US reps reject proposed reorganization of Puerto Rico Statistics Institute

SAN JUAN – The executive director of the Puerto Rico Statistics Institute (PRSI), Mario Marazzi, echoed statements made Friday by several members of the U.S. Congress in rejection of the Gov. Ricardo Rosselló administration’s proposal to consolidate the entity.

Last week 15 U.S. representatives, both Republicans and Democrats, sent a letter to Dr. Nancy Potok, the chief statistician of the Office of Management and budget, and copied Gov. Ricardo Rosselló, to express their rejection of the Statistics Institute provisions contained in Reorganization Plan 1 and its enabling bills, Senate Bill 809 and House Bill 1403.

The members of Congress wrote that in the aftermath of the September hurricanes and economic hardship on the island accurate data is required and removing the independence from the PRIS’s functions could undermine the institute’s credibility.

“Amidst recent news coverage on the intention of Puerto Rico’s government to fold the Puerto Rico Institute of Statistics (PRIS) into the Department of Economic Development and Commerce and allow for the Secretary to privatize PRIS’s core functions, we write to you to express concern over the announcement, and reiterate the importance of the independence of the PRIS,” the letter states. “As it relates to Puerto Rico, the need for public, independent, and unbiased data has never been more acute, particularly as Congress debates disaster supplemental legislation. We urge the inclusion of Puerto Rico in federal statistical programs and surveys carried out by the U.S. Census Bureau and other federal agencies.”

The U.S. lawmakers further stress that the PRSI is a key ally of federal statistical agencies and say greater collaboration between the institute and the federal agencies is essential for the U.S. government to gather the same statistics on Puerto Rico that it does for the 50 states.

“We greatly appreciate these expressions and join them,” Marazzi said. “The Institute has been working for years, for example, for the economy of Puerto Rico to be included in the statistics about the economy of the United States. For this, the federal government has required us to make some improvements to the methodologies used by the Planning Board.” he explained.

“In fact, currently, we are the only entity in Puerto Rico that dedicates its own resources, including 10% of our budget, to make these improvements. For this purpose, inter-agency agreements have already been signed between the Institute and the Federal Government. It’s just a matter of being allowed to execute them. We are very concerned that the proposed reorganization will halt or postpone these important projects, which could reverse the inclusion of Puerto Rico in the economy of the United States,” the institute director added.

American Statistical Association: Don’t dismantle Puerto Rico Statistics Institute

Marazzi said he is confident that during the next few days, the Puerto Rico Legislative Assembly will carefully weigh Reorganization Plan 1 and join their counterparts in Congress in stressing the importance of the PRSI.

“Likewise, we trust that in the coming days more voices will continue to unite and express themselves against the proposed reorganization, just as more than 1,700 people have already done through the online petition on the change.org platform that was started and promoted by the American Statistical Association,” he said.

In mid-January, La Fortaleza Public Affairs Secretary Ramón Rosario had expressed that the Economic Development and Commerce Department (DDEC by its Spanish acronym) would be in charge of designing the process to privatize the PRSI. However, this move would be subject to the approval of the Legislative Assembly during this ordinary session, which runs through the summer.

La Fortaleza said the goal is to give the PRSI’s board “real independence.” If the proposed process is carried out, the board’s members would be named by the private sector.

The PRSI is an autonomous government entity with the task of coordinating the government’s statistics production service to ensure the data collection and statistics systems, on which public policies are based, are complete, reliable and easily accessed.

The Institute has in its inventory, www.estadisticas.pr, about 300 statistical products. In addition, it is custodian and provides access to more than 100 data sets through www.data.pr.gov and over 40 tables and more than 6,000 indicators through: www.indicadores.pr.

Read the full text of the letter here.

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Frente por Puerto Rico to lobby Washington for financial aid package

SAN JUAN – Gov. Ricardo Rosselló asked the group “Frente por Puerto Rico” to go to Washington, D.C., for “the next few weeks” to assist in lobbying for financial resources for the island after the passage of Hurricane María.

With “a single voice,” the governor expects the “front” to go to the U.S> capital and demand equal treatment for Puerto Rico. Efforts will focus largely on approving a long-term financial package to rebuild the island, but also include the healthcare issue and the Donald Trump administration’s recently presented tax reform.

Regarding the financial aid package, Rosselló said he expects it to be addressed “within the next month, month and a half,” after the government has final details on the damages caused by María. Some unofficial estimates suggest $30 billion to $ 95 billion in losses.

A lack of congressional action “would result in Puerto Rico not to being rebuilt properly, the potential for a humanitarian crisis and, above all, the mass exodus of many Puerto Ricans to different states,” Rosselló said in Thursday’s press conference.

Several members of Frente por Puerto Rico were present for the announcement, including former Govs. Alejandro García Padilla, Aníbal Acevedo Vilá and Carlos Romero Barceló; representatives of the private sector and nonprofit organizations; and the presidents of Puerto Rico’s Senate and House, Thomas Rivera Schatz and Carlos “Johnny” Méndez, respectively.

The “narrative” with which they will go to Washington will be decided on next week, when the group will again meet with Rosselló. At that meeting, the group is also expected to establish a work schedule to begin its visits to DC.

The governor also assured that the group will work with the delegations of Texas and Florida in Congress, aiming to secure the necessary support to obtain the resources and actions the local government seeks. It must also connect with the Puerto Rican diaspora to communicate with their members of Congress to advocate for the island.

“There is an environment where the same delegations from Texas and Florida are demanding that Puerto Rico, Virgin Islands, Texas and Florida be treated equally,” Rosselló said.

