Meet The Legal Theorists Behind The Financial Takeover Of Puerto Rico

Details

Publish Date:
October 30, 2017
Author(s):
Source:
The Nation
Related Person(s):

Summary

A nurse dispatched to Puerto Rico by the Registered Nurse Response Network described the island’s dire situation earlier this month. “A line formed outside FEMA in Rio Grande two nights ago,” she wrote in a public letter. “People waited 24 hours only to receive 1 16oz water and one snack size Cheez-it’s. The people of Puerto Rico are starving and have no access to water.… They have turned off the water and we are running out of bottled water.”

A humanitarian catastrophe is unfolding, and the federal government urgently needs to fund public services, transportation, and basic goods. But, rather than provide the money as aid, Congress approved a $5 billion loan, which will only add to the island’s immense debt. On top of that, Puerto Rico has little say over how it will be rebuilt. In 2016, the federal government appointed a seven-person Federal Oversight and Management Board (FOMB) to restructure the island’s debt, with the belief that the US territory needed sweeping cuts. Austerity, exacerbated by the FOMB, had already deteriorated the quality of life, but the ravages of Hurricane Maria have made local control and additional spending critical. Instead, hands tied, the island’s elected governor has been reduced to nonprofit fundraising.

Even laying aside the undemocratic nature of oversight boards, the solutions they impose on populations are often painful and ineffective. Just ask anyone in Flint. According to local-government expert Michelle Wilde Anderson of Stanford University Law, when fiscal problems are caused by chronic poverty, population decline, and the federal government’s encouragement of debt, the situation won’t be fixed “with better spreadsheets or fiscal tools.” If a household isn’t bringing in enough money because of a job loss or injury, Anderson told me, “you can’t tell them they need better financial management.… If it’s a revenue problem, what they need is a living-wage job, not a financial expert to prohibit them from buying groceries.”

In struggling cities in Michigan and Pennsylvania, Anderson said, many expert financial managers “got in there and saw the revenue collapse, and there was nothing they could do about it. They don’t have new funding or special tools to bring the city’s people out of poverty. And so they get the hell out of there in a few years, leaving the city no better off than it was before.”

When poverty, postindustrial decline, and population loss (or a hurricane) are the sources of economic crisis, you can’t blame the government, and therefore suspending it becomes less justified. While Anderson is quick to say she is not “against the notion of takeover laws full stop,” she thinks control boards should not be given powers superior to those of an elected official: “We have to give the electeds all the tools that we think are needed to keep a city’s budget balanced.”

Read More