As our national debt exceeds $19 trillion, House Republicans, with the support of President Obama, are proposing a massive bailout for Puerto Rico. This legislation will rattle municipal markets, raise borrowing costs for states and further open the idea for congress to swoop in and save mismanaged states such as California that are “too big to fail”. We’ve heard this argument before from Congress that we must support this bailout to save ourselves from a worse financial situation. When will it stop? The Virginia Tea Party Patriot Federation is willing to call a spade a spade, the get out of jail free cards for irresponsible fiscal practices must stop. We call upon Speaker Ryan and Republican leadership in Washington to take the lead.
For the last several months Puerto Rico, a U.S. territory, has claimed it will not be able to pay it’s roughly $72 billion debt. Instead of attempting to curb its economic catastrophe with free-market reforms or cut government spending, the Puerto Rican Government, which employs a whopping 25% of the island’s citizens, requested assistance from the Obama Administration and Congress.
In March, Republican leadership proposed a bill that would allow the Puerto Rican government to restructure 100% of its debt, even bonds that have a constitutionally-backed guarantee of repayment, which is unprecedented and something no state has the power to do. Constitutional legal scholar, Logan Beirne reported that “Representative Bishop’s plan threatens to disregard property rights in favor of a nostrum – one that will help make Puerto Rico’s debt death spiral perpetual.” He further stated , “This plan will serve to protect the existing politicians, drive up Puerto Rico’s future borrowing costs, compromise ongoing good-faith negotiations, and maintain the island’s dependence upon the United States as we wait for the next crisis to build.”
Nevertheless, in an effort to push the legislation through prior to November elections, Speaker Ryan recently tried to reassure conservative lawmakers that this is not a bailout like those in 2008. The Speaker’s arguments sound similar to those who defended the TARP bailouts who praised abandoning the free market to save the free market. The Speaker argues that we must do something now or we will be looking at a bigger and more direct taxpayer bailout. Historically, settling for bad legislation to avoid worse legislation has never proven to be good public policy, nor turned out beneficial for the taxpayer.
This legislation is in fact a bailout and should be stopped. Allowing Puerto Rico to restructure its debts under the current legislation rules will bail out progressive politics and a crony-capitalist framework in Puerto Rico on the backs of American savers and retirees. The Speaker can try to win the public relations war by assuming Americans won’t read the legislation or understand financial markets, but restructuring Puerto Rico’s GO bonds will raise borrowing costs for states, meaning they will be unable to complete important infrastructure projects like roads without raising taxes to make up for increased borrowing costs. Even more troubling is the precedent of setting new rules on federal intervention to allow overspending states such as California, Illinois and others to seek the same assistance, which equates to Washington taking more money away from hard working Americans.
Congressman Rob Wittman, who represents the 1st District of Virginia, serves on the committee which will continue to hear these requests from President Obama, the Speaker and Puerto Rico, has taken a stand against the leadership’s bailout measure. We are calling for all Virginia Congressmen to stand with Congressman Wittman against the Republican leadership pressures he will certainly endure in the coming weeks. The idea that savers, retirees, taxpayers or even state governments should be responsible for irresponsible policies of Puerto Rico, self-serving Obama Administration officials, and Republican leadership is simply more Washington cronyism. The Virginia Tea Party Patriot Federation continues to challenge our leaders in Washington to make the tough financial decisions needed to balance our budget and to pay off our debt for our children’s future.
Rick Buchanan is a resident of Fauquier County and serves as the Chairman of the Virginia Federation of Tea Party Patriots.