On December 9, 2015, three Republican US Senators co-sponsored Senate Bill 2381, called the “Puerto Rico Assistance Act of 2015.”
Now three months later, in March 2016, the US Congress re-branded it as the “Puerto Rico Oversight, Management, and Economic Stability Act,” whose acronym is PROMESA.
The original Senate Bill 2381 offered very minor assistance: a temporary reduction in payroll taxes and a “transition assistance” fund of $3 billion. But the real purpose of Senate 2381 was the installation of a Financial Control Authority, which would rule over Puerto Rico. The PROMESA bill does exactly the same.
Here is the Senate bill, all 159 pages of it:
Here is the PROMESA bill:
If you download both bills, and place them side-by-side, you will soon realize…
They are virtually the same bill.
After three months of hearings and “policy review,” Congress made only two legislative adjustments and one budget cut:
Other than this, they issued a nearly identical law.
The following analysis provides you the parallel page references to both Senate Bill 2381 and the “new” PROMESA bill. Point by point, page after page, they both establish a dictatorship in the Caribbean.
AUTHORITY TO ACCEPT “GIFTS”
The most astounding “good government” power of the Financial Control Authority will be its right to “accept, use, and dispose of gifts, bequests, or devises of services and real and personal property.” (Senate bill, p. 53) There is no explanation of how these gifts will “aid or facilitate” the work of the Authority. They just will.
The chairperson of the Authority will deposit these gifts “in an account,” which will then be “available for disbursement” by the chairperson. (Senate bill, p. 54)
This open invitation to bribery, influence peddling and money laundering, is repeated word for word on page 16 of the PROMESA bill.
ABSOLUTE BUDGET POWERS AND POLITICAL CONTROL
Every member of the Authority (including the chairperson) will be appointed by the President of the US. (Senate p. 43; Promesa pp. 4-6 ) One of the few differences between Senate 2381 and PROMESA, is that the latter reduces the number of Authority members from six to five.
Neither the chairperson, nor any of the Authority members, will be accountable or liable to the government of Puerto Rico. (Senate pp. 58, 61, 132; Promesa pp. 20, 25)
The Authority will ensure “the payment of debt obligations.” (Senate p. 38; Promesa pp. 64-65, 69), re-structure the workforce of the Commonwealth government (Senate p. 37; Promesa pp. 28-29, 54-56) and reduce or freeze public pensions. (Senate pp. 9, 152; Promesa pp. 54-55, 94-95)
It will also supervise the entire budget of the Commonwealth government (Senate p. 38; Promesa pp. 27, 32, 35-36, 46-47, 68), its pension system (Senate pp. 39, 152; Promesa 54-55, 94-97), legislature (Senate p. 39; Promesa pp. 35-36, 46-47), public authorities (Senate p. 42; Promesa pp. 55, 63) and all leases, union contracts, and collective bargaining agreements. (Senate p. 114; Promesa pp. 49-50, 94-97)
The Authority will also make “recommendations” with respect to all of the financial affairs of Puerto Rico. This will include the salaries of all personnel, firing of workers, reduction of pensions, elimination of services, and the use of “alternative service delivery mechanisms, including privatization and commercialization.” (Senate pp. 121-122; Promesa pp. 54-56)
If the governor or legislature of Puerto Rico resist any of these “recommendations,” the Authority can “take such action as it determines to be appropriate.” In other words, the Authority can implement any “recommendation” that it wants, regardless of the Puerto Rican government. (Senate p. 125; Promesa p. 58)
Anyone (public official or otherwise) who defies or obstructs the Authority, will be found guilty of “criminal misdemeanor” (Senate p. 56 ; Promesa p. 19) and will be subject to suspension without pay, removal from office, (Senate p. 57; Promesa p. 19), and even potential imprisonment. (Promesa p. 19)
The Authority makes a “recommendation” to Puerto Rico
CREATION OF DEBT, WITH NO ACCOUNTABILITY
The Authority can also encumber the physical infrastructure of Puerto Rico.
It can issue debt – bonds, notes, or other obligations – and keep them in an escrow account, which it would make available to Puerto Rico “at such times as it considers appropriate.” (Senate p. 127; Promesa pp. 62-63)
Alternatively, these funds could be used for “ANY OTHER purpose that the Authority considers appropriate.” (Senate p. 127; Promesa p. 63) (author’s emphasis)
In addition to issuing debt, and using this debt for ANY OTHER purposes that it sees fit, the Authority will “pledge or grant a security interest in revenues to individuals or entities purchasing bonds, notes, or other obligations.” (Senate p. 128; Promesa pp. 63-64.) In other words, the physical infrastructure of Puerto Rico (highways, bridges, schools, prisons, electrical grid, water supply, public housing, prime coastal real estate) will all be available as “collateral” for the debt decisions of this Authority.
