Republicans ignore Puerto Rico's debt crisis at own peril, says former governor
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Version 0 of 1. Republican presidential candidates need to be conscious of the importance of the Puerto Rican vote when they react to the debt crisis afflicting the territory, according to the former commonwealth governor Luis Fortuño. Related: Puerto Rico's 'unpayable' debt: is this the Greece of the western hemisphere? In an interview with the Guardian, Fortuño said the candidates who are serious about pursuing the party’s nomination to the end “will have to comment” on the debt crisis there. Fortuño, a well-respected Republican who was mooted as a potential vice-presidential pick for Mitt Romney in 2012, said the issue could be important not just in the general election but in the 2016 Republican presidential primary as well. Florida has long been a crucial swing state, and Puerto Ricans make up a key demographic in that state. Concentrated in the “I-4 corridor”, a key battleground in general elections, the nearly 1 million Floridians of Puerto Rican descent can determine who wins the state’s 29 electoral votes. As Fortuño pointed out, Puerto Rican American voters backed George W Bush for president in 2004 and Marco Rubio for Senate in 2010, but also backed Barack Obama in both 2008 and 2012. Fortuño also noted that while Puerto Ricans are a crucial general election demographic, their votes loom even larger in the 2016 GOP primary. Florida’s presidential primary is scheduled to be held on 15 March and is a winner-take-all contest. The Sunshine State allocates 99 delegates of the 1,235 needed to clinch the Republican nomination. However, that’s not the only Republican primary that week in which Puerto Rican voters play a key role. Just two days before, Puerto Rico itself holds a Republican primary where any candidate who receives 50% of the vote gets all 23 delegates up for grabs. Not only that, with Florida’s Puerto Rican population and proximity to the island, any win in Puerto Rico is bound to get significant attention in the Sunshine State, creating the potential for a Republican contender to land a one-two punch. Related: Economic exodus means two-thirds of Puerto Ricans may soon live in states This could favor Jeb Bush. While both he and Marco Rubio are from Florida, Bush also has close ties to Puerto Rico. As Fortuño, a Bush supporter, pointed out, the former Florida governor spent three months “campaigning for his father” in Puerto Rico during the 1980 Republican presidential primary, and both George HW Bush and George W Bush had looked out for the island’s interests while in the White House. Fortuño particularly praised the elder Bush, whom he said had “a soft spot in his heart for Puerto Rico and showed it over and over”. The question is whether the ongoing crisis on the island will become a political issue. In Fortuño’s opinion, it could. The former Puerto Rican governor noted that the commonwealth could take two different pathways in resolving the crisis which was sparked when the commonwealth’s governor Alejandro García Padilla proclaimed nearly two weeks that the island’s debts were “unpayable”. (Although the longtime United States territory had long been struggling economically, the statement of García Padilla, who narrowly bested Fortuño in the island’s 2012 gubernatorial election, focused national attention on its travails.) The first is to take what he viewed as a far more responsible tack in dealing with the debt crisis, and make clear that holders of Puerto Rico’s general obligation bonds and Cofina bonds, which are backed by sales tax, would be fully protected. The second entails politicians continuing along the current path, and things will get worse and “lawyers will just get rich”. If the second path is pursued, it could have grave consequences and create a mounting political crisis. In particular, with 50,000 Puerto Ricans leaving the island every year – many of them with families still there – the issue could become far more important, especially with various Puerto Rican agencies due to make major payments to bondholders in the coming months. Puerto Rican bonds are widely held, as they have long been considered a safe investment. “Many people are holding Puerto Rico bonds in mutual funds, IRA accounts and other retirement accounts and they don’t even know it,” Fortuño said gravely. “It won’t be a crisis until enough people come to realize that it is affecting them personally.” Rick Wilson, a top Florida Republican consultant, was somewhat more skeptical of the impact of the debt crisis on Puerto Rican American voters in Florida. In his opinion, “the issues in Puerto Rico have not yet penetrated outside [the] immediate community and a lot of them feel a little more insulated” because of the Sunshine State’s booming economy. Wilson went on to note that while a “lot was in flux” on the topic, it was “still a secondary issue”. One of the big issues in Puerto Rico’s crisis is that unlike with American states, Chapter 9 of the bankruptcy code doesn’t apply to the commonwealth. The provision allows any municipality, which is defined as a “political subdivision or public agency or instrumentality of a State”, to reorganize its debts. This includes cities, counties as well as a variety of public agencies and authorities. However, Puerto Rico is not a state. Related: Colony, state or independence: Puerto Rico's status anxiety adds to debt crisis Among Republicans, Jeb Bush came out in favor of applying Chapter 9 to Puerto Rico during an April visit to the island, saying: “I think that Puerto Rico ought to be treated as other states are treated as it relates to restructuring.” All three major Democratic candidates – Hillary Clinton, Martin O’Malley and Bernie Sanders – have supported this as well. In contrast, Marco Rubio has been far more equivocal on the subject. When asked by the Guardian on Wednesday whether he supported legislation to allow Puerto Rican municipalities to file for Chapter 9 bankruptcy, the Florida Republican called it “a complex issue”. He added: “We want to make sure that whatever decision we make with regards to this is probably going to create a precedent for other jurisdictions in the country that are going to face similar situations in the near future.” However, Chapter 9 already applies in all 50 states and has recently been invoked in financial crises in major cities such as Detroit and Stockton, California. Yet even if Puerto Rico dodges this bullet, its ambiguous status will remain an issue. As a commonwealth, Puerto Ricans have long enjoyed American citizenship without the burden of paying federal income tax. However, that also means they don’t vote in the general election, and their government doesn’t have the same sovereign authority as state governments. Fortuño, a longtime supporter of Puerto Rican statehood, thought the debt crisis made clear the need for his native island to be a full-fledged state. Not only does the former governor believe an increasing number of people on Puerto Rico are realizing “the disadvantage that it is to be territory as oppose to a state”, he added that he doesn’t believe the founding fathers “intended a territory to remain a territory for 120 years”. However, the debate over statehood remains unresolved. While a majority of Puerto Ricans supported statehood in a 2012 referendum, the vote was nonbinding and Congress has yet to act. While Jeb Bush favors Puerto Rican statehood, Rubio said Wednesday that he would like a second vote on the topic. He told the Guardian that the 2012 referendum lacked clarity because it had three options, and that there needs to be “an up-or-down referendum”. In 2012, Republican nominee Mitt Romney supported statehood for the island. Democrats are even more muddled on the topic. For example, while the campaign of former Maryland governor Martin O’Malley has repeatedly touted his leadership on Puerto Rico, they have not responded to numerous requests from the Guardian about O’Malley’s position on statehood. In the meantime, a bill to apply Chapter 9 to Puerto Rico was introduced in Congress by the commonwealth’s delegate to the House of Representatives in February. It has yet to receive a vote. Sabrina Siddiqui contributed reporting from Cedar Rapids, Iowa |