Candidates Clash in Puerto Rico over Bailout for Island
Policy + Politics

Candidates Clash in Puerto Rico over Bailout for Island

REUTERS/Ana Martinez

Puerto Rico may be on its last leg financially, but the U.S. territory is suddenly showing some impressive political allure.

On Friday, former Secretary of State Hillary Clinton and Florida Sen. Marco Rubio converged on the island for a day of speeches and presidential campaigning. While some might think that Clinton, the Democratic frontrunner, and Rubio, one of 17 Republican aspirants, might have been better off pressing the flesh in Iowa and New Hampshire, Puerto Rico has become an irresistible target for them and others.

Related: Can the U.S. Avoid a ‘Chaotic Resolution’ of the Puerto Rico Debt Crisis?

Puerto Ricans can’t vote for president, even though they are U.S. citizens. Yet the heavily populated territory conducts presidential primary elections for both parties – March 13 for the GOP and June 5 for the Democrats. And there are roughly five million Puerto Ricans living and voting on the mainland, including nearly one million in the key battle ground state of Florida.

Clinton defeated Barack Obama in Puerto Rico's 2008 Democratic primary and she is counting on another strong showing during the 2016 presidential campaign, according to reports. Former Florida Gov. Jeb Bush was there in April – before he formally announced his campaign– showing off his mastery of Spanish and winning over some voters by endorsing statehood for the territory.

“The Hispanic vote is rapidly growing and there are a number of Puerto Ricans living in Florida,” said Ron Bonjean, a former Republican congressional aide and political expert. “So it makes sense that presidential candidates on both sides of the aisle will try to court Puerto Ricans for their support.”

These are troubled times for Puerto Rico, whose governor disclosed in June that the island was mired in $72 billion of debt and couldn’t pay its bills. That disclosure by Gov. Alejandro García Padilla was widely viewed as both a warning to the territory’s creditors that they may have to take a haircut and a plea to Congress and the White House for assistance.

Related: How Hedge Funds Are Profiting from Puerto Rico’s Pain

The Obama administration and many lawmakers on Capitol Hill signaled from the outset that there would be no “federal bailout” of Puerto Rico -- and that island officials would have to figure out a path back to financial stability through reforms and cuts. However, Puerto Rico doesn’t qualify for the federal bankruptcy protection that was critical to Detroit and other U.S. cities and government entities to help them restructure and downsize their financial obligations.

The issue of whether to revise Chapter 9 of the bankruptcy law to help Puerto Rico through its crisis has divided Congress and some of the Republican presidential candidates. Democratic Sens. Chuck Schumer of New York and Richard Blumenthal of Connecticut introduced legislation that would grant Puerto Rico's municipalities and public utilities the same option to declare bankruptcy as U.S. municipalities, but they have been unable to attract GOP co-sponsors.

Clinton and Bush have both come out in support of bankruptcy protection for Puerto Rico, as have Democratic candidates Bernie Sanders, a Vermont senator, and former Maryland governor Martin O’Malley, who has also visited the island.Clinton argues that Congress should provide Puerto Rico the same authority that severely distressed states already have. She said on Friday at a roundtable on health care and the economy that "I do not believe you can fix your economy through austerity alone," according to the New York Times.

In his comments during his visit to the island, Bush said, "I think that Puerto Rico ought to be treated as other states are treated as it relates to restructuring.”

Related: How Puerto Rico’s Debt Crisis Could Hurt the GOP

However, Rubio took just the opposite view in an op-ed published ahead of his arrival in San Juan on Friday. He joined many other conservatives in arguing that Puerto Rico must dig itself out of the mess, and that allowing the territory to restructure under federal bankruptcy protection would be tantamount to a free pass for years of fiscal mismanagement and waste.

Rubio said that the solution, in fact, required austerity and tax cuts.

“Allowing Puerto Rican municipalities to reorganize their debts under Chapter 9 of the US Bankruptcy Code would not solve Puerto Rico’s problems and should only be a measure of last resort considered if Puerto Rico takes significant steps to fix its budget and economic mess,” Rubio wrote in an op-ed published in El Nuevo Dia, Puerto Rico’s largest daily newspaper.

“… Puerto Rico’s leaders must lead and do the difficult but essential work of cutting spending, reining in out-of-control big government and eliminating job-killing policies, including scores of new tax increases,” Rubio said.

Related: Marco Rubio: 17 Things You Should Know About Him

During remarks at a crowded restaurant and bar, Rubio took aim at Clinton, saying, “It sounds to me like Secretary Clinton’s plan for Puerto Rico is to continue the same projects that they’re doing now,” according to a New York Times report. “The people rallying behind her today are the people who put Puerto Rico in this fiscal mess to begin with.

In an interview on Friday, Bonjean said, “It looks very unlikely that the Hill would actually grant Puerto Rico the ability to declare bankruptcy because politically, it looks like you’re opening up a bail-out,” he said. “For Republicans, that’s especially dangerous. And so I don’t think that would occur in the end.”