SCHUMER, ALONG WITH ENTIRE DEMOCRATIC CAUCUS IN SENATE, CALL FOR SWIFT CONGRESSIONAL ACTION TO GIVE PUERTO RICO RESTRUCTURING AUTHORITY, WHICH HAS NO COST TO TAXPAYERS
In Letter, Schumer & Democratic Colleagues Urge Majority Leader McConnell to Work Together to Put Forth Legislation That Will Address Puerto Rico’s Fiscal Crisis; Schumer Says Such Legislation is Critical, As Puerto Rico Seeks to Resolve Its Outstanding Debt Obligations & Stabilize Economy
With Over 1M Puerto Ricans Living in New York, Schumer Has Been Strong, Outspoken Leader On Providing Puerto Rico & Its 3.5 Million Fellow US Citizens With Equitable Treatment; Schumer is Sponsor of Two Critical Pieces of Legislation That Help Puerto Rico By Providing it Debt Restructuring Authority & By Treating PR Fairly in Federal Health Programs – Medicare & Medicaid
Schumer: Our Fellow Citizens in Puerto Rico Deserve Fair Treatment and Access to All Tools Necessary to Fix Economic Crisis
On Wednesday, U.S. Senator Charles E. Schumer, along with the entire Democratic caucus in the Senate, wrote to Majority Leader Mitch McConnell urging bipartisan legislative action that would give Puerto Rico access to financial restructuring tools to help address its dire fiscal crisis – at no cost to the taxpayer.
Puerto Rico is currently facing dire economic challenges that are placing immediate and growing hardships on the island’s 3.5 million U.S.-citizen residents. In their letter, the Senators said that Congress must pass legislation to provide Puerto Rico with appropriate restructuring tools to respond to their economic and humanitarian crisis. In addition, the Democratic Senators note that “[r]estructuring legislation would not cost the federal government a single penny and would instead save U.S. taxpayers from the growing cost of inaction.
“The legislation we seek to pass will provide Puerto Rico the authority it needs to restructure its outstanding debt without costing taxpayers one plugged nickel. But if our Republican colleagues in Congress fail to act, the costs will be sky-high. We have a basic responsibility to aid all American citizens in times of crisis, and that’s why it’s so important for Majority Leader Mitch McConnell to work with Senate Democrats to pass a bipartisan piece of legislation that includes the ability to restructure the debt and fix the dire economic crisis affecting the 3.5 million American citizens in Puerto Rico,” said Senator Schumer. “We need to be concerned with these issues not only because Puerto Ricans are part of the American family and deserve the quality of life that we all expect, but also because our failure to act now could result in a Puerto Rican financial crisis that becomes a drag on our entire economy.”
There are 3.5 million Puerto Ricans living on the Island today, and 5.2 million living in the United States, including over 1 million in New York State. Schumer ?said that as the economic situation in Puerto Rico continues to deteriorate, residents will continue to be compelled to flee their homeland. Schumer went on to say that, the population shift from Puerto Rico to mainland U.S. is likely to continue as their economic situation worsens, until the only ones left are those that do not have the resources or ability to move. Schumer explained that unfortunately, this situation has the real potential to lead to a serious humanitarian crisis if nothing is done.
Schumer has been an outspoken leader on providing Puerto Rico and its residents with the tools needed to fix the economic crisis. Specifically, Schumer introduced the “Puerto Rico Chapter 9 Uniformity Act” in Congress, which would give Puerto Rico the authority to access Chapter 9 protections offered under the Federal Bankruptcy Code. The legislation aims to address the growing fiscal crisis in Puerto Rico by granting Puerto Rico the authority to allow its municipalities and government-backed corporate debtors to readjust their debts under the supervision of a bankruptcy court. “The Puerto Rico Chapter 9 Uniformity Act” would provide Puerto Rico with the same authority granted to all U.S. states that enables its municipalities and public utilities to restructure their debt.
A copy of their letter is below:
January 27, 2016
The Honorable Mitch McConnell
Washington, DC 20510
Dear Majority Leader McConnell:
We write to you with concern for the 3.5 million U.S. citizens residing in Puerto Rico and for the financial crisis that is deepening there because Congress failed to address it in the Fiscal Year 2016 Omnibus Appropriations bill.
Puerto Rico is facing severe economic, fiscal, and liquidity challenges that are placing immediate and growing hardships on the island’s residents. Puerto Rico slid into a recession over ten years ago that was deepened by the 2008 national recession. Unemployment remains stubbornly high and is currently over 12 percent, more than double that of the state with the next highest rate. Forty-five percent of the population is living in poverty and 58 percent of these people are children. Schools and hospitals are being closed and the population has declined by about ten percent, or 300,000 people, in the past ten years. The rate of migration to the U.S. mainland has increased to an estimated 80,000 people per year as services deteriorate and job opportunities decline.