From the left, former On foreground, from left, Gov. Alejandro García Padilla, Governor Ricardo Rosselló and former Gov. Carlos Romero Barceló (Felipe Torres / CB)

Rosselló was confident that sometime before the end of next week, Congress would approve a measure that would give immediate relief to Puerto Rico through nearly $6.2 billion in funds. These include loans of up to $4.9 billion that would inject liquidity to the central government and almost $1.2 billion to support the local Nutritional Assistance Program.

In a 353-69 vote Thursday, the House passed legislation allocating a combined $36.5 billion in Federal Emergency Management Agency (FEMA) funds. Of that amount, $4.9 billion will be in FEMA loans available to Puerto Rico and the U.S. Virgin Islands, with the idea of replacing the loss of revenue. Other aid will go to aid the U.S. West Coast states that had massive wildfires. The measure no goes to the Senate for consideration.

Trump lashes out at Puerto Rico as House passes aid package 

The government of Puerto Rico also expects to obtain within the next few weeks, $4.2 billion to $ 4.6 billion in funds through various federal programs.

In addition to the long-term financial aid package for the island’s reconstruction following María, the governor mentioned healthcare and tax reform as elements that will form part of Frente por Puerto Rico’s lobbying in Washington.

“It is important that Puerto Rico can maintain its tax advantage to sustain our economy here, and of course, that we can implement the economic development tools,” the governor said about the tax reform Congress is discussing.

Rosselló announced early in August the creation of the group with the intention of having diverse sectors represented when advocating in favor of the island for healthcare funds and economic development measures.




GOP Congress rolls back rules on hunting, broadband privacy

By Kevin Freking

WASHINGTON, D.C. — Hunters could soon target grizzly bears from the air on Alaska’s federal lands. Internet providers may get to sell the browsing habits of their customers. States will be able to deny federal family planning money to Planned Parenthood and other abortion providers.

Citing states’ rights, jobs and the right to bear arms, congressional Republicans are reversing dozens of Obama-era rules affecting the environment, education and the energy sector. The GOP is using a largely unknown but highly effective legislative tool that allows a simple majority in the House and Senate to overturn regulations that often took years to craft.

Indeed, with an overhaul of health insurance going off the rails, Republicans are left pointing to the repeal of various government regulations as their crowning legislative achievement after some 70 days at work. The GOP casts the effort as overturning eight years of excessive government regulation and boosting business.

In this March 28, 2017, photo, President Donald Trump, accompanied by Environmental Protection Agency (EPA) Administrator Scott Pruitt, third from left, and Vice President Mike Pence, right, signs an Energy Independence Executive Order at EPA headquarters in Washington. The GOP-led Congress is using a largely unknown but highly effective legislative tool that allows a simple majority in the House and Senate to overturn regulations that often took years to craft. (Pablo Martinez Monsivais, File/AP)

In this March 28, 2017, photo, President Donald Trump, accompanied by EPA Administrator Scott Pruitt, third from left, and Vice President Mike Pence, right, signs an Energy Independence Executive Order at EPA headquarters in Washington. (Pablo Martinez Monsivais, File/AP)

“These things will help get people back to work, and after years of sluggish growth, give a real boost to our economy,” Speaker Paul Ryan, R-Wis., said this past week.

The president has signed eight resolutions revoking regulations issued during the final months of Democrat Barack Obama’s presidency. Six resolutions have cleared Congress and are awaiting the president’s signature. A couple dozen more are on deck, with last Thursday the deadline for filing more.

Trump has signed measures eliminating requirements that mining and oil companies report payments made to foreign governments. The rule was designed to shine a light on how much money foreign governments received for their nation’s resources, thus reducing the prospect of corruption.

He also signed another measure reversing an Obama plan to prevent coal mining debris from being dumped into nearby streams.

“These actions from Congress and the president are giving hope to businesses that they haven’t had in a long time,” said Rep. Kevin Brady, R-Texas, chairman of the Ways and Means Committee.

Democratic Leader Nancy Pelosi scoffed at the notion that Republicans were accomplishing anything with the regulatory repeals “because they do not meet the needs of the American people.”

“They are about trickle-down. Their life is about giving more money to the high-end and to corporate interests, maybe it will trickle down, that would be good, but if it doesn’t, so be it, that’s the free market,” Pelosi said.

Robert Weissman, president of Public Citizen, a consumer advocacy group, said the regulatory repeals Congress pushed through will actually damage the economy more than it helps. He said that eliminating the stream protection rule may help coal companies, but it hurts other companies that stand to gain through healthier streams and water supplies.

EPA chief: Trump to undo Obama plan to curb global warming

“If you look across the terrain of the Congressional Review Act resolutions, they are repeals of public measures that help, consumers, workers and the environment in very substantial ways, but are opposed by powerful corporate interests,” Weissman said. “The Republicans driving these measures are paying back their corporate benefactors at the expense of the public.”

In some cases, the regulatory repeal efforts have had nothing to do with the economy, but addressed hot-button social issues that so often dominate Washington politics.

Republicans blocked a Social Security Administration rule that would have prevented tens of thousands of mentally disabled beneficiaries from being able to purchase a firearm. The rule was targeted specifically at those beneficiaries with mental disorders who have a third party manage their financial benefits, and it was opposed by the NRA and several advocacy groups for the disabled.

The latest repeal effort clearing both chambers required Republicans to bring Vice President Mike Pence to the Capitol so he could cast the tie-breaking vote on the abortion issue. The scrapping of the Health and Human Services rule gave states the go-ahead to deny federal family planning money to Planned Parenthood and other abortion providers.

