Friday, August 7, 2020

NPP Candidates for Governor Vow to Put House in Order

By on June 2, 2016

SAN JUAN – The campaign to become the New Progressive Party’s (NPP) candidate for governor in the primaries that will be held on June 5 could be described as an incestuous contest between two men—Ricardo “Ricky” Rosselló, Ph.D., and Pedro Pierluisi Esq.—who both have ties to former Gov. Pedro Rosselló. When the elder Rosselló took office in 1993, Pierluisi held the position of Justice secretary, while Ricky, the former governor’s son, was still in high school.

 

Resident Commissioner Pedro Pierluisi, left, in an interview with Caribbean Business Politics Editor Ismael Torres, foreground, and Executive Editor Philipe Schoene Roura

Resident Commissioner Pedro Pierluisi, left, in an interview with Caribbean Business Politics Editor Ismael Torres, foreground, and Executive Editor Philipe Schoene Roura

In the more than 20 years since, Pierluisi won a first election as the NPP candidate for resident commissioner, when he was the running mate of former Gov. Luis Fortuño in 2008. Pierluisi was re-elected as resident commissioner in 2012. Rosselló went on to obtain his bachelor’s degree from the Massachusetts Institute of Technology and his Ph.D. in biomedical engineering from the University of Michigan, in a career that has been largely dedicated to the applied sciences. The marked contrast of a political career for Pierluisi—holding degrees from Tulane and George Washington universities—with two victorious elections under his belt and Rosselló’s trajectory as a scientist has made the experience factor an issue, which is being exploited by the resident commissioner.

The week prior to the primary put in stark relief the issue of experience—as Pierluisi was in Congress helping to build consensus behind the Puerto Rico Oversight, Management & Economic Stability Act (Promesa), Rosselló was out on the campaign trail criticizing the resident commissioner for flip-flopping on the bill that would establish a federal fiscal-control board as well as provisions for debt restructuring.

“At first he was against it, saying that he would never support Promesa in its original form,” Rosselló told Caribbean Business during an interview that took place last week. “I have been against pushing for a structure—I’m the only one who has opposed Chapter 9 and Super Chapter 9 like restructuring for Puerto Rico from day one because I think that if you are going to sit at the table in good faith negotiations, [why would you] then jump on a plane and go to Washington, D.C., to ask for instruments precisely not to pay.”

Pierluisi insists that negotiations in achieving consensus in a very divisive Congress are more complex than people understand. “This has been a moving target, so to start quoting me at different times is not right—back then when it was a fiscal control board on steroids without anything else, I came out against it,” Pierluisi told Caribbean Business in reference to his quotes against Promesa in the investigative magazine Mother Jones. “When it was first circulated as a draft I was against it, but this has been evolving. Right now, the legislation that we have is the best that we can put forward. Promesa in its current form is the result of an agreement between House Speaker Paul Ryan, [House Minority Leader] Nancy Pelosi and Treasury officials. I can understand those who criticize it from their particular angle.”

Promesa’s colonial implications
Although Rosselló has been very vocal in his opposition to Promesa, as statehooders, he and Pierluisi concur that Puerto Rico’s territorial status will put Puerto Rico’s next governor in the unenviable position of having to report to an oversight board.

Caribbean Business Executive Editor Philipe Schoene Roura interviews Dr. Ricardo Rosselló

Caribbean Business Executive Editor Philipe Schoene Roura interviews Dr. Ricardo Rosselló

“We have thought about this. Being a territory and a colony, unfortunately we don’t have much say in this,” Rosselló said. “We have a strategy to push forward—short term, medium term and long term. Short term, as soon as I’m elected governor, I am going to execute a strategy with the bondholders. You know that you have 18 different creditors and I believe that putting them all into one big umbrella is a big mistake. You have hierarchies, you have different conditions—some are revenue-pledged bonds, others are not. I have a plan to sit at the table with them and achieve the best solution for Puerto Rico. The plan has several simple steps—step No. 1, produce the audited statements, no matter how bad they are and be transparent with the creditors.”

Should he prevail in the June 5 contest, Pierluisi said he has no qualms about governing with the board in place. “It is time that people accept that as a colony, as a territory, we are subject to the plenary powers of Congress,” Pierluisi told Caribbean Business. “I am going to be fine with it [the board]; the same way that I get along with White House officials, congressional officials and fund managers. That is going to be the case with Promesa’s board members. I can guarantee that I will have an excellent relationship with the board when the time comes. And I will do what has to be done as governor—that has not changed with Promesa. I will have to come up with a good fiscal plan, I will have to come up with a balanced budget and I will have to make certain that our spending falls in line with our budgets. That is the role of a governor,” he said.

