Memo to the Federal Government: Priorities for Puerto Rico

Memo to the Federal Government: Priorities for Puerto Rico

Published on January 14, 2021 / Leer en español

Director - Washington, D.C. Office

Executive Summary

In general, the new Administration should focus its energy on providing the residents of Puerto Rico equal access to federal programs and funding so it can avoid poverty traps and spur economic growth. The long-standing history of underinvestment in government programs has eroded and caused significant deficiencies in Puerto Rico’s institutions. Therefore, significant long-term investments and funding decisions by the federal government will be required.  And though the Administration’s support for extending federal assistance to the island is key, we must keep in mind that those efforts could be stymied if they lack support from the U.S. Congress.

Reconstruction Efforts 

  • The Trump Administration imposed numerous provisions that impeded prompt access to recovery funds. Meanwhile, the longer it takes for funds to reach disaster victims, the more challenging it becomes to achieve economic growth.
  • If aid lags behind a bureaucratic government process, it could instead, erode the capacity of government to manage other unexpected large-scale disaster recovery processes (such as the COVID-19 pandemic), give rise to additional outmigration and decrease the government’s revenue collection capacity.
  • Accelerating disbursement and access to disaster recovery funds is important to ensure families can finally restart their lives – three years later – in secure households. The ability to rebuild other public infrastructure and the energy grid will determine how transformative the reconstruction will be.

U.S Safety Net Programs


  • Puerto Rico, just like the world at large, continues to battle a killer pandemic but with the added pressure of lacking enough funding to sustain an already crumbling healthcare infrastructure.
  • This is primarily because under Puerto Rico’s Medicaid program, the federal share of the cost of the program, known as the Federal Medical Assistance Percentage (FMAP), is much lower than what is provided to U.S. States. Even then, the federal cost share is applicable only until an arbitrarily set spending amount is reached.
  • These limitations severely constrain program delivery, as evidenced by lower eligibility levels, fewer mandatory benefits, lower provider payments, and lower spending per enrollee. Even prior to the healthcare epidemic, 72 of Puerto Rico’s 78 municipalities were designated as medically-underserved areas.
  • The island cyclically faces the hard choice of cutting services or people from its Medicaid program unless additional federal funding is appropriated. Cutting services is hardly an option since the island provides only 10 out of 17 mandatory services offered in U.S. states.
  • Federal funding, once again, expires in September 2021. The incoming Biden-Harris Administration has the potential to champion and advance through Congress a permanent fix to Puerto Rico’s Medicaid funding stream, one that allows for a stable healthcare system for years to come.


  • The Supplemental Security Income (SSI) is a federal program that provides cash assistance to the aged, blind, and disabled individuals with limited resources to meet basic living expenses. Precisely at a time when the elderly have been the hardest hit, Puerto Rico residents are unfairly discriminated from participating in this program.  According to CNE estimates, allowing Puerto Rico into the SSI program could provide an estimated $2.58 billion in cash aid to over 435,000 individuals.
  • There is an ongoing legal dispute regarding the application of SSI to residents of Puerto Rico before the Supreme Court of the United States. In United States v. Vaello-Madero, Jose Luis Vaello-Madero argues that the exclusion of Puerto Rico from the SSI benefits program violated the Constitution’s Fifth Amendment’s equal protection guarantees. The U.S., on the other hand, asserts that the denial of SSI disability payments to Puerto Rico does not violate the Fifth amendment. A U.S. District Court Judge granted Vaello-Madero’s motion for summary judgment, essentially agreeing with the plaintiff.  Months later, the U.S. Court of Appeals in Boston issued a ruling affirming the decision of the lower court.  The Trump Administration, through the Department of Justice’s Acting Solicitor General Jeffrey B. Wall, submitted a petition this fall for a writ certiorari to the Supreme Court as to the applicability of such policy changes.
  • Barring any decision from SCOTUS before the Biden Administration swears into office, new officials can retract DOJ’s position and withdraw the legal petition. In doing so, the Social Security Administration will have to fast-forward its work and adjudicate thousands of disability cases at once. Congress will inevitably have to appropriate the funds in order to allow for administrative changes that make the decision effective.


  • The federal government provides low-income families financial assistance to purchase food through the Supplemental Nutrition Assistance Program (SNAP). Unlike nutrition funding provided to the States, Guam and the U.S. Virgin Islands, Puerto Rico receives a limited amount of annual federal funding to run its own Nutritional Assistance Program (NAP).
  • Since it functions as a block grant, when crisis strikes, Puerto Rico has no flexibility to expand the program to provide for increased needs, as it would under emergency circumstances. At a time when nearly half of the population needs these benefits to put food on the table, its reform cannot be understated.
  • The time has come to orchestrate a careful transition to the same nutritional assistance the U.S. government provides to other jurisdictions – a step that can be taken when the next Farm Bill heads to Congress for consideration.

Economic Development

  • By providing a tax credit for working families, the Earned Income Tax Credit (EITC) has become one of the federal government’s largest antipoverty programs. Puerto Rico, however, is excluded from participation in the federal EITC.  With a persistent poverty rate of 43 percent – and a dismaying 57 percent child poverty rate – it seems logical to extend EITC benefits to reduce poverty levels in Puerto Rico and increase workforce participation.
  • In lieu of congressional action, Puerto Rico established a local earned income tax credit that is intended to grow the economy. While this is a step in the right direction, on its own, the Puerto Rico EITC is small compared to what similar working-poor households receive in the states. And it is not enough. Relying on this program to offset the negative consequences of austerity programs on the island is negligent and dangerous.
  • Recent proposals included in the House-passed emergency supplemental appropriations package in 2019 and the House Ways and Means Committee Economic Mobility Act of 2019, would supplement the Puerto Rico EITC with a federal funding boost. The federal supplement would serve as an incentive for Puerto Rico to increase the size of its EITC and amplify the credit’s beneficial effects.


The time to put these policies to work for the people of Puerto Rico is now. Key to the effectiveness of any plan for Puerto Rico is the capacity to coordinate efforts among all relevant actors. Unilaterally imposing recovery solutions on the affected population (the overarching policy thus far) creates mistrust, encourages stakeholders to evade rules, and undermines a shared commitment to successfully recover from the hurricanes, earthquakes and the pandemic. We look forward to working with the federal Administration and the local government for the well-being of Puerto Rico and its people.