One of the more closely contested repeals would kill an online privacy regulation. Fifteen Republicans sided with Democrats in opposing the repeal, which Pelosi said would allow internet providers to sell personal information without a user’s consent. “You should be very, very scared,” she said.

The ability of Congress to void regulations with a simple majority was created in 1996 when Congress passed the Congressional Review Act.

In the 20 years since, Congress was only able to use it once to repeal a regulation. Congress sent five repeal resolutions to Obama, but he vetoed each of them. Trump made clear early on that he would back the efforts of the GOP-led Congress.

Trump to target trade abuses with executive orders

“I will keep working with Congress, with every agency, and most importantly with the American people until we eliminate every unnecessary, harmful and job-killing regulation that we can find,” Trump said this past week. “We have a lot more coming.”

The U.S. Chamber of Commerce has encouraged the regulatory rollbacks, weighing in with lawmakers on efforts affecting internet providers, federal contractors and energy companies. Neil Bradley, a senior vice president at the Chamber, acknowledges that it’s hard to say how many jobs are created or saved through the repeal of one particular rule, but he says employers of all sizes tell the chamber government regulations are a top concern that makes it harder for them to flourish.

“Any time we can roll back these regulations is another step forward to restoring the economic growth that I think is the top priority of the American people,” Bradley said.




González officially becomes Puerto Rico’s first US congresswoman

House Speaker Paul Ryan of Wis. administers the House oath of office to Puerto Rico Resident Commissioner Jenniffer Gonzalez during a mock swearing in ceremony on Capitol Hill in Washington, Tuesday, Jan. 3, 2017. (AP Photo/Zach Gibson)

House Speaker Paul Ryan of Wis. administers the House oath of office to Puerto Rico Resident Commissioner Jenniffer Gonzalez during a mock swearing in ceremony on Capitol Hill in Washington, Tuesday, Jan. 3, 2017. (AP Photo/Zach Gibson)

SAN JUAN – Jenniffer González made history again Tuesday when sworn in as Puerto Rico’s first woman resident commissioner in Washington, D.C. at the 115th Congress of the United States.

The resident commissioner, leader of the Republican Party in Puerto Rico, was sworn in for four years along with the 435 members of the U.S. House, which comprises 241 Republicans, who only lost six seats in the November elections, and 194 Democrats.

As announced Monday, newly sworn in Puerto Rico Gov. Ricardo Rosselló accompanied González. Former Govs. Sila María Calderón and Luis Fortuño were also present, as well as a group of Puerto Rican politicians and agency heads.

Meanwhile, José Serrano (D-New York), Nydia Velázquez (D-New York), Luis Gutiérrez (D-Illinois) and Raúl Labrador (R-Idaho), all of Puerto Rican descent, were re-elected to Congress, as was Florida’s first congressman of Puerto Rican heritage, Darren Soto (D).

González is expected to present Wednesday a Puerto Rico statehood bill Wednesday, for which she will be accompanied by Rosselló. She also plans to submit measures to obtain parity with states in federal healthcare funds.

The measures are aimed in part at alleviating the U.S. territory’s decade-long economic crisis that has prompted more than 200,000 people to leave for the U.S. mainland.

González is allowed to serve on committees but has limited voting powers as Puerto Rico’s resident commissioner. She is a Republican and once served as speaker of Puerto Rico’s House of Representatives.

González, 40, is among the youngest members of congress, where the average age of members is 50 to 55 years old. The youngest member is 31, while the oldest, 87.

115-freshman-classlarge




Jenniffer González participates in Harvard program for new congressmen

CAMBRIDGE, Mass. — Resident Commissioner-elect Jenniffer González Colón is participating in the Bipartisan Program for New Members Elected to Congress along new congressmen nationwide, offered by the Institute of Politics at Harvard University.

Resident Commissioner-elect and chairperson of the Puerto Rico Republican Party, Jenniffer González (File)

Resident Commissioner-elect and chairperson of the Puerto Rico Republican Party, Jenniffer González (File)

“I am thankful of the invitation by Harvard University to participate in the program.  know I will acquire tools that will allow me to represent the island efficiently, and I will take advantage [of the opportunity] to continue developing relations with my colleagues so they know our interests, and to be able to count on them when boosting legislation to Puerto Rico’s benefit,” expressed González Colón.

The New Progressive Party (NPP) politician explained that every two years, the Institute offers the nation’s most prominent education and training program to new members of the U.S. House of Representatives. The new elected members in Congress will gather for the Institute’s conference, where they will discuss how legislators can exercise their leadership in and face legislative challenges.

“We are pleased to welcome the new Congress members so they congregate in an environment where they can set aside partisanship and focus on daily governance work,” expressed William D. “Bill” Delahunt, the Institute’s interim director and former U.S. representative for Massachusetts’ 10th congressional district.

He added their participation “is evidence of the collaborative and civilized commitment that can be reestablished in our democratic process as we begin new efforts to reconnect the United States.”

The 22nd edition of the Bipartisan Program for New Members Elected to Congress offers attendees a variety of seminars and guidance that include: federal budget process; key issues in domestic and foreign policy; and the expanding role of innovation and technology in government; setting up and staffing congressional offices; best practices for media relations; and managing family/work life balance.

For more information, visit http://www.iop.harvard.edu.




Behind the Smiles, Tough Reality for Trump and GOP Congress

WASHINGTON — The budding new alliance between Donald Trump and congressional Republicans hides a tougher reality: Even with unified GOP control of Washington, the president-elect’s priorities may have trouble getting through Congress.

