Puerto Rico Ping! Please Freepmail me if you want on or off the list.
Posted on 06/09/2016 6:05:32 PM PDT by Hojczyk
The legislation was bolstered by rare bipartisan cooperation between the White House and the House's Republicans and Democrats over the past six months.
House Speaker Paul Ryan urged Congress to act quickly on the "Puerto Rico Oversight, Management and Economic Stability Act" (PROMESA), warning lawmakers of a "deepening crisis" on the island.
"Now the island is shutting down," Ryan said, with "closed schools; hospitals are beginning to close, that's today. Tomorrow there could be policemen without cars, there could be blackouts at hospitals."
Nevertheless, some lawmakers feared that allowing Puerto Rico to restructure its $70 billion debt in a way that changes the seniority of the creditors - for instance by making them all equal or subordinated to pensioners - would set a bad precedent for other U.S. states with debt problems.
Puerto Rico does not enjoy Chapter 9 bankruptcy protection, unlike the 50 U.S. states.
(Excerpt) Read more at newsmax.com ...
If only there was a conservative party to counter the Uniparty.....
bi partisan...
.. it ain’t our money, it’s our future
I hope the Wisconsin Primary, August 9th, takes out Paul Ryan and puts in Paul Nehlen as the candidate for the general election.
Why is this a problem for the Congress to solve?
Sounds like another way for everyone to get a cut of the “aid”.
So tired of bailing out liberals. Give them the consequences of their stupidity.
This is another Clinton orchestrated fiasco, the democrats didn’t like US corporations getting away with not paying taxes and repealed Section 936.
http://taxfoundation.org/blog/tax-policy-helped-create-puerto-rico-s-fiscal-crisis
I. Section 936 and Puerto Rico’s Nine-Year Recession
Throughout the modern economic history of Puerto Rico, one of the central drivers of its economic growth has been the United States tax code. For over eighty years, the federal government granted various tax incentives to U.S. corporations operating in Puerto Rico, in order to spur the industrialization of the island. Most recently, beginning in 1976, section 936 of the tax code granted U.S. corporations a tax exemption from income originating from U.S. territories.
In addition to section 936, the Puerto Rican corporate tax code gave significant incentives for U.S. corporations to locate subsidiaries on the island. Puerto Rican tax law allowed a subsidiary more the 80% owned by a foreign entity to deduct 100% of the dividends paid to its parent. As such, subsidiaries in Puerto Rico had no corporate income tax liability as long as their profits are distributed as dividends.
When section 936 was in effect, U.S. corporations benefited greatly from locating subsidiaries in Puerto Rico. Income generated by these subsidiaries could be paid to U.S. parents as dividends, which were not subject to U.S. corporate income tax under section 936, and were deductible from Puerto Rico’s corporate income tax.
Because of these generous tax incentives for business, Puerto Rico grew rapidly throughout the 20th century and developed a substantial manufacturing sector, though it remained relatively poor compared to the U.S. mainland. However, because section 936 made foreign investment in Puerto Rico artificially attractive – creating, in effect, an economic bubble – it left the island vulnerable to a crash if the tax provisions were ever to be repealed.
As it happened, section 936 became increasingly unpopular throughout the early 1990s, as many saw it as a way for large corporations to avoid taxes. Ultimately, in 1996, President Clinton signed legislation that phased out section 936 over a ten year period, leaving it to be fully repealed at the beginning of 2006. Without section 936, Puerto Rican subsidiaries of U.S. businesses were subject to the same worldwide corporate income tax as other foreign subsidiary.
Spending more of your money. :)
The author is an idiot. US states CANNOT GO BANKRUPT!
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I was about to post the same thing but read the comments first.
Glad to see my congressman, DesJarlais, voted against it. Called it a “Band-Aid fix for a gaping wound”.
Thoughts?
THIS is the GOP congress so many of us fought for in 2012 and 2014.
Spit.
Embarassed to be republican with this group of GOPe.
Puerto Rico Ping! Please Freepmail me if you want on or off the list.
The Government of Puerto Rico employs so many people that we’ve crossed the point of no return when it comes to democratically elected leaders being able to cut the size of government, given that such a large percentage of voters either work for the government or have a close relative that works for the government. Thus, it will take someone that does not have to answer to the voters of Puerto Rico to reduce the size of government to a reasonable level.
The same thing happened to the Dominion of Newfoundland (which was a separate British Commonwealth realm, not a part of Canada, back then) in the 1930s, when the King dissolved the Newfoundland Parliament (at such Parliament’s own request) and appointed direct administrators; the main differences between what the King did and what Congress is doing here are that Puerto Rico will retain its legislature (although the federal Oversight Board can veto spending measures that exceed the new, lower budget that will be imposed by the Oversight Board) and that the United States will not pay off Puerto Rico’s public debt (whereas the UK bailed out the Newfoundland government).
It is an embarrassment to the Puerto Rico electorate that this measure had to be adopted, but that does not make it any less necessary. Hopefully the government elected in November will take this as an opportunity to cut spending to reasonable levels and not force the Oversight Board to make the cuts itself.
What he means is the Puerto Rico municipalities (political subdivisions, public agencies, etc.) are not covered by Chapter 9, whereas municipalities of the 50 states are covered by Chapter 9.
Also, while it certainly is true that U.S. states cannot *declare bankruptcy* pursuant to the U.S. Bankruptcy Code, Illinois is seeking to belie the assertion that a state cannot “go bankrupt” (i.e., become insolvent). Those Democrat legislative supermajorities in Illinois are making sure that the state government doesn’t get derailed from its certain path to insolvency.
People on this thread seem to be knee-jerk against this, I’m not sure why. The article says this bill does not use taxpayer funds, it’s not a bailout, and the left is unhappy with some provisions.
All of those things are true, but Karl Rove ran ads calling it a bailout, and you know how trusted and admired Rove is here at FR ....
The truth is that the Democrats wanted to turn the bill into a bailout, but GOP Congressmen Bishop, Duffy, Labrador and, ultimately, Ryan, did not permit it to happen. Bernie Sanders is furious with the bill, which does not permit the feds to pay off Puerto Rico’s debt nor, in the alternative, screw over bondholders (any debt restructuring would need to be approved by 5 of 7 members of the federal Oversight Board (4 of whom would be nominated by Republicans) and by 2/3 of bondholders.
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