Court rules Puerto Rico residents eligible for SSI program

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A federal appeals court has upheld a decision that people in Puerto Rico are eligible for the Supplemental Security Income program.

As many as 700,000 people may be impacted by Friday's ruling from the U.S. Court of Appeals for the First Circuit. The Social Security Administration runs SSI, which provides money to low-income people who are disabled, blind, or over 65. It also provides money to families with disabled children.

The appeals court ruling may impact as many as 700,000 people in Puerto Rico.

Puerto Rico currently has a program jointly funded with the federal government that provides funds to these groups.

According to Jenniffer González-Colon, Puerto Rico's non-voting representative in Congress, the average SSI beneficiary receives $553 monthly, whereas the average beneficiary under the Puerto Rico program receives $77 monthly. The maximum income permitted for an individual to qualify for SSI is $750 per month, compared to a maximum of $65 per month for the Puerto Rico program.

"Puerto Rico’s territorial status has been the cause of the discrimination suffered by the Americans living on the island by turning their citizenship into a second class American citizenship," González-Colon said in a statement. "Today's First Circuit opinion confirms the decision that invalidates the provision of law that allows Americans residing on the island to not qualify for SSI.

“We have fought for this in Congress and in court as a friend of the court in support of Puerto Rico residents who were unable to participate in the program merely because of their place of residence,” she continued.

An attorney in the case, Hermann Ferré, said that up to 700,000 of the island’s 3.2 million residents might be eligible for the program.

“I think in a territory with a 40% poverty rate, any additional monies would be more than welcome," said Evercore Director of Municipal Research Howard Cure. "I wouldn’t count on the money just yet since the Supreme Court also has to rule.”

The U.S. government attorneys have the option now of seeking a review by all of the First Circuit's judges ("en banc"), petitioning for certiori from the U.S. Supreme Court, or simply accepting the decision. They haven't indicated their intention yet to Ferré, an attorney for the island resident seeking to keep the SSI benefits he first started getting as a New York resident.

Cumberland Advisors Portfolio Manager Shaun Burgess said that he expected SSI to have more impact by allowing the local government to save money on the existing program than as a stimulus on the local economy. Cumberland owns insured Puerto Rico bonds.

Ferré said he thought introducing SSI to Puerto Ricans would help the island's economy.

In the ruling the Circuit Court panel of judges said the U.S. Supreme Court in a 1978 case had allowed the federal government to treat Puerto Rican residents differently from residents of the 50 states based on three conditions. First, Puerto Ricans didn’t contribute to the federal treasury. Second, the cost of providing benefits would have been high. Third, the SSI benefits being requested would have disrupted Puerto Rico’s economy.

In this case, the Circuit Court said that SSI benefits wouldn’t disrupt the economy, as only those who can’t work get them.

The court’s judges said that from 1998 to 2006 Puerto Ricans paid more into the federal treasury than did residents of six states. Even in 2018 they paid $3.5 billion. Residents of Puerto Rico who get income from either sources outside the island or from the federal government are required to pay federal income taxes on the income. They also pay Social Security, Medicare, and unemployment insurance taxes. In this way, the Circuit Court judges said, Puerto Rico residents do contribute to the federal treasury.

Finally, the judges said the cost of extending SSI to the residents, considered alone, was not an adequate reason to deny the benefits. The judges said the equal protection clause of the Fifth Amendment of the Bill of Rights requires the federal government to make the payments to the island’s residents.

In other news related to Puerto Rico’s economy, island economists and officials are beginning to release estimates of the impact of the governor’s COVID-19 related shutdown of island activity on the island’s economy and government finances.

According to an April 8 story in the El Nuevo Día news website, Puerto Rico Secretary of the Treasury Francisco Pares Alicea said that he expected the virus and resulting governor-ordered shutdown will reduce tax revenues by up to $1.6 billion in the coming months. For comparison, the current fiscal year General Fund projects $8 billion in revenue.

According to the same story, economic activity on the island may be cut by $4 billion, according to Omar Marrero, executive director of the Puerto Rico Fiscal Agency and Financial Advisory Authority.

By comparison, Inteligencia Económica Chairman Gustavo Vélez said around April 6 that if the governor’s lockdown continued to end of May, it could cost the island $10 billion in economic activity, according to El Nuevo Día. By comparison, Puerto Rico’s 2018 gross national income was $85 billion.

On Sunday Gov. Wanda Vázquez Garced extended the island lockdown to May 3. She also loosened the restriction slightly on hardware and auto repair shops but required that people wear masks when shopping in stores.

Correction: The ruling came from an appellate court, which was not clear in the original version of the story.

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