Talking Points for a Congressional Hearing

On Tuesday, January 12, 2016, the Sub-Committee on Energy and Mining will hold the first public hearing of the new year on the Puerto Rico financial and economic crisis. This will be the fifth Congressional and Senatorial hearing in the last 6 months.

The Treaty of Versailles of 1898 gave the United States Congress absolute powers over the territories acquired as a result of the Spanish-American War. Section 3 of the Territorial Clause of Article Four of the U.S. Constitution says: The Congress shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States; and nothing in this Constitution shall be so construed as to prejudice any claims of the United States, or of any particular state.” Therefore the U.S. Congress has the absolute legal authority to deal and approve solutions to end the humanitarian crisis that American citizens in the U.S possession are currently going through. Congress must be bold and must try avoiding approving parches when both Senators Orrin Hatch and Chuck Grassley have stated that “Puerto Rico needs a long term solution” and a program of transitional solutions or parches will not address the crisis correctly and effectively.

The following are “Talking Points” that will assist you in dealing with the graveness of the social, economic and political crisis that 3.5 millions American citizens are facing in their daily lives.

Causes of the Crisis

  • Corruption and government waste promoted by an absence of resources and oversight, both at the territorial level and Federal law enforcement agencies, has cost the People of Puerto Rico more than $ 20 billions dollars. The Office of the Comptroller of Puerto Rico estimates that at least 10% of the operating budget of the government of the territory of Puerto Rico is lost by corruption and wasteful expenditures
  • Governors with son and brother participating in the multi-million dollars in fees of re-financing and issuance of public bonds. Hundreds of millions in fees were generated in the underwriting of bonds issues since 1973 to the present day. UBS, Goldman Sachs and others have been target of SEC Federal investigations of allege acts of mismanagement, corruption and violations of laws and rules.
  • Corruption in the use and administration of Federal Funds, from HIV, Public Housing, U.S. Department of Transportation and the U.S. Department of Education Title I. Multiple Federal prosecutions were conducted by the U.S. Attorney’s Office in Puerto Rico and the FBI with limited resources!
  • Corrupt mayors, granting millions of dollars of dollars in “consulting contracts” and building stadiums and coliseums that are scarcely used but generates paybacks and illegal extortion moneys caused that 70 of the 78 cities are operating in the red.

  • During the first 6 months of 2015, according to the El Nuevo Dia newspaper, 71,297 American citizens from the territory moved to the United States because of the dire economic crisis and because of 104 new taxes and tariffs imposed by the present territorial government making Puerto Rico the most expensive American jurisdiction to live. Senator Orrin Hatch in his Senate speech on the Puerto Rico crisis said, “I don’t want to give any credibility to a statement that The White House in not acting diligently in dealing with the crisis in order to promote the migration of American citizens from Puerto Rico” to battleground states in order to secure control of the executive branch to the Democrats. Then only way American citizens in the territory will stay in the territory and attract Puerto Ricans from the mainland to move back to the Island is by granting political equality through statehood. Political equality has been supported by every GOP President and presidential candidate since Eisenhower, Regan, Nixon, Ford, George H.W. Bush and George W. Bush. See Link: via @YouTube
  • The last 9 elected governors of Puerto Rico are responsible for solving every budget hole with bonds, loans and refinancing. All of the governors elected since 1972 to the present have used loans and bond financing for failed mega projects. Please examine the link that will provide you with each one debt responsibility:

The perils of benign neglect or partial solutions!

A policy of approving partial solutions or parchment will not solve the crisis. For example: Approving the extension of the Artcile 9 of the Bankruptcy law is a partial solution but will not solved the present collapsing structural, social and economic environment of Puerto Rico. If Washington procrastinates tackling with strong leadership and boldness this is what is going to happen:

  1. At least one million American citizens from Puerto Rico will move to the 50 states of the union. That’s the projection of the U.S Census Bureau for 2050. At the current rate of 85,000 to 125,000 per year that goal will be reach by 2025.
  2. The economy of the territory will weaken to catastrophic proportions because those moving are the middle class. The middle class is the engine that provides growth to the economy.
  3. Banks will continue to fail costing billions to the FDIC.
  4. Property values have lost between 40 to 60% of their value and will continue to deflate. As of today Puerto Rico has more than 300,000 houses empty, one fourth of its housing stock. The real estate values have deflated between 40 to 60%.
  5. Bankruptcies in the private sector and small businesses will continue to grow.
  6. The Federal government losses in  home loans, small business financing and public debt as public corporations collapse, losing tens of thousands of clients that moved to the United States.
  7. The Federal Treasury’s cost in providing assistance and services will double because it is at least 50% more economical to provide the same in the territory.
  8. The destruction of the social fiber of the People of Puerto Rico, families, friends and a culturally rich society will be in the National conscience as a catastrophic and humanitarian crisis further eroding the weakened image of the government of the United States in the International community, especially in the Caribbean basin and Latin America.

