In a letter to his Democratic colleagues, Sanders, an independent senator from Vermont, urged opposition to a bill in the US House of Representatives that would ultimately require an unelected board appointed by congressional Republicans to compose a fiscal plan to address Puerto Rico’s debt.
The seven-person committee would have free rein to restructure the island territory’s debt by any means necessary, including budget and pension cuts, privatization of public assets, and exempting Puerto Rico from US Department of Labor rules that would allow the US territory to lower its minimum wage to $4.25 per hour, according to a statement from Sanders’ office.
“We have an important choice to make: do we stand with the working people of Puerto Rico or do we stand with Wall Street and the Tea Party? The choice could not be clearer,” Sanders wrote in the letter.
House Resolution 5278 ‒ also known as the Puerto Rico Oversight, Management and Economic Stability Act ‒ demands a restructuring plan that “must be ‘in the best interest of creditors,’ not in the best interest of the 3.5 million US citizens living in Puerto Rico,” Sanders said, adding that “this legislation looks out for the needs of Wall Street vulture funds first and foremost. That is unacceptable.”
The Vermont senator noted that HR 5278, an updated version of which was introduced in the House last week, is “strongly opposed” by major labor unions like the AFL-CIO and Service Employees International Union (SEIU) while it is supported by financial industry titans such as Goldman Sachs, JP Morgan Chase, and Bank of America, as well as conservative groups like Tea Party Forward and Americans for Tax Reform.
“In my view, we must never give an unelected board the power to make life and death decisions for the people of Puerto Rico without any meaningful input from them at all,” Sanders wrote. “We must not balance Puerto Rico’s budget on the back of children, senior citizens, the sick and the most vulnerable people in Puerto Rico.”
Sanders called for the Federal Reserve and the Treasury Department “to be just as creative in finding solutions to help the 3.5 million American citizens in Puerto Rico as they were in rescuing the largest financial institutions in this country and throughout the world in 2008,” referring to US government bailouts of failing financial firms amid the 2008 recession.
Puerto Rico’s $72 billion in debt has been fueled by a decade-long recession that has resulted in a 20-percent job reduction since 2006. The unemployment rate is more than 12 percent, with poverty rates topping anywhere in the US. However, Puerto Rico is unable to file for Chapter 9 bankruptcy because it is not a state.
Sanders said the House legislation “would make a terrible situation even worse,” and suggested the territory should be granted the right to restructure its debt in conjunction with a bankruptcy court, just as US municipalities are allowed to do.
“We must stop treating Puerto Rico like a colony and start treating the American citizens of Puerto Rico with the respect and dignity that they deserve during this very difficult period,” Sanders wrote.
The Puerto Rico Oversight, Management and Economic Stability Act is supported by the White House, according to The Hill, as well as top congressional Democrats like House Minority Leader Nancy Pelosi, Republican House Speaker Paul Ryan, and Hillary Clinton, Sanders’ rival for the Democratic Party’s presidential nomination.
Puerto Rico’s Democratic primary is on June 5, with Sanders and Clinton competing for 60 delegates.
Earlier this month, the island territory announced it would default on $470 million in debt payments.
“This was a painful decision. We would have preferred to have had a legal framework to restructure our debts in an orderly manner,” said Governor Alejandro Garcia Padilla. “But faced with the inability to meet the demands of our creditors and the needs of our people, I had to make a choice. I decided that essential services for the 3.5 million American citizens in Puerto Rico came first.”
Garcia Padilla has called on Washington to grant the island an exemption from federal law in for order for Puerto Rico to file for Chapter 9 bankruptcy.