Treasury official urges focus on Puerto Rico during transition

Puerto Rico must be a top priority for the federal government as the White House, Congress and the commonwealth territory prepare for new leadership, a Treasury Department official said Friday. 

“We have a role to play in the coming months,” Antonio Weiss, counselor to Treasury Secretary Jacob Lew said at the National Tax Association conference in Baltimore, urging Congress, outgoing President Obama and incoming President-elect Donald Trump to help fix the U.S. territory’s ongoing fiscal and healthcare challenges.

{mosads}“At Treasury, this is a top priority and we are committed to ensuring a smooth transition to the next administration,” Weiss said, pointing out Puerto Rico’s own new leader: Governor-elect Ricardo Antonio “Ricky” Rosselló Nevares, who ran a platform advocating statehood for the commonwealth government.

PROMESA.

In June, President Obama enacted a bipartisan fiscal deal called the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) aimed at relieving the island’s long-time economic woes.

The deal was controversial as Congress delayed passing legislative relief as the territory faced critical debt payment deadlines. Democrats also fought for additional economic growth measures, such as certain individual tax credits, while Republicans hesitated to provide what many described as a bailout.  

PROMESA includes a restructuring process for Puerto Rico’s $70 billion debt and procedures to expedite approving critical infrastructure projects.

The new law also established an eight-member congressional task force, led by Senate Finance Committee Chair Orrin Hatch (R-Utah), that will look into ways to improve Puerto Rico’s economy. 

The law also created a separate seven-member board that will independently review Puerto Rico’s long-term economic recovery plan, annual budgets and debt restructuring process. The board is reviewing the economic plan that Puerto Rico’s current governor submitted in October, according to Weiss. 

Weiss explained that the plan contains a set guidance for Puerto Rico’s policy choices, a reflection of Treasury’s review of other debt crises. 

“First, the plan asserts that austerity alone in Puerto Rico will be self-defeating and will only lead to further economic contraction,” Weiss said. “Next, the plan commits to protecting the most vulnerable populations, including the elderly, the young, the disabled, and low-income residents.”

Weiss also advocated for allowing Puerto Rican residents to access the earned income tax credit (EITC) and the child tax credit (CTC).

The EITC would be “powerful” because of the island’s low labor force participate rates, which are 23 percentage points below the U.S. mainland’s rates, he said.

The child tax credit, he said, would improve life for roughly 650,000 families in the island. 

Healthcare crises.

Since the economic crisis has also threatened the Puerto Rico’s healthcare system, Weiss urged Congress to fill in “the healthcare funding gap in … order to protect the well-being of the island’s 3.5 million residents.”

Weiss explained that federal programs, such as Medicaid and the Children’s Health Insurance, cover around half of Puerto Rico’s population, but the Affordable Care Act’s one-time funds could dry up by end of 2017.

“Up to up to 900,000 Americans living in Puerto Rico could lose coverage,” he said.

The threat of the Zika virus is a major sign of the island’s deteriorating resources, Weiss added.

“As of Nov. 9, the Centers for Disease Control and Prevention has recorded 30,439 Zika cases in Puerto Rico,” he said. “And, financial constraints … have impaired the local government’s response.” 

Medical professionals have been fleeing the island and a “dozen hospitals closed floors and curtailed services because the central government and its health care agencies could not pay their bills,” the official said. 

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