By Angela Vullo

March 22, 2018–On March 20, Congresswoman Nydia Velasquez (D-NY) hosted a discussion on the subject of “Puerto Rico, Six Months after Hurricane Maria.” The event provided an opportunity for small businesses and NGOS on the ground to talk about relief work immediately after the Hurricane. What became clear in the course of the event is that federal aid has been completely inadequate not only to eliminate life-threatening conditions still afflicting thousands, but that no plan for a full recovery is in the offing.

In addition to the hearing, hundreds of activists descended on Congress to demand action. Several hundred demonstrated in heavy rain at the Federal Emergency Management Agency (FEMA) headquarters, calling for more federal aid, and airing their “bitter frustration” with FEMA’s response.

The congressional participants were Democratic Leader Nancy Pelosi, Rep. Jose Serrano (D-NY), Rep. Joseph Crowley (D-NY), and Rep. Albio Sires (D-NJ).

Dire Conditions Continue

Rep. Velasquez opened the discussion by laying out the ongoing dire conditions of life in Puerto Rico. After six months of inadequate action by the United States Government, she said, many (an estimated 100,000+) still have no power, and migration continues with a further 10% decline in the population, leaving less than 3 million people now living on the Island. She addressed the fact that the outmigration would make the problem of rebuilding much more difficult, due to the reduction in the population of working-age adults, in addition to the loss of doctors, lawyers and teachers.

The New York congresswoman further contrasted financial restructuring with investment, and called for long-term investment policies. She said that on this 6 month anniversary we have seen an “abysmal response,” creating a massive disaster. But, she said, despite the response, there is “hope for Puerto Rico.”

Democratic Minority Leader Nancy Pelosi also stressed the lack of an adequate response, which she said was “further damaged by the tax bill.” (It eliminates a tax break for investment in the Island.) She also called for a policy of “long term sustainable growth,” and took on the prejudices against the Island: “Our country, America, is all 50 states.”

Rep. Crowley and all the other panelists backed up Pelosi’s statement, saying that Puerto Ricans are U.S. Citizens. Crowley accused the GOP of “ignoring the law” and said there is a “roadblock to funding.”

Rep. Jose Serrano was passionate: in situations like this, you find out who your friends are versus the “clowns”. He admitted that the lack of response made him cynical, but yet he was hopeful. He proposed to bring in the military to rebuild. He said, “This fight is only beginning. We need to rebuild the power grid, not just repair what was there.” He drew the dichotomy: “Puerto Ricans fought in the military, but we are only equal in wartime.” He called for immediate action: “None of these words can make life easier for Puerto Rico.”

A Fiscal Plan for Disaster

One of the chief focuses of the hearing was Puerto Rico’s 2018 Fiscal Plan, presented by Gov. Rosselló on Jan. 24. The most comprehensive and conclusive testimony on this fiscal plan for austerity came from Mark Weisbrot, Co-Director at the Center for Economic and Policy Research His testimony was titled, “Puerto Rico Needs Economic Recovery First, Not `Structure Reforms’ and Debt Service Extraction.

In his opening remarks, Weisbrot focused on the 2018 Fiscal Plan, which is likely to be approved by (FOMB) Financial Oversight Management Board. He first gave an overview of Puerto Rico before the hurricane. He stated that the “2017 plan was a plan without a future for Puerto Rico. It implied another lost decade, and probably more, without economic growth. So, even before the hurricane hit, Puerto Rico was headed for an economic experience that is rare in the history of modern capitalism: more than 20 years without economic growth. Unemployment was already almost 12% and about half of the population in poverty. Child poverty was at 58%, three times that of the U.S. And it was obvious that Puerto Rico’s debt was unsustainable.”

“Then came the hurricane which destroyed much of Puerto Rico’s already crumbling infrastructure, with some $94 billion in damages according to the governor’s estimates.”

Weisbrot then turned to the Governor’s fiscal plan, which he concluded was a denial of reality:

Now we have a new fiscal plan, which purports a significantly better future than the pre hurricane plan. The economy is forecast to have a positive real GNP growth for 5 years, after a big plunge for 2018. In this plan, there is a cumulative budget surplus of $3.4 billion over the next six years. How is this possible? Did Puerto Rico receive so much federal aid that its economic future has been transformed? No. Post hurricane assistance has only covered about half of the estimated damage, and has been slow to materialize. Furthermore, a separate plan for the privatization of PREPA (the government-owned electric utility) is a risky venture, especially in consideration of Puerto Rico’s past experience with privatization; in particular, the privatization of water services turned out to be a terrible failure. Another huge part of the present state of denial is the refusal to recognize the need for debt cancellation. A debt that was not payable before the hurricane damage is even less sustainable now.

Economic Growth Must Come First

Weisbrot then addressed what a real recovery plan must include:

In sum, the first priority for the PR economy must be a return to economic growth. And that is precisely, what the new fiscal plan, despite its wildly over-optimistic assumptions, cannot provide. … After the economy returns to growth, then we can talk about ‘structure reforms’. But the fiscal plan’s continued austerity and the attempt to squeeze debt service out of this devastated is a recipe for disaster. It makes no sense, especially when the economy is caught in a trap of falling demand, shrinking population (projected 19% decline from the hurricane to 2023, after falling 10 percent in the decade prior) and creditors still menacing the recovery with legal actions. If implemented, this plan will most likely lead to an even more prolonged economic decline than was projected by the first (2017) fiscal Plan.

When Rep. Velasquez asked how the Island can achieve growth, Weisbrot responded that it would require to “propose a plan that doesn’t impose austerity. 29% have left over 10 years. You need a stimulus to keep people in Puerto Rico, a reconstruction plan. “

In response, the Congresswoman referred to a letter she and Sen. Elizabeth Warren sent to the FOMB urging debt cancellation.

Weisbrot backed this up, referring to Greece and Jamaica, who were forced to shrink their economies in order to pay debt service.

A National Solution

Now put this hearing in its real national context.

Not only have we seen a decline in economic growth in Puerto Rico over decades, but a decline overall in the U.S. in the last fifty years, particularly in investment in infrastructure. Compare a .05% productivity rate currently with 3-4% during the FDR years. Most of the collapse of U.S. infrastructure has not been caused by natural disasters, but by a concerted policy to de-industrialize. We are presently embroiled in a disaster of our own making, a man- made disaster.

Despite promises by Trump to rebuild, first by the “trickle down” tax cuts, and then a long-awaited plan to build infrastructure that simply transfers costs to the states, nothing has materialized. His proposals are the same as for Puerto Rico: privatize, or do nothing.

How long will Americans wait? Puerto Rico’s head is on the chopping block right now, but it is only first in line. Trump is already saying he will veto any funding for the Gateway Project. “Mainland Americans” should stop thinking that the policies for the United States overall are different from those for Puerto Rico. We are all on the same sinking Titanic.

A plan for a National Infrastructure Bank is waiting in the wings. It’s what made the America we are proud of. It’s time to bring this plan to the forefront, and stop playing these killer political games. We need an America that defends all of us under the Constitution, not just the .1% at the top, who are currently making the rules. Only a long-term economic program will guarantee a future for all Americans. That’s the law.

angelamvullo@gmail.com