Governing in the Age of Permiso
As we enter the stretch run to the general elections, there is a palpable difference to the campaigns tracing to the self-evident truth that Puerto Rico’s government is virtually suspended by the Puerto Rico Oversight, Management & Economic Stability Act (Promesa). Subconsciously, the candidates vying for votes are coming to grips with that reality—some are in denial, others may resort to fight or flight. If there were truth to language on Capitol Hill, the name of the act enabling the territorial control board would have been Permiso (the Spanish word for, “may I please”). Usage? May I please submit this deal with Cofina Senior creditors?; may I please go to market? And, so, this general election feels like a ruse; we, the people, will elect representatives who pretend to govern over Puerto Rico’s affairs—con permiso.
This special pre-election edition of Caribbean Business was planned as a guide to the coming elections. In it you will find a Mano A Mano between the two frontrunners, New Progressive Party gubernatorial candidate Dr. Ricardo Rosselló and Popular Democratic Party gubernatorial candidate Dr. David Bernier. The two candidates were to have answered identical questions with follow-ups that offer telling responses. Unfortunately, Rosselló was unable to participate in the interview. Thus, this newspaper prepared an essay on the candidate, along with the responses he gave during an interview that was conducted after the Juntecónomico event hosted by Caribbean Business, Caribbean Business en Español and TV station ABC5.
It was surprising to see Rosselló go into hibernation at this critical juncture of the campaign; apparently things are more complex than this newspaper knows.
Prior to the dates on which we were to have conducted our interviews, Rosselló’s father, the former two-term Gov. Pedro Rosselló, went on the record saying that he feels his son is well-equipped to govern Puerto Rico, but that he questioned some of the people who were surrounding him. Puerto Rico’s electorate could very well imagine the upstart candidate sighing aloud, “thanks Dad,” although the elder Rosselló cannot help himself—he has a pathological penchant for the truth.
At this writing, the two leading candidates vying to house-sit La Fortaleza have diametrically opposed views on how to handle a junta controlled behind the scenes by people who respond to former Gov. Luis Fortuño.
One candidate, pro-commonwealth Bernier, believes Puerto Rico must handle austerity measures with caution while he pushes mightily to have pro-growth incentives such as Section 245A pushed through the U.S. Congress. That incentive, which is consensually challenged because it reeks of corporate welfare, would grant 85% tax breaks on dividends repatriated to the United States by manufacturing companies doing business in Puerto Rico.
Conventional wisdom on the Hill is betting against the measure because it could be a $10 billion tax negative for the U.S. Treasury, according to estimates by the Joint Tax Committee.
Rosselló’s rhetoric, on the other hand, plays more to the conventional wisdom in the creditor camp. The upstart Rosselló, who is seen by many on Wall Street as the second coming of Argentina President Mauricio Macri, is negotiating with creditors and has said for the record that he will have at least two term sheets worked out within the first 50 days of his possible administration. That, in turn, says he, will provide Puerto Rico market access in 2017.
What Rosselló and Bernier are ignoring is that the culture of austerity being pushed by a junta is underpinned by Fortuñista doctrine; it could put such tremendous stress on Puerto Rico’s economy that it would be a full generation before we put ourselves back together again. Vamos con calma.