House Speaker Paul Ryan of Wis., left, shows President-elect Donald Trump, his wife Melania and Vice president-elect Mike Pence the view of the inaugural stand that is being built and Pennsylvania Avenue, from the Speaker's Balcony on Capitol Hill in Washington, Thursday, Nov. 10, 2016. (AP Photo/Alex Brandon)

House Speaker Paul Ryan of Wis., left, shows President-elect Donald Trump, his wife Melania and Vice president-elect Mike Pence the view of the inaugural stand that is being built and Pennsylvania Avenue, from the Speaker’s Balcony on Capitol Hill in Washington, Thursday, Nov. 10, 2016. (AP Photo/Alex Brandon)

And in some cases Republicans themselves might be the barrier.

Building a border wall and restricting immigration from terror-stricken nations? Don’t count on Senate Democrats to go along, and they will effectively wield veto power in many cases.

Repealing President Barack Obama’s health care law? That looks likely to happen in some way, shape or form, but a number of states that accepted that law’s expansion of the Medicaid health program for the poor are represented by Republicans. It will take painstaking and potentially lengthy negotiations to come up with a solution.

And then there are Trump’s protectionist views on trade, skepticism about international treaty organizations and promises to protect Social Security and Medicare. All that flies in the face of Republican Party orthodoxy – and the list goes on.

Still, all that seemed like a problem for another day as Trump paid a triumphant visit to Capitol Hill on Thursday after a cordial White House meeting with President Barack Obama.

He sat down with House Speaker Paul Ryan of Wisconsin, whom he derided as “very weak and ineffective” just last month after Ryan distanced himself over audio of Trump talking about groping women. Ryan was all smiles as he escorted Trump, wife Melania and Vice President-elect Mike Pence onto the Capitol Balcony to give them a view of the inauguration platform being constructed for Trump to take the oath of office Jan. 20.

From there Trump strolled through the Capitol’s stately Ohio Clock Corridor with Senate Majority Leader Mitch McConnell of Kentucky, who’d been quick to endorse him but critical of his rhetoric and undisciplined campaign style. But it was McConnell’s strategy of refusing to act after the death of Justice Antonin Scalia in February that now hands Trump a Supreme Court vacancy to fill.

And on Thursday there was no sign of strain. The normally reserved McConnell even seemed to adopt Trump’s hyperbolic rhetorical style, declaring their encounter “a first-class meeting.”

Ryan, for his part, picked up Trump’s campaign slogan, telling reporters: “We are now talking about how to hit the ground running, and make sure we get this country turned around, and make America great again.”

As he left the Capitol, Trump was asked about his legislative priorities.

“A lot of really great priorities. People will be very, very happy,” he said. “We’re going to move very strongly on immigration. We will move very strongly on health care. And we’re looking at jobs. Big-league jobs.”

As for specifics, there were none. But Trump’s ability to deliver on his extravagant campaign promises to change Washington and rebuild the nation will require passing laws, a tedious process not built for instant gratification.

He will be able to take some steps through unilateral, executive actions, a method Republicans repeatedly accused Obama of overusing. But big-ticket items like tax cuts and infrastructure spending, and most major policy changes on immigration, health care, energy or trade, would require Congress’ say-so. And although Republicans control the House, they will have only 52 seats in the 100-member Senate next year, well short of the 60 votes needed to advance most legislation.

“Many of his proposals would face a certain filibuster in the Senate,” predicted Jim Manley, a Democratic consultant and former top Senate aide.

So the gatekeeper on much of Trump’s agenda may end up being New York Sen. Chuck Schumer, who will take over as the Democrats’ Senate leader in the new Congress. Schumer has had little to say since the election, beyond issuing a short statement congratulating Trump, though the two have spoken on the phone. But few expect Schumer and his Democrats to sign on to too many of Trump’s plans.

And the areas where Democrats see most initial agreement with Trump – on infrastructure spending, for instance, or his proposal for paid family leave – may run into problems from congressional conservatives reluctant to go along with big government spending.

Even as GOP leaders pledged to work together with Trump, there were signs of policy differences.

At a post-election news conference, McConnell declined to endorse Trump’s signature border wall with Mexico.

And on trade, Trump has denounced the 12-nation Trans-Pacific Partnership negotiated by the Obama administration, and both McConnell and Ryan have indicated it won’t come to a vote before Obama leaves office. Yet some establishment Republicans remain convinced that some kind of deal is sorely needed.

“The big question is trade. Gotta have trade,” said GOP Sen. Pat Roberts of Kansas, who chairs the Agriculture Committee. Roberts said “mounds of grain” are sitting on the ground in Kansas, waiting for customers.

“Gotta export. And with that, it’s preferable to have a trade bill,” Roberts said, adding of Trump: “I don’t think he’s opposed to trade bills. He just wants trade bills where he feels we get an equal shake. So, we’ll work on it.”




Congress returns to battle over Zika, keep government open

In this May 24, 2016 photo, House Speaker Paul Ryan of Wis. faces reporters at Republican National Committee headquarters on Capitol Hill in Washington. Congress has a long to-do list when lawmakers return from a seven-week recess Tuesday, but it’s unclear if much of it will get done. Presidential election politics will hover over all business in the month before lawmakers leave Washington again to go home and campaign. (AP Photo/J. Scott Applewhite)

In this May 24, 2016 photo, House Speaker Paul Ryan of Wis. faces reporters at Republican National Committee headquarters on Capitol Hill in Washington. (AP Photo/J. Scott Applewhite)

WASHINGTON – Lawmakers returning to Washington after a seven-week break picked up right where they left off – feuding about legislation to battle the mosquito-borne Zika virus and deadlocked over the defense budget.

A tightening presidential race and pitched warfare for control of the Senate this November promise to overshadow whatever Congress accomplishes in an election-shortened September session – which, for now, looks like little more than a temporary government-wide spending bill to prevent a shutdown at month’s end, possibly linked to money to battle Zika.