Senate 2381 and Promesa are careful to mention that “the United States is not responsible for any principal or interest on any bond, note, or other obligation issued by the Authority” (Senate p. 132; Promesa p. 67)
In addition, the Promesa bill specifically exempts the Authority, and all its members and employees, from any liability for actions undertaken by the Authority. (Promesa p. 20).
This means that Puerto Rico – its taxpayers and its physical infrastructure – will be solely and exclusively responsible for repayment of the Authority’s debt…including the debt which the Authority creates, for “any other” purposes that it sees fit.
The Authority will also have prosecutorial powers.
It is authorized to “conduct necessary investigations” into the government of Puerto Rico. (Senate p. 37; Promesa pp. 15-16)
It is empowered to hold hearings, secure government records, demand evidence, take testimony, subpoena witnesses, and administer oaths (under penalty of perjury) to all witnesses. (Senate pp. 51-52; Promesa pp. 15-16)
Anyone who fails to appear, refuses to testify, or withholds evidence, can be held in contempt of court. (Senate pp. 54-55; Promesa p. 17)
The PROMESA bill added to these penalties: any failure to cooperate shall be a misdemeanor punishable by a $1,000 fine, one year in prison, or both. (Promesa p. 19)
The outcome of any Authority investigation can lead to criminal and civil penalties – including, but not limited to, getting fired from your job. (Senate pp. 56-57; Promesa p. 19)
THE DISTANT “PROMESA” OF BANKRUPTCY RELIEF
Section 302 of PROMESA contains the one substantial difference from Senate 2381. If Puerto Rico or one of its instrumentalities (i.e. PREPA, PRASA) is insolvent, and has provided audited financials to the Authority, and has tried and failed to negotiate a voluntary re-structuring, then the Authority might authorize the filing of a bankruptcy petition. In its sole and exclusive discretion, the Authority may also authorize a petition, even if the above conditions have not been met. (Promesa p.75)
Since the Authority is a collection agency for the hedge funds, this “bankruptcy relief” from the Authority – at the sole discretion of the Authority – is all smoke and mirrors.
It’s the equivalent of a loan shark who gives you a one-week extension before breaking your legs, or the old white man in the Geico commercial:
The final proof of this smoke and mirrors, is that the PROMESA bill omitted $3 billion that was originally allocated in Senate 2381 for the “economic and health care stability” of the island. PROMESA is playing hardball…it will negotiate and rule with an iron fist. (Senate pp. 155-156)
HOW A COWARD CUTS YOUR WAGES
The cowardly low point of the PROMESA bill occurs in Section 409. (Promesa p. 91) It mandates a change in Section (6)(g)(4) of the Fair Labor Standards Act of 1938 [29 U.S.C. 206 (g)(4)], but the effect of this change is unclear. In order to understand this change, you have to read Section (6)(g)(4) itself.
Only then do we realize that PROMESA will cut the minimum wage of newly hired young workers from $7.25 to $4.25 throughout the entire island. This will apply to everyone aged 20-24, whenever they start a new job.
In a 122-page bill, that so carefully enunciates and protects the rights of billionaire hedge fund owners, the US congress could easily have added one line saying “if you are aged 20-24, your minimum wage is reduced to $4.25 during the first three months of your job.” Instead they took the cowardly approach.
Over 200,000 young people, many of them paying student loans, will now be working for $4.25 an hour in Puerto Rico. The US congress calls this PROMESA.
GEORGE ORWELL IN PUERTO RICO
The PROMESA Authority will be the governor, banker, judge, jury, and pawnbroker of Puerto Rico.
It will manage the entire Puerto Rican economy, and be accountable to no one on the island. It will tell the Puerto Rican government when to jump, and how high. It will issue debt, spend the money in any manner it sees fit, and leave Puerto Ricans to pay the bill.
It will do nothing about the Jones Act, the loss of pensions, the privatization of public schools, or the hedge funds that will own the physical infrastructure of Puerto Rico – its schools, prisons, highways, electrical grid, and water supply.
Despite all of this, Governor Alejandro Garcia Padilla recently stated that “he would accept a federal fiscal oversight body, as long as it respects Puerto Rico’s autonomy.”
It would thus appear, that the governor is a clown.
This is where our “Commonwealth” relationship to the US has gotten us: a dictatorship in the Caribbean, owned and operated from Wall Street, disguised as a “management assistance authority.”
The branding is very catchy, though.
Congress took bribe money from the hedge funds, for three full months (Dec. 2015-March 2016). Then they slapped some lipstick and high heels on Senate Bill 2381. Then taking a page from George Orwell, they called it…
PROMESA for Puerto Rico.
For a history of the War Against All Puerto Ricans, read the book…
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