Despite significant budget cuts, tax increases, and additional fiscal discipline measures, the declining population and shrinking tax base are resulting in decreasing revenues. The Puerto Rican government has attempted to maintain services and stem migration by borrowing—a strategy that failed when Puerto Rico was shut out of the bond markets. Although the government made most of its January debt payments, Puerto Rico has now missed some of its debt payments for the second time in five months. It is almost certain that Puerto Rico will be unable to make its upcoming $469 million in payments to bondholders in May and the $1.9 billion in payments due to bondholders in July. It is clear to us that Puerto Rico and its creditors will be unable to stop these trends without some form of intervention.
For Puerto Rico to have any chance of rebuilding its economy, Congress must act.
We agree with Speaker Ryan that “Puerto Rico’s fiscal crisis is a problem that is not going away any time soon” and we urge you to match his commitment to act on a responsible solution by the end of the first quarter of this year. We believe that such a solution must allow Puerto Rico to restructure a meaningful portion of its debt. It is important to recall that Puerto Rico was included in Chapter 9 of the U.S. Bankruptcy Code until 1984, when Congress inexplicably excluded it from the nationwide approach to resolving municipal insolvency.
We urge you to commit to working with us to swiftly enact legislation to give Puerto Rico access to appropriate restructuring tools. This is the only way Puerto Rico can respond effectively and responsibly to this growing financial and social catastrophe. Any legislation that does not include a federal process that allows Puerto Rico to adjust its debt would not be a real solution for Puerto Rico’s crisis.
Restructuring legislation would not cost the federal government a single penny and would instead save U.S. taxpayers from the growing cost of inaction. If Puerto Rico continues down the current path toward default, there will likely be extensive litigation, growing fiscal and economic turmoil, continued degradation of essential government services, and even greater migration to the U.S. mainland.
We look forward to working with you to respond to this crisis, relieve the hardships on the U.S. citizens of Puerto Rico, and avoid additional costs to U.S. taxpayers.
Sen. Maria Cantwell (D-Wash.)
Sen. Harry Reid (D-Nev.)
Sen. Charles Schumer (D-N.Y.)
Sen. Richard Durbin (D-Ill.)
Sen. Barbara Boxer (D-Calif.)
Sen. Dianne Feinstein (D-Calif.)
Sen. Michael Bennet (D-Colo.)
Sen. Richard Blumenthal (D-Conn.)
Sen. Christopher Murphy (D-Conn.)
Sen. Thomas Carper (D-Del.)
Sen. Christopher Coons (D-Del.)
Sen. Bill Nelson (D-Fla.)
Sen. Mazie Hirono (D-Hawaii)
Sen. Brian Schatz (D-Hawaii)
Sen. Joe Donnelly (D-Ind.)
Sen. Angus King Jr. (I-Maine)
Sen. Benjamin Cardin (D-Md.)
Sen. Barbara Mikulski (D-Md.)
Sen. Edward Markey (D-Mass.)
Sen. Elizabeth Warren (D-Mass.)
Sen. Gary Peters (D-Mich.)
Sen. Debbie Stabenow (D-Mich.)
Sen. Al Franken (D-Minn.)
Sen. Amy Klobuchar (D-Minn.)
Sen. Jon Tester (D-Mont.)
Sen. Claire McCaskill (D-Mo.)
Sen. Jeanne Shaheen (D-N.H.)
Sen. Cory Booker (D-N.J.)
Sen. Robert Menendez (D-N.J.)
Sen. Martin Heinrich (D-N.M.)
Sen. Tom Udall (D-N.M.)
Sen. Kirsten Gillibrand (D-N.Y.)
Sen. Heidi Heitkamp (D-N.D.)
Sen. Sherrod Brown (D-Ohio)
Sen. Jeff Merkley (D-Ore.)
Sen. Ron Wyden (D-Ore.)
Sen. Robert Casey Jr. (D-Pa.)
Sen Jack Reed (D-R.I.)
Sen. Sheldon Whitehouse (D-R.I.)
Sen. Tim Kaine (D-Va.)
Sen. Mark Warner (D-Va.)
Sen. Patrick Leahy (D-Vt)
Sen. Bernie Sanders (I-Vt)
Sen. Patty Murray (D-Wash.)
Sen. Joe Manchin III (D-W.Va.)
Sen. Tammy Baldwin (D-Wis.)
CC: The Honorable Orrin Hatch
Chairman, U.S. Senate Committee on Finance
The Honorable Chuck Grassley
Chairman, U.S. Senate Committee on the Judiciary
The Honorable Lisa Murkowski
Chairman, U.S. Senate Committee on Energy & Natural Resources