In its first vote Tuesday, Senate Democrats for the third time blocked a $1.1 billion Zika funding package and an accompanying Veterans Administration spending bill over restrictions on Planned Parenthood. They then voted to prevent the Senate from turning to a $576 billion Pentagon spending measure.

“It’s hard to explain why – despite their own calls for funding – Senate Democrats decided to block a bill that could help keep pregnant women and babies safer from Zika,” said Senate Majority Leader Mitch McConnell, R-Ky. “It’s also hard to explain why – despite the array of terror attacks we’ve seen across the world – Senate Democrats decided to block a bill that could help keep the American people safer from threats.”

Democrats oppose the Zika measure as it bars Planned Parenthood clinics in Zika-suffering Puerto Rico from receiving new money to treat the disease and curb its spread. The legislation also would ease, over the objections of environmentalists, permitting requirements for pesticide spraying to kill the mosquitoes that can spread the virus.

Sen. Charles Schumer, D-N.Y., said Republicans had “loaded it up with poison pill riders to assuage the hard right.”

Republicans added those provisions to the measure in June, along with spending cuts to help pay for the Zika bill, saying they are reasonable priorities that reflect their control of the House and Senate.

The Zika threat hasn’t gripped the public as Ebola did two years ago, but pressure is building as dozens of mosquito-transmitted Zika cases have been confirmed in the political battleground state of Florida since lawmakers left Washington in July.

The defense bill, meanwhile, is caught in a furious battle sparked by a Republican move to use emergency war funds to try to artificially increase the basic Pentagon budget by $16 billion next year. The Obama administration and its Democratic allies on Capitol Hill are dead set against the idea, which breaks with a hard-won budget deal that’s less than a year old; they say that if Republicans want more money for defense, domestic programs will have to receive an equal boost.

The defense battle won’t be resolved until after Election Day, but Tuesday’s vote on Zika should send the warring parties back to the drawing board, and it appears likely that the provision targeting Planned Parenthood – and perhaps the underlying $95 million worth of social services grants – will have to be dropped from the measure.

“We’re going to work through these issues and I’m sure we’ll have a successful outcome to make sure just that the trains are running on time,” House Speaker Paul Ryan, R-Wis., told hometown radio host Stan Milam of AM 1380 in Janesville on Tuesday.

On the Zika virus, which has spread over the summer and is linked to birth defects, Ryan said, “I do believe we’ll find some kind of resolution.”

For his part, Ryan has to navigate some tricky waters on the underlying stopgap spending bill, known in Washington-speak as a continuing resolution. Some conservatives want to block any post-election session and are pressing for a continuing resolution that keeps the government open until March or so. But President Barack Obama and Senate Democrats are dead set against the idea – they want a full-year spending agreement completed this year – and Ryan said he wants to keep negotiating on the full-year spending bills through the fall.

Maryland Rep. Steny Hoyer, the No. 2 House Democrat, said Tuesday that an extension of current spending “should be in my view be passed as soon as possible, it should go to sometime in December” and budget work should be finished by the end of the year.

As the inauguration of the next president looms in January, a multi-year restoration of the iconic Capitol Dome is nearing completion, and the Rotunda reopened for visitors on Tuesday, free of scaffolding and safety netting that prevented visitors from a full view of its artwork.

Politically, Republicans are pressing for additional investigations of Democratic nominee Hillary Clinton over her emails. House conservatives are determined to impeach IRS Commissioner John Koskinen, saying he stonewalled and impeded congressional investigations into IRS targeting of conservative organizations. Koskinen wasn’t commissioner at the time.




[Column] The Cat Is Out of the Bag

BY RAFAEL M. ARRILLAGA-ROMANY

Puerto Rico is stuck with a model for a federal oversight board whereby public-policy objectives will be pursued through an unelected control mechanism of limited duration, and whose performance will primarily be measured based on short-term benchmarks. Our principal challenge within this context will be whether it is possible to develop a successful and relevant fiscal plan notwithstanding the seemingly unavoidable future changes to the political relationship between Puerto Rico and the United States.

Status is a meaningful credit risk
With debt sustainability front and center, the “cat is out of the bag.” Traditional investors and credit-rating agencies will pay careful attention to this experiment. The decision by Congress not to bail out the commonwealth revealed the “status question” as a meaningful credit risk. It is a clear message to investors that, at least for now, they must account for the risk associated with Puerto Rico’s territorial status.

Puerto Rico must also be cognizant of this message. By enacting a federal bankruptcy regime for the territories, the commonwealth will now arguably have to revisit how much of this risk it is willing to assume, with an assumption of risk manifesting itself by the granting of debt-security packages designed to be “bankruptcy remote.” Conversely, if the commonwealth is to retain flexibility with respect to the short- and midterm economic consequences that may result from the resolution of the status question, then insisting that future payments on a portion of its debt be conditioned on the occurrence of certain contingencies seems suitable.

Rafael Arrillaga-RomanyThe unresolved status question requires that fiscal projections incorporate a higher degree of readily identifiable contingencies that will have to be settled based on assumptions. Until the status question is addressed, traditional investors will be justified in demanding higher premiums for long-term debt, not because Puerto Rico turned to debt restructuring as a short-term solution for its fiscal crisis, but because a successful return to capital markets will depend primarily on the ability to pay. The presence of these assumptions not only makes it more difficult to restructure the commonwealth’s tax-supported debt, but also obstructs Puerto Rico’s ability to achieve the paramount objective of restoring “adequate market access” through debt sustainability.

