On July 10, 1984, Ronald Reagan signed the Bankruptcy Amendments and Federal Judgeships Act. Section 9 of that Act (11 U.S.C. § 901 et. seq.) specifically excluded Puerto Rico from the bankruptcy protections that are extended to all U.S. municipalities.
Thanks to Section 9, Puerto Rico cannot re-negotiate or re-structure its $73 billion public debt, without permission from its creditors. If the creditors say “PAY ME NOW,” the island must either pay or go into default. There is no middle road.
WALL STREET LAUGHING
What does PAY ME NOW mean?
Since Puerto Rico’s debt has been downgraded to “Junk Bond” status, the island must pay the highest interest rates. Currently, the annual yield on Puerto Rico bonds are an astounding 10 percent. With the triple-tax exemption factored in, Puerto Rico bonds are providing an annual 18 percent return.
While this is great for Goldman Sachs and the Oppenheimer Fund, it is tragic for Puerto Rico. The math is very simple: 10% annual yield on $73 billion is $7.3 billion. With a population of 3.6 million, every Puerto Rican will have to pay $2,000 per year – just to cover the yield on this debt.
With a per capita income of only $16,400 (1/3 that of the US) this means that every man, woman and child in Puerto Rico will have to pay 12% of their meager $16,400 income to Wall Street…with no bankruptcy protection.
Can you hear Wall Street laughing?
PRESIDENT OBAMA LAUGHING
For the past three months the Latino press, advocacy groups and elected officials have frantically contacted the White House. Pres. Obama has done and said nothing about the crisis. The White House stated repeatedly that there would be “no bailout for Puerto Rico,” but urged Congress to “consider a Chapter 9 bankruptcy amendment” for the island.
Obama spoke with a forked tongue. He knew that Congress would pass no amendment, because this would open the door to 50 states demanding bankruptcy privileges, as well.
Instead of doing anything for Puerto Rico, in the last week of July 2015, he proudly announced the renaming of a post office in the South Bronx, as the Herman Badillo Post Office.
There is now a growing rumor that Obama wants Puerto Rico to fail…because this will force more Puerto Ricans to move to Florida, where they will become Democratic voters in the 2016 presidential election.
Can you hear Obama laughing?
US CONGRESS LAUGHING
Pedro Pierluisi, the Resident Commissioner of Puerto Rico, is convinced that Congress will agree to making Puerto Rico the 51st state…just because Puerto Rico asks for it. Pierluisi’s entire political career, and his political party (PNP) are built on that one belief.
Asking five members of Congress to give up their seats, so that five Puerto Ricans can take them, is a pretty large request. Let’s see how Pierluisi fared, when he proposed something much smaller.
On February 11, 2015, Pierluisi proposed H.R. 870. This bill would amend Chapter 9 of the Bankruptcy Act, to allow Puerto Rico some limited bankruptcy powers. It took five weeks for this bill to be assigned to a committee, on March 16, 2015.
A year has now passed. The bill is still in that committee. Nothing has been done.
On August 3, 2015, Puerto Rico was forced into default, for failure to meet a scheduled $58 million bond payment.
Congress went on summer vacation, while Puerto Rico went into default…and 3.6 million people had to pay even higher taxes to cover the default penalties. It’s no wonder that so many of them, have had to flee the island.
Here’s another example of Congressional ridicule:
This Pierluisi bill asked for higher Medicare Part “B” reimbursement rates to Puerto Rican seniors. Not only was this bill bottled up in committee, but Congress cut another health program – Medicare Advantage – by 11 percent.
They did the exact opposite of what Pierluisi asked. In the middle of Puerto Rico’s greatest financial crisis, they cut vital health funds for seniors.
By ignoring Pedro Pierluisi, and simply doing nothing, Congress threw Puerto Rico into default and kicked every senior in the teeth. Then they broke for summer vacation.
Can you hear Congress laughing?
Unfortunately, few people are laughing in Puerto Rico. Many lives are being systematically destroyed by this laughter from the north.
The laughter needs to stop. Puerto Rico needs to wake up. This cannot continue much longer.
For a history of the War Against All Puerto Ricans, read the book…
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