Thursday, October 18, 2018

Letter to Trump, Congress: Puerto Rico Cannot Survive Without Massive Fiscal Stimulus, Debt Relief

By on January 19, 2018

SAN JUAN – Puerto Rico has “no path to recovery without a massive fiscal stimulus plan and debt relief,” top economic figures told President Trump and Congress on Friday.

They released an open letter urging the Trump administration and Congress to take “immediate and decisive” action to accelerate economic growth and rebuilding in Puerto Rico, where a humanitarian crisis after Hurricane Maria threatens the “very survival of the island,” according to a release about the letter.

The full letter is available here: http://recovery4pr.org/.

In recent months, little federal aid has reached Puerto Rico, and many residents are still without power and without access to clean water and reliable sources of food and shelter.

Some of the most influential economists and economic policymakers in the United States have grown increasingly alarmed, the release reads, by the lack of federal attention on Puerto Rico.

(Screen capture of https://appropriations.house.gov/)

The letter was signed by, among others, people who served in previous U.S. administrations and advisers to institutions such as the International Monetary Fund (IMF) and United Nations (UN).

Among them are Jason Furman, former chairman of the Council of Economic Advisers under President Obama; Gene Sperling, former director of the National Economic Council under President Clinton; Antonio Weiss, former counselor to the Treasury secretary under President Obama; Joseph Stiglitz, Nobel Prize winning economist and Columbia University professor; Simon Johnson, former chief economist of the IMF; Jeffrey Sachs, former top economic adviser to the UN; and Mario Marazzi Santiago of the Puerto Rican Institute of Statistics.

They request that the island’s reconstruction be a priority for the Trump administration and Congress. The writers believe Puerto Rico needs a substantial federal investment as part of the supplemental relief act Congress is currently considering for U.S. jurisdictions destroyed by hurricanes and fires.

Before Hurricane Maria hit, Puerto Rico’s economy was already in a downward spiral, the economists emphasized. Its economy stopped growing in 2016 and entered a “lost decade” of negative gross domestic product growth, fiscal austerity, unemployment, emigration and debt.

The new fiscal stimulus plan for Puerto Rico “must address the devastation caused by the hurricane and the problems that caused the prior deterioration of the economy,” the letter reads.

For this recovery plan to succeed, they argue, Puerto Rico needs a “massive injection of funds for reconstruction” – at least $94 billion; lasting debt relief, with suspension of all debt payments to creditors until Puerto Rico’s economy recovers; the same level of federal Medicaid and Medicare aid received by U.S. states; and full access to a federal Earned Income Tax Credit (EITC) and an expanded Child Tax Credit (CTC).

The list of economic leaders endorsing the fiscal stimulus and debt reduction plan for Puerto Rico outlined in the letter follows:

Daron Acemoglu, Massachusetts Institute of Technology;

Alan A. Aja, Brooklyn College, City University of New York;

Robert Blecker, American University;

José Caraballo Cueto, University of Puerto Rico, Cayey;

Hector Cordero-Guzman, Baruch College-City University of New York;

William “Sandy” Darity, Jr., Duke University;

Alberto Dávila, The University of Texas Rio Grande Valley;

Zadia M. Feliciano, Queens College, City University of New York;

José M. Fernández, University of Louisville;

Richard Freeman, Harvard University;

Jason Furman, Harvard Kennedy School of Government;

Jamie Galbraith, University of Texas, Austin;            

Martin Guzman, Columbia University;

Darrick Hamilton, The New School;

Simon Johnson, Massachusetts Institute of Technology;

Thea Lee, Economic Policy Institute;

José Alameda Lozado, University of Puerto Rico, Mayagüez;

Mario Marazzi Santiago, Puerto Rico Institute of Statistics;

Marie T. Mora, The University of Texas Rio Grande Valley;

Francisco L. Rivera-Batiz, Columbia University;

Dani Rodrik, Harvard Kennedy School of Government;

Jeffrey Sachs, Columbia University;

Gene Sperling, Former Director, National Economic Council;

Joseph Stiglitz, Columbia University;

Mark Weisbrot, Center for Economic and Policy Research;

Antonio Weiss, Senior Fellow, Harvard Kennedy School of Government.

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