Some of the most obvious contingencies seem manageable. While some may argue that a debt-restructuring scenario opens up the possibility of negotiating risk allocation between the commonwealth and investors regarding the level of future federal transfer payments, all restructuring proposals to date by the commonwealth have been premised on the continuance of such benefits. At the core of the U.S.’ political foundation is a set of values that preclude, for the foreseeable future, transfer payments protecting and promoting the common welfare of U.S. citizens in Puerto Rico be withdrawn due to a change in political status.

Status-neutral fiscal plan essential
But if the interim period—prior to a change in status—is to be relevant in boosting the prospects for a sustained economic recovery, a status-neutral fiscal plan will be essential. While I have long been highly skeptical of the relevance and efficacy of post-industrialization “economic development plans” in a globalized model, and openly advocate against state involvement in lieu of reliance on the market’s competitive process to best allocate resources, such rejection does not minimize the role of fiscal policy in maximizing the prospect for sustained economic growth.

Well-designed tax and spending policies can positively impact employment, investment and productivity in the long term. Such policies, however, are most powerful when they elicit genuine long-term responses from economic agents. If the policies adopted are perceived as too linked to a particular resolution of the status question, their permanence is exposed and their efficacy diminished. In fact, my biggest fear is that even if we are successful in identifying a mix of fiscal policies that are status-neutral, such an exercise will further underscore how our current political status limits our ability to achieve long-term growth by having an impact on labor supply, investment in physical and human capital, and total factor productivity.

Perhaps even more troubling for some—depending on the allocation of risk between the commonwealth and investors—the adoption of policies associated with a particular status may also predetermine our future political relationship with the U.S.

The “status question” can no longer be ignored. The quicker it is resolved, the better. Will Rogers was right: “Lettin’ the cat outta the bag is a whole lot easier than puttin’ it back in.”

—Rafael M. Arrillaga-Romany is the managing member of RAR Consulting Group LLC. In this role, he has advised Puerto Rico Senate President Eduardo Bhatia Gautier on fiscal policy matters. Before founding RAR, he served as executive director of the Puerto Rico Tourism Development Fund and as special adviser to the Government Development Bank president. Arrillaga-Romany earned a bachelor’s degree in economics & political science from University of Michigan, Ann Arbor, and a J.D. from Fordham University School of Law.




Congress Leaves Washington With Its Dysfunction On Display

WASHINGTON (AP) — Congress exited a sweltering Washington on Thursday, its dysfunction on full display as it left behind must-do legislation to combat the mosquito-borne Zika virus and a stalemate over lawmakers’ basic job of fulfilling agency budgets.

The twin failures highlighted the one step forward, two steps back nature of the bitterly-divided Congress, even as Senate Majority Mitch McConnell and House Speaker Paul Ryan trumpeted victories on drug abuse legislation and other, more modest bills. But a continuing impasse over the Pentagon budget sent McConnell’s effort to revive the process for advancing annual spending bills off the rails.

When lawmakers return from their vacation after Labor Day, a stopgap funding bill that’s needed to prevent a government shutdown will be the main order of business before Congress recesses again for the fall campaign.

Calls by Democrats for modest curbs on guns sales went unheeded as lawmakers embarked on a seven-week vacation extended by the national political conventions this month. Democratic nominee-to-be Hillary Clinton paid a visit to Senate Democrats amid new polls showing a tightening race against Donald Trump.

House Republicans rush to a closed-door GOP caucus with House Speaker Paul Ryan of Wis., on Capitol Hill in Washington, Tuesday, July 12, 2016.Congress is expected to exit Washington for a months-long recess with no action on gun control, despite mass shootings in recent weeks and uproar from Democrats who have pushed for new legislation. (AP / J. Scott Applewhite)

House Republicans rush to a closed-door GOP caucus with House Speaker Paul Ryan of Wis., on Capitol Hill in Washington, Tuesday, July 12, 2016. (AP / J. Scott Applewhite)

As the last act before lawmakers sped away from the Capitol, Senate Democrats again blocked a $1.1 billion take-it-or-leave-it Zika measure drafted by Republicans controlling Congress, protesting a provision that would block Planned Parenthood clinics in Puerto Rico from receiving money to fight the virus, which can cause severe birth defects and can be transmitted by mosquitoes native to much of the country.

“Republicans chose to put their ideological battle against Planned Parenthood ahead of their responsibilities as legislators to help fight Zika,” said Sen. Patty Murray, D-Wash. The administration still has considerable Zika funding at its disposal but inaction on the Zika issue this summer may lead to delays in developing a vaccine and advanced mosquito-fighting techniques.

Earlier, McConnell, R-Ky., again tried to call up a $575 billion Pentagon funding bill but was blocked by Democrats who fear that Republicans will use the measure to boost the defense budget while keeping domestic programs frozen — and in the process unravel last year’s hard-fought budget deal, which reversed curbs on both Pentagon and domestic accounts.

Republicans howled in outrage at the twin Democratic filibusters.

“Our service members are at war. They are in combat. And their combat boots are on the ground,” said Sen. Joni Ernst, R-Iowa. “I think our colleagues across the aisle have forgotten that.”

Democrats fired back at a news conference in which they blasted Republicans for failures on gun safety legislation, Zika, reform of the justice system, and emergency funding to confront the nation’s opioid epidemic.

“This is going to be a long, hot summer for people who aren’t going to be able to take nice long vacations, people who are in our streets fearing for our children, people wondering why Congress has failed,” said Sen. Cory Booker, D-N.J.

