The bipartisan Financial Oversight and Management Board for Puerto Rico, appointed by President Barack Obama, told incoming Gov. Ricardo Rosselló that the plan must include more layoffs of government employees, cuts in pensions, wage freezes, reduced medical coverage, slashed welfare rolls and the sell-off of government assets.
The board set up under the Puerto Rico Oversight, Management, and Economic Stability Act has the power to override any financial decisions of the government of Puerto Rico.
The law’s stated purpose is to “bring lawful order to chaos.” In reality “it’s just a collection agency” for wealthy bondholders, Héctor Pesquera, co-president of the Hostosian National Independence Movement, told the Militant by phone from San Juan Dec. 30.
The board, or junta as it is called in Spanish, rejected the fiscal plan proposed by outgoing Gov. Alejandro García Padilla in November. García didn’t propose deep enough cuts, what junta President José Carrión euphemistically called “policy adjustment” and “structural reforms.” Carrión also said that García’s plan was mistaken in expecting additional funds from Washington for Medicaid.
Some 60 percent of the island’s population receives Medicare or Medicaid. Unlike the 50 U.S. states, federal spending on Medicaid is capped, generally covering less than 20 percent. As a result, the government of Puerto Rico makes up the shortfall, an estimated $1.4 billion a year.
The Puerto Rican economy has been in recession since 2006. The island’s gross national product has contracted by 18 percent since then. More than a dozen hospitals have closed floors and curtailed services. A nearly 70 percent cut in infrastructure spending by the government and government-owned utilities has left roads and the electrical grid in bad shape.
Official unemployment in November was 11.9 percent, more than twice the U.S. average, and labor force participation is barely 40 percent, compared to 63 percent in the U.S. Median household income is less than $19,000, one-third the U.S., while the cost of living is comparable, if not higher.
Successive regimes in Puerto Rico have already cut government spending by 12 percent since 2006, laid off nearly one-quarter of the government workforce — the largest source of jobs on the island — increased sales taxes by $1.4 billion a year and slashed pensions.
Measures will ‘worsen death spiral’In a Nov. 29 reply to Carrión, García expressed the fears of Puerto Rican capitalists that a deeper attack on the standard of living of the island’s workers and farmers would “worsen the death spiral” and present “a serious risk to the social stability of Puerto Rico.”
In a 10-page letter to García and Rosselló, Carrión gave the governor’s office a deadline of Jan. 31 to come up with a revised plan and the Puerto Rican legislature a Feb. 15 deadline to approve laws to carry it out.
More than one-third of Puerto Rico’s budget goes to paying interest on the debt, but Carrión said that stopping payment on the debt is “legally and equitably not an option.” After all, he wrote, even if the debt were cancelled there would be a shortfall of more than $3.2 billion a year. The best they can hope for, he said, is that negotiations with creditors will lead to a “restructuring” of the debt.
In the meantime, the junta demands “comprehensive labor and welfare reform,” including reducing or eliminating severance pay, paid vacations, pensions and “non-essential” services, as well as cutting the welfare rolls. Education and health care “two of the largest areas of expenditure,” Carrión added, must be “reduced substantially” and tuition increased.
He also demanded “energy reform” to lower electricity costs.
Workers hit the hardestWhat that really means “is they want to privatize the electrical company,” Pedro Irene Maymí, president of the CPT union federation, said by phone from Morovis, Puerto Rico, Jan. 1. “In all these measures it is the workers who are hit the hardest.”
Under the impact of the economic and social crisis on the island, Puerto Ricans are leaving for the U.S. in droves. Since 2004 more than 350,000 have emigrated, 9.2 percent of the population. By the end of 2015, some 3.5 million people lived in Puerto Rico, and 5.4 million Puerto Ricans lived in the U.S., including 1.7 million who were born on the island.
One-third of the island’s doctors have left. When her son had a seizure in February 2016, Karen García was told he couldn’t get an appointment with a pediatric neurologist until July 2017, Reuters reported Oct. 11. Family doctors suggested she should move to the U.S.
This is not an exception, Yazmín López, a registered nurse in Mayaguez, said by phone Dec. 30. “So many doctors have moved to the U.S.” At first some people thought the junta would bring some order to the economy, López said. “But many people now realize it’s just to pay the debt and that we are just a colony.”
The pro-independence weekly Claridad said in a Dec. 29 editorial that “the Junta is bringing bitter medicine. It remains to be seen if our people will drink it without resisting.”
End US colonial rule in Puerto Rico!
Who is Oscar López? Why should he be free?
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