WASHINGTON, May 23 – Sen. Bernie Sanders called on his Democratic colleagues in the Senate to oppose legislation introduced in the House of Representatives last week that would establish a control board to oversee Puerto Rico’s financial crisis.
“We have an important choice to make,” Sanders wrote in a letter to Senate Democrats, “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.”
According to Sanders, the House’s bill, H.R. 5278, “would make a terrible situation even worse” by requiring the governor of Puerto Rico to submit a fiscal plan to an unelected oversight board comprised of seven members, a majority of whom would be chosen by Republican leadership. The people of Puerto Rico would choose none of the members.
The oversight board would be empowered to enact its own fiscal plan to cut the budget, slash pensions, raise taxes, privatize and sell public assets and work to restructure debt without the approval of Puerto Rico’s democratically elected government. Instead of responding to the needs of Puerto Ricans, the legislation requires that any restructuring of Puerto Rico’s debt be “in the best interest of creditors.”
H.R. 5278 would also exclude Puerto Rico from the Department of Labor’s new overtime rules and allow the governor of Puerto Rico to slash the minimum wage to just $4.25 an hour for a period of up to five years.
Right-wing organizations, including Tea Party Forward and Americans for Tax Fairness, and a major Wall Street trade group representing Goldman Sachs, Citigroup, JP Morgan Chase and Bank of America endorsed the bill. Unions representing over 13 million workers, however, strongly oppose the proposed legislation.
“We must make it clear that hedge fund managers on Wall Street cannot get a 100 percent return on Puerto Rican bonds they purchased for as little as 29 cents on the dollar yielding interest rates of up to 34 percent,” Sanders wrote, “while the budget for hungry children in Puerto Rico would be cut.”
Sanders, instead, urged his colleagues to work with him on an alternative to the Puerto Rico Oversight, Management and Economic Stability Act “that protects the interests of the people in Puerto Rico, the workers, the elderly, the children and the sick – and not just Wall Street vulture funds.”
To assist Puerto Rico, Sanders proposed giving the U.S. territory the same authority granted to every municipality in the country to restructure its debt under the supervision of a bankruptcy court. If an independent audit currently underway in Puerto Rico finds that any of its $70 billion debt was issued in violation of its Constitution, Sanders said that it should be “immediately set aside.”
Sanders also called on the Federal Reserve to provide loans to the island’s public utilities and purchase new bonds to facilitate an orderly restructuring of Puerto Rico’s $70 billion debt, require major “haircuts” for Wall Street vulture funds, and give Puerto Rico the time it needs to grow its economy, create jobs, and expand its tax base.
“The time has come 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,” Sanders wrote.
“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.”
To read Sanders’ letter, click here.