Democrats were particularly upset over guns in the wake of the mass shooting in Orlando, recent deaths of African-Americans at the hands of police, and the killing of five officers in Dallas last week. Senate Republicans last month blocked an attempt by Democrats to block people on a government list of terrorist suspects from buying guns. Democrats have been denied a vote in the House, which prompted Democrats to call a sit-in to protest. Protests from GOP conservatives have forced Ryan, R-Wis., to shelve a less stringent version.

“Congress can’t even agree that known or suspected terrorists — most of them from other countries — should be barred from legally buying guns in this country,” said Sen. Dianne Feinstein, D-Calif. “Stop stonewalling the nation on gun safety reform.”

In response, Republicans cited recently-enacted legislation to help Puerto Rico through its fiscal crisis, a bipartisan measure to combat opioids, aviation safety legislation and legislation requiring labels on foods containing genetically modified ingredients. And they blamed Democrats for filibustering a Zika measure that tracked the version that passed the Senate.

“Just because Democrats are again reverting to their dysfunctional ways because they believe it suits them politically, it doesn’t change the reality that we’ve made significant progress in restoring the Senate to significantly better health,” McConnell said. “We’ve clearly put the Senate back to work.”

In the House, Republicans rammed through a $32 billion spending bill for the Interior Department and the Environmental Protection Agency — laced with provisions to roll back Obama administration regulations on matters like coal-fired power plants — on a partisan 231-196 vote. But it’s just the fifth of the 12 bills funding the $1 trillion-plus annual budget for Cabinet agencies to pass the chamber, and signs again point to a catchall spending at years’ end.

The House also passed, along party lines, a bill to impose new sanctions on Iran for its continuing development and testing of its ballistic missile program.




Debt Strikes at Midnight

On July 1, the Puerto Rico government could be paying a large chunk of the roughly $1.9 billion it owes to its creditors. However, it would be a last-minute decision, as the Alejandro García Padilla administration and its advisers evaluate how much should be paid, according to sources.COVER STORY ARTWORK JUNE 30, 2016

Moreover, sources added that La Fortaleza would be announcing on Thursday the executive order that authorizes the Puerto Rico government to miss its constitutionally guaranteed debt obligations to protect essential services to citizens, as allowed by the local debt-moratorium statute enacted earlier this year. However, the government could still decide to make partial payments due July 1 on this debt.

Officials declined to confirm how much it would finally pay, or default, come Friday.

At risk is the roughly $958 million due on constitutionally guaranteed debt, as well as some $87 million tied to the Infrastructure Financing Authority (AFI by its Spanish acronym). The government defaulted earlier this year on AFI debt, and the entity is already operating under a moratorium executive order.

According to market filings, municipal bond-insurance companies cover many of the payments that could be missed, meaning these would need to pick up the tab for any defaulted debt they insure.

Early this week, Government Development Bank (GDB) President & Chairwoman Melba Acosta stressed to this newspaper this factor would not play into the government’s payment decisions. She noted the important role these companies play as creditors in debt-restructuring talks.

Meanwhile, the Puerto Rico Electric Power Authority (Prepa) reached a deal with its creditors on Thursday over how it would fund its $417 million payment due on July 1. The utility also extended until Dec. 15 an initial debt-restructuring agreement struck with a majority of its creditors, while updating some of the milestones that need to be achieved for the deal to run its course.

The rest of the debt-service tab corresponds to public entities that were already expected to meet their payments in full, although some would do so by tapping into their debt-service reserves.

Friday’s potential default could mark the first time Puerto Rico fails to pays its constitutionally protected debt.

To try to soften the blow, the administration was leaning to use “clawed back” revenues, or monies taken from some of the island’s public entities since late last year, one source said. However, some officials within the administration would be pushing for not using these funds to pay for debt, another source added.

Government officials declined once again to comment on the whereabouts and potential uses of the redirected funds, which previously paid for debt issued by certain public entities. Less than two months ago, Treasury Secretary Juan Zaragoza said that about $140 million in such funds should be available by June 30, in line with initial estimates given when the measure was first announced.

With some creditors already suing the Puerto Rico government over its latest fiscal maneuvers, officials demanded swift enactment of the Puerto Rico Oversight, Management & Economic Stability Act, or Promesa, before July 1. They believe it would give the island the legal protections it needs in the face of a default.

On Wednesday, the bill cleared Congress with bipartisan support, and is on its way to President Barack Obama for its signing.

An eventful week
Any dodged debt payments on July 1 would become part of yet-another eventful week for Puerto Rico. Meanwhile, prices of commonwealth bonds remain in a frenzy, as the market continues to soak in events related to the island’s fiscal and economic crisis.

In addition to Promesa’s passage, La Fortaleza would be making public the executive order that paves the way for any nonpayment call on Friday. Officials and advisers have been putting the final touches on the document since late last week, sources said.

The governor had previously expanded AFI’s state of emergency, allowing a moratorium on the entity’s looming debt obligations.

Long-awaited audited financial statements for fiscal year 2014—due for over a year—are also expected to be finally unveiled “within the next days,” according to García Padilla administration officials.

On the legislative front, Puerto Rico lawmakers end the session on June 30—the only one of the year because of November’s general elections—with the government’s fiscal 2017 budget plans taking center stage. Failure to have a budget in place by July 1 would cause the current one to remain in place, and only the governor can call a special session after Thursday.

Despite the bumps in the road and continuing rough days ahead, Acosta told this newspaper she remains confident debt-restructuring talks will continue. Moreover, the GDB chief believes Promesa would go to great lengths in spurring negotiations with Puerto Rico’s creditors.

Talks among advisers for the government and certain creditor groups recently came to a halt after failing to strike a deal over a plan to restructure about $50 billion of Puerto Rico’s $70 billion public debt.

