Puerto Rico and its debt crisis remain in the news as Congress considers legislation to help the island territory restructure and manage its debt. Puerto Rico’s pensioners remain trapped in this crisis as well. Just last week, a new audit of the territory’s pension system by KPMG found that the pension system there could run out of money next year. Puerto Rico’s retirees risk being cast into poverty if the pension system is not properly funded- a risk that becomes even greater if the territory is forced to repay vulture hedge funds rather than put needed funds into its depleted pension.
Puerto Rico’s debt crisis, its causes, and its consequences are all complicated and, as a result, there is a lot of confusion about what is happening there. While we’ve written about it before, let’s cover some of the basics:
- Puerto Ricans are American citizens: despite the island’s status as a U.S. territory, all Puerto Ricans are natural-born American citizens. If a Puerto Rican moves to an American state, as many have done to flee the island’s debt crisis, they are immediately eligible to register to vote, to work, etc. – just as someone moving from Texas to Florida would be able to do. Since the island is a territory though and not a state, some laws and regulations do not apply there, as they would to a state. This, in part, is a cause of the island’s current problems.
- The legislation Congress is considering is not a “bailout”: while the status of legislation to address Puerto Rico’s debt crisis is still uncertain, one thing is not: this is not a “bailout”. No legislation being considered or proposed in Congress would give money to Puerto Rico to repay its debts or even to properly fund its pensions. What the legislation would do is give Puerto Rico the legal ability to restructure its debts- a legal ability it would have if it were a state. The vulture hedge funds currently preying upon the territory’s crisis may characterize it as a “bailout”, but that is simply to scare people and stop the legislation that the vultures oppose.
- What’s happening in Puerto Rico is not going to happen in a state: in the right-wing media, you will hear people say that Puerto Rico is the first domino and that soon states like Illinois and California will begin declaring bankruptcy and asking the federal government for a bailout. This is simply a right-wing scare tactic used by anti-pension ideologues who want to eliminate all public pensions. If nothing else, this situation would not happen in a state because states have legal abilities that territories do not. The situation in Puerto Rico is unique, the result of a confluence of factors including the 2008 financial crisis, a declining manufacturing base on the island, and an over reliance on bonds by the territory’s government. Even a state like Illinois- which just set a record for going the longest without a budget- is not in the same situation as Puerto Rico.
Puerto Rico’s pensioners need our help. They do not have a voice in Congress, so we need to lend our voice to support them. Please write to your member of Congress and your senators and urge them to protect Puerto Rico’s pensions in the legislation that Congress is currently considering. If Puerto Rico’s pensions are abandoned, thousands of American citizens are at risk of being thrown into poverty.