Katie Niederee and Julia Lawless, 202-224-4515
Hatch-Rubio Bill Critical to Resurrecting Growth in Puerto Rico
Utah Senator Says Puerto Rico Empowerment Act, “works to help people in Puerto Rico as they continue to face a stagnant economy and recover from massive damage caused by recent hurricanes.”
Click here to watch Hatch speak on the Senate Floor on the Puerto Rico Empowerment Act.
WASHINGTON – Senate Finance Committee Chairman Orrin Hatch (R-Utah) today spoke on the Senate floor about the Puerto Rico Empowerment Act of 2018 (S. 2873), which he introduced last week with U.S. Senator Marco Rubio (R-Fla.). This legislation would enact recommendations made by the Congressional Task Force on Economic Growth in Puerto Rico, which Hatch chaired last Congress.
“I had the opportunity of chairing the [Congressional Task Force on Economic Growth in Puerto Rico] with four members from the House and four members from the Senate,” Hatch said. “We also made sure that the Task Force was evenly split with regard to political affiliation. I know such evenhanded bipartisanship and compromise is rare around here, but we were able to do it. And we came up with a 125-page report that made many different suggestions. Not wanting that work to go to waste, Senator Rubio and I have been working hard to craft those proposals into this bill, and I am confident it truly embodies the purpose and bipartisan spirit of that bicameral Task Force.”
Hatch continued, “I know that there is bipartisan support for our fellow Americans in Puerto Rico. Indeed, I heard a lot of support by members here on the floor following the devastating hurricanes that hit the island. Some Members seemed genuinely concerned, while others seemed more interested in trying to cast doubts on or politicize the disaster response from the federal government, led by the administration. Nonetheless, I remain committed to working with anyone, from either side, to help and support the people of Puerto Rico.”
Hatch’s full remarks can be found below:
Last Thursday, I introduced a bill, co-sponsored by Senator Rubio, titled the Puerto Rico Economic Empowerment Act of 2018. The bill works to help people in Puerto Rico as they continue to face a stagnant economy and recover from massive damage caused by recent hurricanes. This bill would be a critical step towards resurrecting growth in Puerto Rico -- it directly targets relief to Puerto Ricans themselves and small businesses on the island. In brief, the bill provides the following:
First, the bill provides a payroll tax holiday for employees in Puerto Rico for two years, cutting their payroll taxes in half in order to give economic relief to the hard-working people of Puerto Rico who face an economy that has been stagnant and mismanaged for far too long.
Second, the bill provides equal treatment with respect to the federal child tax credit for Puerto Rican families with one or two children, and not just for those who have three or more. This will provide more equitable treatment to Puerto Rican families with respect to the federal child tax credit, to help families and reduce child poverty.
Third, the bill provides greater flexibility for Puerto Rico in various Small Business Administration programs, to assist Puerto Rico’s small business owners during a time of prolonged economic downturn.
Fourth, the bill confronts the longstanding problem in trying to monitor Puerto Rico’s economy that stems from lack of inclusion of Puerto Rico in many federal statistics surveys. The bill also calls for the establishment of a Federal Statistical Research Data Center in Puerto Rico.
These and other provisions in the bill follow recommendations of the bipartisan Congressional Task Force on Economic Growth in Puerto Rico. I had the opportunity of chairing that Task Force with four members from the House and four members from the Senate. We also made sure that the Task Force was evenly split with regard to political affiliation.
I know such evenhanded bipartisanship and compromise is rare around here, but we were able to do it. And we came up with a 125-page report that made many different suggestions. Not wanting that work to go to waste, Senator Rubio and I have been working hard to craft those proposals into this bill, and I am confident it truly embodies the purpose and bipartisan spirit of that bicameral Task Force.
Although I do not have a score on the bill yet, from previous scores on similar provisions would add up to over $3.5 billion of relief—largely in tax relief—to our fellow Americans in Puerto Rico. Once I obtain an updated score, I will recalibrate the offset accordingly if necessary.
In the meantime, the fiscal cost of the bill is entirely offset by redirecting funds from the Prevention and Public Health Fund established under the so-called Affordable Care Act. Redirecting from that fund helped provide offsets for the 21st Century Cures Act and for the Bipartisan Budget Act of 2018, both of which received bipartisan support.
I hope that all of my colleagues can join Senator Rubio and me in support of this bill, after all, our prior efforts have not solved many of the ongoing issues in Puerto Rico.
For example, toward the end of 2015 we passed PROMESA into law.
PROMESA was the result of the efforts by the Obama administration officials to shore up Puerto Rico’s outstand debt obligations. It largely took their bankruptcy scheme, but usefully added provisions intended to spark economic development in Puerto Rico, particularly in the energy space.
One promise of PROMESA touted by Obama administration officials was that it would circumvent a viscous and wasteful sequence of lawsuits. Theoretically, the law was going to stop creditors and the government of Puerto Rico from facing-off in prolonged court battles. I voted for PROMESA because Puerto Rico’s long span of fiscal irresponsibility needed to be stopped, and a promise of limiting litigation was inviting…Unfortunately, the law has failed to prevent a tidal wave of litigation, as was promised.
