s meeting with U.S. Treasury Secretary Steve Mnuchin last week, is part of a broader initiative pushed by Puerto Rico’s government as it enters a critical juncture in the Puerto Rico Oversight, Management & Economic Stability Act (Promesa) sweepstakes. Rosselló is jockeying for position at the first-quarter pole—trying to obtain financial relief from the U.S. Treasury—even though the Financial Oversight & Management Board (FOMB) recommended against seeking short-term financing.
This was the second time the Rosselló administration made a case for creating a vehicle that would bring much-needed liquidity to Puerto Rico, first in meetings that took place in New York in January. The message from Republicans at this juncture has been consistent: “We gave you that Promesa legislation, now use its provisions wisely”—as if anyone could have wisdom with a law unlike any passed in Congress to date.
Meeting deadlines in full compliance with the exigencies of the oversight board is an exercise steeped in hardship that traces to the euphemisms in its language. For instance, Promesa uses the word “territorial,” making it tacitly clear that the federal law is for territories only, so that a host of distressed municipalities do not come calling on Congress for relief.
Because representatives on Capitol Hill speak with forked tongues, they also made certain to stress that the board is an “oversight” board, not a control board—again, to stress that this control board is not treating Puerto Rico like an old colony.
The play on words—call them Capitol euphemisms—that gloss over the affronts of colonialism has opened space for a game of one-upmanship that has the board finger wagging at Elías Sánchez, Rosselló’s nonvoting representative on the board for flippant expressions and general bravado about the Puerto Rico government’s true powers, in this submissive state.
Most recently, draft fiscal plans by five covered entities—the Puerto Rico Electric Power Authority; Puerto Rico Aqueduct & Sewer Authority; Government Development Bank; Highways & Transportation Authority; and Cooperatives Supervision & Insurance Corp.—were sent to La Fortaleza prior to final delivery to the oversight board on Feb. 21. However, the procedure called for delivery to the oversight board directly. A person with knowledge of the board’s protocol told Caribbean Business that FOMB members chose to overlook the procedural gaffe to “focus on the big prize”—the delivery of the central government’s fiscal plan on Feb. 28.
By the time you read this, the oversight board will be caught up in the unenviable task of evaluating a plan that the Rosselló administration had hinted will be tainted by fiscal gaps, which are scheduled to take more than the two years that la junta had set as a deadline for structural balance. The board has insisted on closing the gap immediately as it must comply with Promesa stipulations to achieve structural balance right out of the gate. Sources advising the board have let on that although there might be some wiggle room on the road to a balanced budget, a five-year goal is out of the question.
As this newspaper was going to press, sources told Caribbean Business that the fiscal plan would be chock-full of conjecture and projections, including scenarios in the realm of healthcare that contemplate achieving Medicaid parity—pie in the sky thinking that will likely not cut it with the board. The Promesa adviser who spoke on condition of anonymity explained that “the island received $5.7 billion across seven years and blew right through it; we can receive another billion next year and it would not fix the problem. We need to get our house in order.”
He’s right, a shot in the arm doesn’t cure the illness—it prolongs our poor economic health. The sooner we deal with the true underlying issues—the lack of job creation—the sooner we can chart a path to sustainable economic development.