WASHINGTON – Presidential candidate Sen. Bernie Sanders on Monday urged the federal government to extend emergency loans to Puerto Rico to aid in debt restructuring. But he opposed the idea of a control board, which has been a cornerstone of legislation proposed by House Republicans.
Sanders made his remarks at a community meeting in San Juan, the territory's capital, after traveling to Puerto Rico ahead of the territory's June 5 Democratic presidential primary. The senator is running as a Democrat despite serving in Congress as an Independent. Puerto Rico is struggling with $70 billion of debt and $46 billion of unfunded pension liabilities. It has already defaulted on several debt payments and Puerto Rico Gov. Alejandro Garcia Padilla has said his government will default again on a $2 billion payment due on July 1. About $800 million of that payment is on general obligation bonds backed by the commonwealth's constitution.
Sanders told the crowd that extending federal emergency loans to Puerto Rico would help facilitate the orderly restructuring of the commonwealth's debts, according to a statement from his campaign. Creditors should work with Puerto Rico to develop a payment plan that is fair, helps with the recovery of the island's economy, and gives necessary time for the commonwealth to expand its tax base, create jobs, and reduce the poverty rate, he said.
Debt restructuring has been a major component of ongoing discussions in Congress as the House Natural Resources Committee struggles to release a revised bill designed to provide relief to the commonwealth.
The current bill pending in the House, the foundation for the revised bill, seeks to balance competing interests by creating a seven-member, presidentially-appointed oversight board for Puerto Rico that would have the power to require balanced budgets, address pension liabilities, as well as file debt restructuring petitions on behalf of the commonwealth and its entities in a federal district court as a last resort if voluntary negotiations do not succeed.
Sanders said called the bill's proposed control board a Republican idea that is "anti-democratic."
The senator instead reiterated his idea to help the commonwealth by creating jobs. He would invest $1 billion over five years into infrastructure projects that would support the creation of 13 million jobs in the U.S., 150,000 of which could be in Puerto Rico, according to the statement. He is also proposing an "aggressive push" to replace Puerto Rico's fossil fuel-reliant power system with one that relies more on renewable energy.
In his speech, Sanders also accused hedge funds holding Puerto Rico debt of trying to extract profits from the financial crisis that has caused Puerto Rico citizens to suffer. The hedged funds want the commonwealth to take austerity steps like closing schools to free up money for debt payments.
"What vulture funds on Wall Street are demanding is [for] Puerto Rico to lay off teachers, close schools, cut their pensions, and eliminate the minimum wage so that they can make big profits from the suffering and misery of children and the Puerto Rican people," Sanders said.
