Witnesses at Congressional Hearing Argue That Puerto Rico Status Harms Island Economy

The Subcommittee on Indian, Insular and Alaska Native Affairs of the House Natural Resources Committee held a hearing today to examine Puerto Rico’s political status and economic outlook.

All of the witnesses on each of two panels were united in the belief that Puerto Rico’s current territorial status is not acceptable, and that this unwanted status impacts the island economically.  The witnesses differed, however, as to what the best next step should be for the island territory of roughly 3.5 million U.S. citizens.

The first panel, representing each of the three major political parties of Puerto Rico, was similar to the September, 2013 Congressional hearing in the U.S. Senate at which Puerto Rican Resident Commissioner Pedro Pierluisi (President of the New Progressive Party/statehood), Hon. Ruben Berrıos Martınez (President, the Puerto Rican Independence
Party) and Gov. Alejandro Garcia Padilla(President of the Popular Democratic Party (PDP)/Commonwealth) testified.   Today, however, the Governor was absent and sent as his representative, César A. Miranda Rodríguez, Attorney General of Puerto Rico, whose testimony focused heavily on the importance of enacting legislation to expand Chapter 9 of the Bankruptcy Code to include Puerto Rico and treat the territory as a State.  Related legislation (H.R. 870) is pending in the House of Representatives.

When asked about the PDP position on status,  Miranda Rodriguez explained that he would not be answering any questions related to the “Commonwealth” platform, focusing exclusively on his role in the Garcia Padilla administration. He did, however, express an opinion on status when Rep. Norma Torres (D-CA) asked  him if the island’s territorial status is the cause of Puerto Rico’s problems, and Miranda Rodriquez refused to acknowledge Puerto Rico as a “territory,” a claim made by “Commonwealth” proponents.

Delegate Gregorio Sablan (D-Northern Mariana Islands) expressed exasperation at not having a representative from the Commonwealth party at the hearing, noting that the invitation to testify was intended for an individual to represent the PDP, not the Garcia Padilla administration.  Sablan also asked about the rationale behind the administration’s opposition to statehood in light of its support of being treated as a state within the context of Chapter 9 of the Bankruptcy Code.  “How does that make sense?” he asked.

When asked for an update concerning the $2.5 million in federal funds granted to Puerto Rico to hold a federally sanctioned plebiscite, Miranda Rodriguez responded that the ballot definitions had yet to be approved by the Department of Justice.  He added that the Governor is in discussions with the Department of Justice but that no consensus had been reached, and that they are waiting for the “details of the event” to take place.

Rep. Torres asked Mr. Berrios Martinez why he believed Puerto Rico’s economy would be better as a foreign country than as a state.  She noted the mass migration of Puerto Ricans to states, and observed that there is no similar immigration to foreign countries.  Berrios Martinez explained that independence would provide new tools to grow the economy.

Several themes dominated the hearing:

• The economy and the status of Puerto Rico are inextricably linked. Most of the witnesses touched on this point at some time during their statements or their answers to questions. Rep. Don Young, chairing the meeting, said repeatedly that the current status doesn’t work and that statehood would be the simplest solution to Puerto Rico’s economic problems.
• The status quo is not working.  Former Governor and Resident Commissioner Aníbal Acevedo Vilá (D-Commonwealth”) expressed hope that Congress would sit down with leadership from Puerto Rico and develop “an entirely new relationship” not currently described in the U.S. Constitution. Several witnesses reminded the subcommittee that Puerto Rico had already voted for statehood in 2012.  Former Puerto Rico State Senator Miriam J. Ramirez MD testified on the negative consequences of the federal tax regime that has kept Puerto Rico labeled as a “foreign” jurisdiction.  She criticized Controlled Foreign Corporations (CFCs) operating in Puerto Rico, which, she noted, do not have to create jobs and generate real investments to benefit from favorable federal tax  treatment.  Worse,” she explained, “the U.S. Treasury does not produce reports that inform Congress whether the CFCs create jobs and real investment in Puerto Rico. Today we know they don´t.” She added that while billions of dollars in tax breaks are spent to subsidize corporations, “Puerto Rico is sinking.”
• Congress must take action. “Whether we demand it or not,” said Former Governor Carlos Romero Barceló, “it is the Congress and the President’s duty, as the leaders of the greatest democracy on earth, to put an end to this inequality and denial [of our right] to participate in our nation’s democracy.” The Mayor of San Juan, who outlined a proposal for Free Association, similarly insistend that Congress must act.  Resident Commissioner Pierluisi noted that Congress cannot wait for perfect uniformity from Puerto Rico, citing independence movements in Texas and Alaska as proof that statehood can be and has been achieved even with pockets of dissension.

Watch the archived video of the hearing.