PROMESA also set up an oversight board, to facilitate voluntary debt resolution negotiations, or movement of disputes to a court-supervised bankruptcy-like process. The promise of voluntary debt resolutions has not been fulfilled, even for a restructuring agreement between creditors and Puerto Rico’s power authority, called PREPA, which had been agreed upon by both sides.
The oversight board was also intended to oversee and monitor budgets for the various indebted arms of the government of Puerto Rico. On this front, I have also been disappointed, as it seems that the oversight board has largely been operating in the dark, often relying on the government of Puerto Rico for information of questionable validity. That said, I am not without hope. The oversight board has recently been slightly more aggressive in its demands for transparency from the government of Puerto Rico, and I hope they are successful in obtaining useful, verifiable information.
However, the government of Puerto Rico has been, and remains, largely opaque.
Mr. President, as just one example, I have asked government officials in Puerto Rico for audited financial statements for nearly three years now.
Let me repeat that: I have been waiting nearly three years for audited financial statements from Puerto Rico. Unfortunately, to the best of my knowledge, the government of Puerto Rico has not provided audited financial information since fiscal year 2014.
This is obviously problematic when trying to figure out how to best help Puerto Rico.
And this is not a one-off issue. Recently, following numerous claims by government officials in Puerto Rico of severe, even crisis-level, liquidity shortages, Puerto Rico finally got around to looking into hundreds of scattered government bank accounts, and revealed late last year that it found nearly seven billion dollars of stranded cash. This is just one of many examples of how disorganized and inconsistent accounting continues to prevail in Puerto Rico, damaging the credibility of the government.
But it doesn’t end there. There have recently been attempts by the government in Puerto Rico to potentially politicize the Puerto Rico Institute of Statistics. Obviously, this is concerning.
In a report by the Congressional Task Force on Economic Growth in Puerto Rico, Members of Congress from both chambers and both sides of the aisle expressed that the Institute of Statistics “has emerged as a highly professional, autonomous, and apolitical organization that is bringing greater transparency to economic, financial and fiscal conditions on the island.” Indeed, a recommendation of the Task Force was for the Institute to continue to protect its independence.
Unfortunately, the Institute has been forced to litigate its independence given an ill-conceived effort by the government of Puerto Rico to overhaul and potentially politicize the Institute.
Mr. President, I know that there is bipartisan support for our fellow Americans in Puerto Rico. Indeed, I heard a lot of support by members here on the floor following the devastating hurricanes that hit the island. Some Members seemed genuinely concerned, while others seemed more interested in trying to cast doubts on or politicize the disaster response from the federal government, led by the administration. Nonetheless, I remain committed to working with anyone, from either side, to help and support the people of Puerto Rico.
However, that work must involve compromise and mutual understanding of each other’s concerns, and that has not always been the case, in my view. I have tried to work to provide tax relief to people in Puerto Rico. Yet, I continue to hear from some, including former Obama administration officials, that I must include access for Puerto Rico to the Earned Income Tax Credit.
Mr. President, I have been clear about my concerns that administration of such a provision carries with it many possible problems, as highlighted by a report by the nonpartisan Joint Committee on Taxation.
Moreover, Puerto Rico already had its own Earned Income Tax Credit, which it subsequently did away with. It seems to want to resurrect the idea now, and have every right and ability to institute such a credit on the island. However, I cannot support the “advice” from some that I must support a provision involving cutting a big check from the federal general fund to the government of Puerto Rico for them to administer such a credit.
I also cannot support the views of some in Puerto Rico, including government officials, that they were somehow left out of our tax reform efforts because they didn’t receive a special carve out unavailable to anyone else.
Subsidiaries of U.S.-headquartered firms that are organized as Controlled Foreign Corporations in Puerto Rico for federal tax purposes were treated the same as similarly situated taxpayers anywhere else. In addition, if being somehow left out of tax reform means that provisions to provide some sort of tax haven status, as some in Puerto Rico asked for, then I think that proponents of such a view do not understand recent history.
In my more than 40 years in the Senate I have always been a proud advocate for accountability and oversight. That is why I support greater transparency in the Puerto Rican government, as well as the oversight board. I also support ongoing federal efforts, including those at the Treasury Department, to carefully and closely monitor federal funds provided to Puerto Rico for disaster and other relief. As always, we owe a duty to taxpayers to prudently safeguard their hard-earned dollars from being channeled into inefficient or wasteful uses.
These and other reasons are why, in conjunction with Senator Rubio—and anyone else here who wishes to join us—I am advocating for the provisions contained in the Puerto Rico Economic Empowerment Act of 2018 that I introduced today.
Mr. President, let me end by reiterating that I want to work on a bipartisan basis and in the spirit of compromise with anyone here in this chamber to help our fellow Americans in Puerto Rico. Truly, theirs is an uphill battle as they continue to face many different adversities. That has been the case for years, and I hope we can set our troublesome partisan politicking aside and get to work.
Next Article Previous Article