Solutions to the Crisis

I- Create a Federal Fiscal Administration Board to RUN the government of the territory until the the public debt is negotiated and a solid, Congressional backed plan to solve the Island status is in place. Avoid appointing any of the culprits responsible for the public debt crisis. Congress should consider making Puerto Rico an incorporated territory and a multiple phase to integrate the Island as a state of the union. Why? Both the Gallup International organization, made two polls, and the El Nuevo Día have conducted studies that indicate that more than 92% of the population will move to the United States if Puerto Rico becomes an independent country, or a free associated republic. The cost to the U.S. Treasury if this happens will be enormous since salaries in the states of the union are higher in providing services and resources to the new population and Puerto Rico will not be feasible as a society and working economy with less than 350,000 people.

II- Assignment of substantial Federal and local funding to fight government corruption at the territorial and municipal levels. There MUST be a comprehensive and total policy of zero tolerance to corruption. The U.S. Attorney’s Office, the FBI and Homeland Security know how these administrations, elected officials, cronies, and partners in crime have funneled billions of public funds to tax havens through friendly Puerto Rican banks with large international operations. They know who the crooks are! They know their money paper trails! The only limitation that they have is the resources and personnel to investigate and prosecute the culprits.

III- Reduce government agencies from 143 to 35-40. The state of Florida with 19 million people has 39 state agencies. Puerto Rico has 100 plus more agencies that it needs to eliminate.

IV-Reduce the 78 municipalities to 8 counties. We have simply too many city governments with only 8 running their operation in the black, and the rest, 70, with major operational deficits.

V- Use the $2,500,000.00 approved by Congress and The White House to celebrate a Statehood yes or no plebiscite to solve the archipelago’s status. This is the long term solution and the one that will keep and increase our population if statehood is ratified. The Federal Fiscal Board should develop a four-phase plan: a) Fixing the finances; b) incorporating Puerto Rico as a U.S. territory; c) Plebiscite on statehood yes or no and 4) statehood.

VI- Approve and implement a Federal Enterprise Zone, using the model of the legislation drafted by Congressman Jack Kemp and Roberto García, to promote and attract investments and economic development for a period of 10 years until Puerto Rico achieves political equality under statehood. This Enterprise Zone must include a tax credit for jobs creation.

VII- Develop an incentive program to attract population. We need to bring people back to the Island. The present cost of living and taxes limits the development of a successful program.

VIII- Exploit Puerto Rico’s location and Latino culture to attract investment and development from Latin America that will also promote job creation in the states of the Union in the $7 trillion a year Latin American economy.

IX- Develop Puerto Rico as a major trans-shipment port.

X- Re-structure Puerto Rico’s Education Department

XI- Re-structure Puerto Rico’s Health Department

XII- Establish a new policy of approving capital intensive and job creation projects in 90 days or less

XIII- Eradicate drug trafficking and the trans shipment of 100 tons of drugs using Puerto Rico as a spring board to the U.S.A. and Europe.

XIV- Re-use the Roosevelt Road facility in Ceiba as a major defense military and intelligence gathering base. This will send a strong message that the U.S. will not abandon the 3.5 million American citizens in the territory.

XV- Develop a multiple phase tax programs to promote investments and job creation until economic milestones are achieved.

XVI- Reinstate the the Office of the Inspector General in order to prevent corruption and government waste. We need more oversight and U.S. Federal law enforcement agencies must have substantial more funding in order to prevent and prosecute those who have benefited from extortions and governmental corruption.

XVII- Develop a comprehensive energy program in order to eliminate the dependence on fossil based fuels. Present energy costs are a deterrent to the establishment of manufacturing plants and businesses with high energy consumption. At least 6 hospitals on the Island are at the brink of being shut down because of the high energy cost.

Puerto Rico is facing the most defining moment in its modern history. It is not an issue of Republicans versus Democrats, conservatives versus liberals. It is a humanitarian issue and cause! Its requires strong leadership, bold and creative actions. The Federal Fiscal Control Board, reporting to the Congress and the Executive Branch, once it is approved, will find out the true state of conditions of the finances of the territory. The track record and historical facts of the disastrous policies and devastation in the administrations of the past nine governors is there. The foundations of the territory have been shattered. People’s trust in its democratic institution has been destroyed not only by corruption in the executive branch, but corruption in the judiciary and the police. NBC news last week reported that drug trafficking through the archipelago of Puerto Rico increased from 30 tons to 100! This is a real National Security issue costing tens of billions in law enforcement and prison operations in the United States.

The continuation of the same is not acceptable and Congress and The White House must act in order to avoid a “humanitarian crisis” and the dismembering of the People of Puerto Rico forcing them to move to the states of the union. We cannot give any credibility to reports that The White House is slowing implanting solutions in order to fuel the massive population exodus in order to secure the control of the White House in the up coming elections.

Our citizens are not responsible for the lack of resources to Federal and territorial law enforcement in order to investigate and prosecute those responsible for the pillage of a Caribbean den of thieves! They are not responsible that their elected officials and political leaders betrayed their trust! We deserve better. We voted for political equality through statehood with all its responsibilities, obligations and benefits. Doing nothing is not an option. Passivity and benign neglect are simply a crime against humanity! End segregation, discrimination and inequality for 3.5 American citizens who have served the Nation well. The time to act is now to solve this humanitarian crisis once and for all!