On October 14, the outgoing Governor of Puerto Rico, Alejandro Garcia Padilla, who is not running for re-election next month, addressed the Oversight Board which is charged by Congress with addressing the disastrous finances of the insolvent government of Puerto Rico. In default on more than a billion dollars of its debt, with no prospects of repaying its debt in full, having run deficits for 15 straight years, and trapped in the U.S. dollar currency zone, the government has massively difficult problems ahead. So do its creditors and the Oversight Board.
Creation of the Oversight Board was a necessary step. Now its work has really begun. The Governor presented to it the government’s draft fiscal plan for the next ten years-the opening gambit in what will unavoidably be complex and tense negotiations. The substance and the rhetoric of the presentation are instructive.
Garcia Padilla conceded that the accumulated debt and economic problems “are the culmination of decades of misguided and unscrupulous public policies in San Juan,” a fair admission, but immediately adds that these unscrupulous public policies were also in “Wall Street and Washington.” Surely somebody else is also to blame.
“Puerto Rican children and retirees are not to blame for careless decisions made here in New York by the rating agencies”-so it’s the bond rating agencies’ fault-“or the mistaken decisions made by Congress,” such as ending tax subsidies to Puerto Rico. Of course, there are the “greedy lenders” who bought Puerto Rico’s bonds.