Management of territorial affairs has historically fallen under the purview of the Department of Interior’s Office of Insular Affairs. However, President Kennedy changed that situation in the case of Puerto Rico by issuing a memorandum ordering that all matters regarding the U.S.-Puerto Rico relationship be referred to the Office of the President. President George H.W. Bush followed up on this directive by issuing another memorandum requiring all departments, agencies, and officials of the Executive Branch to treat Puerto Rico administratively “as if it were a state.”
More recently, responsibilities specifically related to Puerto Rico affairs have been assigned to the Executive Branch’s Office of Intergovernmental Affairs and several prior Administrations have addressed Puerto Rico issues through the creation of interagency task forces that have looked into and exercised their responsibilities over the island.
Taking a particular interest in the political relationship between the U.S. government and the Commonwealth’s government, in late 2000, the Clinton Administration created the President’s Task Force on Puerto Rico’s Status to “facilitate action on matters related to proposals for Puerto Rico’s status and the process by which an option can be realized.” Following suit, the George W. Bush Administration issued two reports expanding on the relationship with the Government of the United States and options for its future relationship. Under the Obama Administration, a similar approach was undertaken in 2011.
By 2015, however, the island was poised to default on over $2 billion in debt and required the federal Administration to play a leading role in the response to the island’s fiscal and economic crisis, and therefore expanded the scope of the task force. That effort led to the enactment of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). Today, four years since the enactment of PROMESA, Puerto Rico is still grappling with nearly 15 years of economic contraction and a bankruptcy process that appears to have no end in sight.
Undoubtedly, there are many federal equities at stake, including monitoring the debt restructuring process, extending additional federal programs, overseeing disaster reconstruction efforts, and reaching a status resolution. In light of the magnitude of these challenges, if an interagency task force is reconstituted, it should have clear goals and objectives, and be comprised of a multidisciplinary group of actors capable of laying the groundwork for the Biden Administration’s four-year workplan.
We seek to explain why a Puerto Rico Task Force is needed in order to help the new Biden-Harris Administration meet its proposed objectives, with a particular focus on oversight and facilitation.
Context and options for a renewed task force configuration: PROMESA has failed to deliver in many respects. In 2015, the U.S. Treasury and the White House National Economic Council provided Congress with a roadmap of the tools Puerto Rico needed both to recover from its fiscal woes and achieve long-term economic growth. The four pillars included: (1) broad debt restructuring, (2) strong fiscal oversight, (3) health care parity, and (4) economic development tools. PROMESA only provided Puerto Rico and its instrumentalities with two of the four pillars: restructuring and oversight. The political dynamics at the time precluded the Obama Administration from extending long-term fixes for health care and economic development tools. It is clear now that exchanging local governance for a chance at restructuring did not yield the intended results.
National disapproval over how Puerto Rico managed its finances unfairly veered beyond the fiscal crisis and snowballed into the more toxic narrative that Puerto Rico was incapable of running its own government. Capitalizing on that narrative, the Trump Administration appointed federal monitors in multiple agencies, resulting in a highly bureaucratic and inefficient process that has hindered recovery aid from reaching its intended recipients.
The work ahead will require a closer look at how to best pursue and prioritize federal engagement. We provide several options below.
Structural Issues: For decades, programmatic inequities have stifled the island’s ability to overcome several systemic obstacles that long predate the more recent economic and natural disasters. For decades, Puerto Rico has been grappling with acute poverty levels and chronically low labor force participation rates. The federal government 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.
State Capacity: There is little doubt that the slow pace of disbursement of federal disaster funding has dampened Puerto Rico’s recovery efforts. While many groups and organizations have focused solely on the dollar value of what Puerto Rico has received thus far, we also must be careful not to conflate reconstruction funding with long-term economic growth. To be sure, reconstruction funding will be of the essence in the coming years, but these temporary dollars do not properly fix structural problems that, unless corrected, will continue to hinder socioeconomic success. At this point in time, it is necessary to build Puerto Rico’s state capacity to absorb and manage reconstruction funds so that the focus is less about the overall price tag, and more about where these monies are invested.
Political Status: The relationship between the federal government and Puerto Rico’s local elected officials is not peripheral but in fact at the core of our treatment within federal programs. In the early 20th century, the U.S. Supreme Court decided on a series of landmark cases known as the Insular Cases that set a historical precedent for the federal government’s authority over its territories, including the application of federal programs. Consideration at the federal level of a future resolution of Puerto Rico’s political status must be careful not to oversimplify cultural, economic, legal, and constitutional dimensions that will necessitate input from all parties – scholars, government officials, and residents alike.
All of the proposed actions will require adding technocratic local and federal voices to what has been primarily a political body housed in the Executive. Staffing the new body and providing it with the necessary resources to carry out the work should be carefully studied, and perhaps draw inspiration from the way in which the new external Kitchen Cabinet pulls in experts from different fields to provide guidance to the federal working group.