Melba Acosta- bonistas

GDB President Melba Acosta during a recent event of local bondholders

Acosta recently noted how some of the creditor groups did not want to extend the confidentiality period under which negotiations were taking place. Nondisclosure agreements (NDAs) were signed four days before talks were put on hold.

Sources told Caribbean Business a slight rally in bond prices following Promesa’s passage in the House had some of the negotiating creditors eager to exit the NDAs’ confines so as not to miss out on the occasion. Creditors who are under NDAs cannot trade the Puerto Rico bonds they own, as they are sharing confidential information not available to the rest of the market.

“There is no mechanism to bind holdouts, there is no mechanism to force agreement with any single class of creditor,” said Antonio Weiss, an adviser to U.S. Treasury Secretary Jacob Lew, who noted how Promesa would help on this front.

Run-up to July 1
Many of the July 1 payments correspond to debt issued to refinance old debt. Along the way, “underwriting discount, legal, printing and other financing expenses” were also paid out from the proceeds of each transaction.

For months, the García Padilla administration has warned that the island lacks the cash to pay for its payroll and services, while meeting its full debt obligations. “Even if I shut down the government on July 1, I will not have enough money to pay [for debt],” the governor said last week.

Although the public discourse has been somewhat geared toward “a $2 billion payment default,” a large number of Puerto Rico issuers are expected to meet their obligations.

Such entities as the P.R. Aqueduct & Sewer Authority ($147 million), Municipal Financing Authority ($7.5 million), Highways & Transportation Authority ($221 million), Convention Center District Authority ($20 million), Employees Retirement System ($14 million), P.R. Industrial, Tourist, Educational, Medical & Environmental Control Facilities Financing Authority [Afica by its Spanish acronym] ($4 million) and the P.R. Industrial Development Co. ($13 million) should be meeting in full their debt-service payments, barring any last-minute setback.

At Prepa, talks with its creditors resulted in Thursday’s deal, whereby a group of monolines and other creditors will provide about $260 million to the utility to help it fund its $417 million payment due July 1.

Meanwhile, the $958 million due July 1 carrying Puerto Rico’s full faith and credit is split roughly in half between principal and interest.

As for clawed-back revenues, La Fortaleza has remained mum for quite some time over these monies, which the government has been collecting now for several months. It is still unclear whether the government will finally use these funds to cover part of the constitutionally protected debt owed on July 1.

After triggering the clawbacks on Nov. 30, the administration used about $160 million of these revenues to meet more than $400 million in payments due on Jan. 2 on commonwealth-guaranteed debt. Puerto Rico, under its constitution, could take control of previously pledged revenues, but only to service its constitutionally guaranteed debt if no other monies are available.

However, Justice Secretary César Miranda has argued that a court could allow Puerto Rico, under its constitutional police power, to prioritize essential services to residents.

“But if you ask me at this moment and I’m pressed to give you an answer, I would have to say those monies [clawbacks] would need to go to pay constitutional debt,” he conceded to Caribbean Business a few months ago.

At the end of the day, even if the administration uses these monies for such purposes, it would not be sufficient to cover what it owes on general-obligation bonds come July 1. Affected creditors could then ask a court to embargo the Puerto Rico government’s accounts, officials warn, thus the need to have Promesa in place by then.

Calls for Promesa
There are 14 lawsuits in different jurisdictions already, according to Weiss. These include challenges to the García Padilla administration’s use of the clawback measure and debt moratorium law.

“They should be trying to find a way for Puerto Rico to walk out of this and not to add obstacles in this race,” the governor said during a forum held last week in Washington, D.C.

Despite weeks of demanding changes to its proposed fiscal board’s powers, García Padilla called for Promesa’s swift passage.

“Congress must act before July 1. Creditors are hoping to gain the protection of legal judgments as quickly as possible,” Lew wrote early this week to U.S. senators.

But what if Congress had taken longer to clear the bill?

AGP3

Puerto Rico Gov. Alejandro García Padilla

In his letter, Lew warns that “a judge could immediately order Puerto Rico to pay creditors over essential services,” if a default materializes without Promesa in place. “Even a retroactive stay on litigation passed by Congress a few days later would not reverse such a court order,” he added.

Yet, there are those who say that even if Promesa was not approved before July 1, the retroactive nature of its legal protections offsets most of the default consequences, including potential lawsuits.

For his part, Héctor Negroni, Co-CEO of Fundamental Advisors, called the stay mechanism “a fairy tale,” while adding he may challenge it in court. Along with his firm, he has been involved in debt-restructuring talks with the Puerto Rico government.

Promesa establishes a financial control board, charged with bringing back access to capital markets for Puerto Rico. It would oversee the island’s budgets, fiscal plans and debt-restructuring efforts.

The legislation also temporarily shields Puerto Rico against creditors’ lawsuits, during which time the board determines if the local government can at least make interest payments. Yet it is unclear what happens in the time before the board is constituted.

Promesa grants certain debt-restructuring tools, which will be administered by the oversight entity. Its Title VI allows for collective-action clauses, seeking to facilitate the adoption of debt-restructuring plans consented to by a majority of creditors within a class; Title III establishes a bankruptcy-like process if negotiations between the commonwealth and its creditors are unsuccessful.

With Promesa, the federal government believes it is “safeguarding the economy” and “the people of Puerto Rico with a financial control board that “is designed to go away,” Weiss said. For the U.S. Treasury official, this is the only solution on the table, and no one should rally behind alternatives that simply do not exist.

Gov. García Padilla considers this to be the largest debt crisis in U.S. history, and Friday’s looming default would be the island’s fourth in less than a year, joining those by the Public Finance Corp., AFI and the GDB.