“If the governor and the Legislature of Puerto Rico do what they are called to do under the Constitution, we should not have any problem whatsoever dealing with this board because this is an oversight board in the sense that they will be overseeing that we do what we have to do under our own Constitution,” he added.

Tellingly, Pierluisi’s use of the word “oversight” implies that there is some measure of financial control that Puerto Rico will possess—something akin to the fiscal control board that was used in Washington, D.C. In truth, the control board enabled by Promesa is a territorial control board much like those imposed by the Netherlands and the United Kingdom on their Caribbean territories, as reported by NCM News in May 2016.

As a matter of fact, Promesa is a board that features traits that make it compulsory rather than a measure of voluntary oversight. The measure as it stands today must go to a full vote on the House floor, where there is reportedly some opposition to aspects of the measure—some groups continue to oppose placing all 18 creditor groups in one big tranche with collective-action clauses in place forcing holdouts to come into deals that are struck.

Economic development missing
Also, when amendments were made to Promesa en route to a 29-10 vote during markup in committee, very little in the way of economic development for Puerto Rico was included. “Yes, bills I have introduced in the past—the child tax credit bill, the earned-income tax credit bill. Those bills that were included in Treasury’s four-pillar proposal back in October 2015 were not included in Promesa,” Pierluisi said.

“My Medicaid-enhanced bill was also left out of Promesa. Again, the nature of the legislative process in Congress requires that you negotiate and reach a consensus—that consensus has been reached in the House,” he added.

Rosselló concurred. “There’s nothing in Promesa for economic development. There’s a plethora of incentives that I have proposed—they include the earned-income tax credit and Medicare and Medicaid parity,” he said. “There are other things that could be on the administrative track such as participating on a higher level in the federal government’s goods and services $450 billion budget—Puerto Rico participates in only 0.2% in procurement. We should be participating in 1.1% of that budget, which would represent $5 billion for the Puerto Rico economy.”

The upstart candidate said that he will drive economic development with a job creation plan, while he restructures debt issuer by issuer. “I have a proposal to create the Puerto Rico Debt Management Authority—like a fiscal control board, but it is a joint commission with the government of Puerto Rico and the federal government. It allows us to take the critical problems that we have analyzed, which are our lack of credibility and a lack of liquidity,” Rosselló explained. “As soon as I take the oath, I would push forward a committee. I would establish a credible and open, clear path to producing the audited statements. We know that they are probably going to look very bad. And there are some positive elements that I know that I can leverage,” he said. “The municipal markets as a whole are very liquid right now. They are looking to invest and we have to establish a benchmark for Puerto Rico so that it opens itself back to the markets.”

Rosselló sees a disposition by creditors—whether it is the Puerto Rico Aqueduct & Sewer Authority deal or the general-obligation proposal—to sit down and look for alternatives, just not in one big tranche. To that end, he said he has already commenced conversations with bondholders.

“I am already doing that; these people are all used to dealing with me,” countered Pierluisi, in reference to his experience negotiating with leaders of both chambers of Congress and U.S. Treasury officials. “The issue with financial statements is that you are talking about two years back and you are talking about CPAs who, under generally accepted accounting principles, have yet to opine that the commonwealth is a going concern. That is a huge roadblock when you have the liquidity issues and the fiscal issues we are facing,” he said.

“Financial statements will be a struggle for the near future—the important thing is that we have accurate financial data upon which to make our decisions. I envision that happening; I don’t see a problem in getting a clear picture of the government’s finances once we take over,” he added.

Although both candidates allege to have leads in informal polls being conducted across the island, Pierluisi will have to contend with a formidable election machine being driven by the former governor and former first lady Maga Rosselló. A woman who cut her teeth on social work in her college years, the matriarch is a formidable grassroots organizer who had a huge impact on the 1996 election results, during which Pedro Rosselló became the first candidate in Puerto Rico to surpass the million vote mark.

Whoever wins the June 5 primary will move toward unifying the pro-statehood NPP en route to the general elections, which will decide who faces the unenviable task of putting Puerto Rico back together again.

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