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Working People’s Party criticizes austerity measures proposed by U.S. Treasury

Applauds Senator Sanders’s proposals and anti-austerity stand.

October 22, 2015

The Working People's Party (WPP) criticized the fact that the U.S. Treasury’s plan to deal with Puerto Rico’s debt crisis unveiled yesterday is tied to the adoption of harsh austerity measures which are both socially unfair and counterproductive in terms of stimulating growth. It also described the initiatives proposed by Senator Bernie Sanders as far more beneficial to Puerto Rico.

 

Rafael Bernabe, spokesperson and former WPP candidate for Governor pointed out today that the “document issued by the U.S. Treasury confirms many key points that the WWP has made since January 2014. We have pointed out that Puerto Rico’s public debt is unsustainable, that the government does not have the means to both service the debt and provide vital services that Puerto Rico needs, that paying this debt has already imposed terrible sacrifices on Puerto Rico’s working people, and that this debt must therefore be renegotiated.”

Bernabe, who is a professor at the University of Puerto Rico, remarked that the present administration headed by Governor Alejandro García Padilla for the longest time refused to recognize these facts. “They argued that to renegotiate the debt was unthinkable and irresponsible. But the analysis that we have been putting forth during the last twenty months has been proven correct. The new document elaborated by the U.S. Treasury demonstrates this yet again.”

Bernabe indicated that the proposals formulated by the U.S. Treasury must be carefully examined, from the perspective of the best interests of Puerto Rico’s and U.S. working people. “The axis of this proposal includes three measures. First, the extension to Puerto Rico of Chapter 9 of the U.S. bankruptcy code. Secondly and thirdly, the plan conditions the extension of Chapter 9 to the adoption of new budget cuts and austerity measures (the document refers to ‘tighter fiscal discipline’, ‘budget controls’, ‘tough reforms’) and to the creation of a federal oversight board (the document mentions an ‘independent and credible fiscal oversight’) which would have the power to insure that budgets and expenditures correspond to the fiscal adjustment program. That the present administration has gladly embraced this plan is not surprising, since it fits rather nicely with its own plan to combine debt renegotiation with austerity measures and its own control board, even if according to this plan the board would be created by Congress.”

Bernabe explained that “the problem is that austerity measures are both unfair and inefficient. They are unfair since they hurt above all those who are already worse-off, that is to say poor and working people. They are inefficient since, not unlike similar measures in the past, they cannot but deepen Puerto Rico’s economic depression. In other words, these austerity measures threaten to annul any relief that could be obtained on the debt renegotiation front.”

Regarding the proposed oversight board, Bernabe argued that “it has problems in terms both of its objectives and its political nature. Its objective would be to insure the adoption of the austerity measures mentioned above. At the same time it would further limit our participation in the decisions that directly affect us. We are placed under yet another external tutelage. When the document speaks of and ‘independent’ organism it means independent of us. What we need, on the contrary is more, not less participation in any and all decisions that affect us. This is something that nobody that supports independence, statehood or autonomy for Puerto Rico should support. To begin with, this is a kind of intervention that no state would accept.”

Regarding the letter to Jacob Lew, head of the U.S. Treasury by Senator Bernie Sanders, Bernabe argued “it includes many elements that are closer to what Puerto Rico needs. In fact, it includes some proposals that the WPP has made in recent months. It argues, for example, that Puerto Rico’s debt must be audited, and that those portions of it that are found to be illegal or unconstitutional must be ‘set aside’. Furthermore, Senator Sander’s letter underlines, as we have ceaselessly pointed out, ‘that the last thing Puerto Rico needs right now is more austerity.’ Senator Sanders adds in his letter: “The economic situation in Puerto Rico will not improve… laying off workers and allowing corporations to pay starvation wages by suspending the minimum wage and relaxing labor laws. It is impossible to get blood out of a stone’. This is very well put and bares the problem with the labor law reform legislation sponsored by the present administration in Puerto Rico, which we have denounced since it was formulated in the Krueger Report, last June.”

Bernabe pointed out that, "beyond the audit and debt renegotiation, its essential to restructure Puerto Rico’s economy. Measures that ease the transition of the unemployed to the formal economy are positive steps, but for that the jobs must be there and that is what we are lacking. The insistence that there will be no bailout for Puerto Rico, really means that while there is money, plenty of it, to bailout banks, insurance giants and major corporations there is no willingness to spend money to reconstruct poor communities, to create jobs and rebuild our infrastructure. Senator Sanders favors massive investments to create 13 million jobs, to be financed by taxes on Wall Street and the wealthiest 1%. This or something similar must be adopted and extended to Puerto Rico, adapting it to our particular and specific needs and circumstances. And we should follow the same logic by revising the tax incentives which do not promote growth and yet allow $35 billion in profits to leave the island every year. We must organize an audit of the debt, we must stop the proposed austerity measures and we must adopt a plan of economic reconstruction which we must link to similar proposals in the United States. This is what working people in Puerto Rico and the United States need and it will create the best conditions for the resolution of Puerto Rico’s status problem.”