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Private Sector Forum Gives Insights into Promesa’s Drafting

By on August 3, 2016

SAN JUAN—The Task Force for Economic Growth created by the Puerto Rico Oversight, Management and Economic Stability Act (Promesa) is gearing up for a Sept. 15 deadline to make recommendations on urgent ways to help the island with its fiscal crisis.

Task Force staffers are slated to meet today to organize the panel’s work.

Jerry Weller

Jerry Weller, former member of Congress and current managing partner at New World Group Public Affairs (Getty Images)

Jerry Weller, a former member of Congress and current managing partner at New World Group Public Affairs, revealed the task force’s plans during a forum on Promesa sponsored by the Private Sector Coalition held Tuesday.

While Weller said the Task Force was slated to meet Wednesday, a Caribbean Business source clarified the meeting was with staffers only.

The task force is in charge of evaluating federal laws that are preventing Puerto Rico’s economic growth by Dec. 31, but it has an earlier Sept. 15 deadline to recommend urgent items that need immediate attention.

“They will be meeting to discuss the formal process on how they are going to operate and establish protocols,” said Weller, who lobbies on behalf of the Private Sector Coalition for inclusion of economic growth policies in the bill.

Despite the Sept. 15 deadline, it is still unclear whether Congress will be able to pass some sort of legislation to help the island’s economy, as lawmakers will go on recess in October and won’t be back until after the general election in November, after which Congress would dedicate all its efforts on the federal budget, Weller said.

Weller and Bill Cooper, senior advisor to the U.S. House Committee on Natural Resources, were among a host of participants that discussed the process of designing Promesa, the law that creates a fiscal control board to oversee Puerto Rico’s finances and provides a debt restructuring mechanism.

A group of protesters, headed by the Working People’s Party, showed up at the activity in the Condado Plaza Hotel to object to the imposition of a fiscal control board, but police and the hotel’s management stopped them from going into the meeting room.

While the protesters said they were upset because they were not allowed to go into the forum, one of the activity’s organizers, Marilú Otero, said that they invited Rafael Bernabe, president of the Working Peoples Party, to go in but that he said that because of discipline, he could not do it.

“We just did not want to have a mess in there,” she said.

The protesters yelled at some of the participants arriving at the activity for their role in the fiscal crisis and called former Gov. Carlos Romero Barceló, who attended the event, a murderer because of his role as governor during the 1978 killings of two pro-independence supporters at Cerro Maravilla.

Romero Barceló attended the event to bring up the need for Puerto Rico to deal with its political status and obtain equality so it could deal properly with its fiscal crisis.

Weller and Cooper insisted that the fiscal oversight board created by Promesa will help Puerto Rico overcome its fiscal crisis and that the process of creating the bill was a success from a Congressional standpoint, as all sides worked together to make improvements to the bill.  “Promesa is the law [and] the task force has been appointed. It is what we are dealing with,” Weller said.

Both discussed the process that led to Promesa and what steps the private sector must take to have its voice heard by the fiscal board and the task force.

Weller began by asking, “How many of you agree that the solution to Puerto Rico’s problems are more jobs, more taxpayers and more tax revenue?” Romero Barceló yelled from his seat in the public that Puerto Rico needed to deal with status and “equality.”

Weller ignored him, and instead moved on to ask the public, “How many of you believe it is by working together in a united front?”

In that regard, he then praised the Private Sector Coalition for working together to better educate Congress and advocate policies to generate revenues, as well as increase the number of taxpayers and jobs despite the political divisions on the island.

“When this process started, the vast majority of members of Congress knew very little about Puerto Rico, so there is a need for education,” he said.

Throughout the process, he said members of Congress learned that besides tourism, Puerto Rico’s economy relies on manufacturing and boasts a sophisticated economy in the areas of science and technology. “And frankly, it was federal policy that got us here,” he said, referring to the repeal of federal Section 936 tax credits for U.S. subsidiaries.

Weller provided a summary of the process that led to Promesa’s enactment. While officials said that the island needed to find ways to restructure its debt, the Private Sector Coalition instead pressed the need for Puerto Rico to develop its economy.

The private sector established a list of priorities, including pro-growth tax policies, to revitalize manufacturing; the need to reduce the high energy costs; and parity in health care funds. However, Weller said that House Speaker Paul Ryan, whom he described as “the smartest guy in the room by nature,” put everything to a halt.

According to Weller, Ryan told the Coalition that the Obama administration just wanted to deal with the issue of helping Puerto Rico restructure the debt and that, personally, he did not want to deal with too many legislative committees because it would delay the process of creating a fiscal control board.

Ryan then reportedly said that lawmakers were not going to deal with pro-growth tax policy or energy, but that he was going to make sure that Congress would take a serious look to get the island’s economy moving again. As a result, he included a provision creating the bipartisan and bicameral Task Force for Economic Growth, which would also look at any administrative actions that can be carried out at the federal level to help Puerto Rico’s economy.

However, Weller added that the Private Sector Coalition worked together to improve the bill “even further.” For instance, Committee Chairman Rob Bishop looked for ways to find ways to bring private sector competition to the energy sector and create the figure of Revitalization Coordinator to develop an island-wide strategy.

Despite not having jurisdiction over taxation, the Natural Resources Committee also advocated a pro-growth tax policy. It also prompted the Task Force to find ways to help the health care industry, which is an important part of the economy.

Sen. Orrin Hatch, who heads the task force, is the key to move Puerto Rico policy forward as head of the Senate Finance Committee, according to Weller.

In an aside with Caribbean Business, Weller said that Hatch has spoken favorably about giving Puerto Rico tax incentives similar to the ones that the island enjoyed under Section 936 and regrets their repeal.

He urged the island to keep its message simple and work together on its fiscal problems.

Cooper, on the other hand, stressed the need for Puerto Rico to pay its debt, noting that in the process of enacting Promesa, “we did not want a quick access to any type of debt restructuring.”

“There also had to be a fiscal plan and a mechanism in place to achieve audited financials so everyone knows what the island needs,” he said.

While the legislation contains language for Puerto Rico to work on its status, Cooper said the debate “is somewhat moot in Congress,” as the island has to deal first with its fiscal crisis.

“We spend thousands of hours [and] hundreds of meetings to draft one bill. In the end, we only could produce one bill,” he added.

Finally, on the question about the impact of hedge funds in the process, Cooper merely said that in to resolve the Puerto Rico’s situation, all options had to be explored.

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