PROMESA, 4 YEARS LATER
Published on June 30, 2020 / Leer en español
Four years after the enactment of PROMESA, Puerto Rico still faces massive debt and economic challenges – now, further exacerbated by the 2017 hurricanes, the series of earthquakes that have rattled the island since December 2019, and most recently, the COVID-19 pandemic.
Early on, the Center for a New Economy (CNE) warned the measures being considered by Congress would not address the underlying issues affecting the island. Even the original legislative proposal drafted by the White House consisted of: (1) providing a comprehensive debt restructuring mechanism; (2) establishing independent fiscal oversight; (3) treating Puerto Rico equitably with respect to Medicaid funding; and (4) extending the Earned Income Tax Credit (EITC) to residents of Puerto Rico to support economic growth in the island. Congress, however, failed to extend the EITC and equitable Medicaid funding for Puerto Rico, two key elements to achieve fiscal stability and promote economic growth.
To this day, CNE’s multiple warnings ring true. While everyone is aware of the necessary reconstruction work and funding for the island, Puerto Rico still lacks a comprehensive economic plan. Formulating such a plan would prevent officials – both locally and federally – from making abrupt policy changes and responding to immediate pressures in an ad-hoc fashion.
A long-term economic recovery plan must take look at the economy comprehensively, and include input from all of its stakeholders, especially members of the community and those directly affected by policy decisions. Until such a plan is articulated, Puerto Rico will continue to suffer the consequences of bad policies.