Written Statement Submitted to the Committee on Natural Resources, US House of Representatives
Legislative Hearing — PROMESA: Discussion Draft (Day 2)
Published on October 30, 2019
Introduction
Chairman Grijalva, Ranking Member Bishop and members of the Committee, the Center for a New Economy (“CNE”) welcomes the opportunity to submit our comments on the draft legislation dated July 18, 2019 currently under consideration by the Natural Resources Committee of the U.S. House of Representatives to amend the Puerto Rico Oversight, Management and Economic Stability Act of 2016 (“PROMESA”).
CNE is Puerto Rico’s think tank, an independent, nonpartisan group, that informs current debates based on hard data and robust empirical research of Puerto Rico’s most pressing and complex challenges. For over 20 years, CNE has carefully studied the issues affecting Puerto Rico and has been a front row witness to the effects of policies implemented by state and federal government officials.
CNE was among the first voices to alert of Puerto Rico’s impending economic and fiscal crisis. We testified before Puerto Rico’s legislative assembly and the U.S. Congress on the complexity of its debt structure; the possible economic fallout and the need to adopt policies to enable growth; and Puerto Rico’s inability to restructure its own debt as a result of mysterious, and still unexplained, amendments made to the U.S. Bankruptcy Code in 1984. At the time Puerto Rico’s fiscal crisis was actively being discussed in Washington DC, CNE argued that unless Congress provided Puerto Rico with effective tools to bolster its economy, little would change.
As Congress considers amendments to PROMESA, it is imperative to understand that PROMESA was the product of a flawed policy process. While the draft legislation being considered signals the need to make amendments to an imperfect law, it falls short of effectively correcting the course.
We have organized our analysis and recommendations by dividing this document into four main sections: Section I sheds light on the historical dynamics of U.S. policymaking with respect to Puerto Rico. Section II outlines the context behind the legislative process that resulted in PROMESA’s political compromise. Section III provides CNE’s analysis of two proposed amendments. Finally, Section IV lays out our recommendations and conclusions.