Target: Paul Ryan, Speaker of the House
Goal: Allow Puerto Rico to declare bankruptcy in order to salvage its failing healthcare and education systems.
Puerto Rico is in crisis, with $72 billion in debt and its repayments projected to absorb 20 percent of government revenue in the next year. Critical services such as healthcare and education are failing, endangering the quality of life of the island’s 3.5 million inhabitants. While the government may go into default on debt repayments, the Puerto Rico government lacks a basic right given to municipal and state governments in the U.S. to declare bankruptcy. Without that right, the government of Puerto Rico may be locked into a spiral of austerity that will gut the country’s social services. Most of Puerto Rico’s debt is owned by mutual funds and hedge funds that have been lobbying against any sort of refinancing and debt relief.
There have been attempts to solve the crisis without resorting to bankruptcy. The government of Puerto Rico attempted to tax the country’s largest corporation and employer, Walmart. This tax would have raised some of the revenue Puerto Rico needed to repay its debts. However, Walmart sued, and a federal judge ruled that the tax was unlawful.
Recently, the Governor of Puerto Rico signed an emergency bill halting bond repayments. This sets up a showdown between the government of Puerto Rico and bondholders. The result of this may be a greater loss for the people of Puerto Rico as they may lose access to the financial resources their government needs to fund social services. However, if the island were allowed to declare bankruptcy it would be able to refinance its debt in order to continue supporting social services. However, this requires that they be given the right, held by even the lowest levels of government in the U.S., to declare bankruptcy. Sign our petition and ask that the House of Representatives authorize Puerto Rico to declare bankruptcy.
Dear Speaker Ryan,
Puerto Rico currently owes $72 billion in debt that it does not have the capacity to pay. While the lowest levels of government on the mainland can declare chapter 9 bankruptcy, a territory populated by 3.5 million citizens cannot. No level of austerity will make Puerto Rico’s debt levels sustainable; undermining social services is more likely to result in higher rates of poverty and a greater rate of migration to the mainland decreasing tax revenues.
It is in the public interest that this crisis be resolved in an orderly fashion. Clearly pushing for full repayment and austerity measures has only made the government of Puerto Rico decide to halt payments. If the current state continues, the value of Puerto Rico bonds will decrease to zero, thereby harming financial institutions — some of which hold the pensions and investments of millions of Americans. While letting Puerto Rico declare bankruptcy will result in a loss for these institutions, it is less of a loss than they currently stand to make if Puerto Rico continues to refuse to pay bonds. I urge you to find a way to either allow Puerto Rico to declare bankruptcy or find another way to restructure the debt so it is sustainable.
[Your Name Here]
Photo Credit: Jose Zayas