Last month, Puerto Rico ramped up its campaign to solicit the GOP Congress for help getting free of the $73 billion debt. The House Speaker, Paul Ryan is leading the charge to draft legislation that would enable Puerto Rico to come out from beneath its massive debt by claiming bankruptcy.
Despite Puerto Rico’s crushing debt, it hasn’t shown much compunction in making generous contributions to people who have very close relationships with the Obama administration.
SKDKnickerbocker, for example, a large communications corporation headed by former senior Obama staffers Bill Burton and Anita Dunn, has a $3.5 million contract with the island territory to field public relations for Puerto Rico’s current debt crisis. This contract includes as much as $500,000 in financial support for the effort to promote a bailout for Puerto Rico.
Dunn was the Director of Communications for the White House during the administration’s first term while Burton served as the national spokesperson for the Obama’s first campaign for the Presidency.
Barbara Morgan, a former spokesperson for the ill-fated mayoral campaign of Anthony Weiner, is also handling some aspects of Puerto Rico’s contract with SKDKnickerbocker.
Ken Boehm, the chairman of the National Legal and Policy Center has commented that Puerto Rico got itself into its debt problem by overspending for years and years. So it comes as no surprise that corruption and cronyism are part of the reason that Puerto Rico has funneled millions of dollars into the hands of a few politically well-connected lobbying, consulting, and legal firms.
But the Puerto Rican government hasn’t only tapped Obama’s entourage for help with their public image. MillCo, a financial restructuring firm created by Jim Millstein.
You might recognize Millstein’s name as the Chief Restructuring Officer at the Treasury Department who worked for Obama during his first term. MillCo received $50 million from the island territory in exchange for access to the bankruptcy courts.
At this point, it’s clear that Puerto Rico has every expectation that Congress will offer it a bailout. In December, rather than make payments toward its debt, the territory paid out approximately $120 million in holiday bonuses to its employees.
In the first week of April, Puerto Rican officials passed a law that authorized its governor to suspend the island’s debt repayment schedule unilaterally. This was done so that they could lavish bonuses on their employees instead.
While Puerto Rican officials have proven their willingness to shortchange their bondholders, there’s little doubt that they will remain faithful to those who have made it possible for them to welch on their debt- Obama’s former staff.
Accumulating $73 billion in debt was no small feat for an island with a population of only three million. They accomplished it by borrowing roughly $25,000 per person to offer its citizens a silver standard in public services. Then turn around offer a gold standard in payments and services for connected Washington consultants to do it.
Now, with a bailout for Puerto Rico looming over the American taxpayer, where are the fiscal conservatives who should be opposing it?
Not as much is known about any possible responsibility for this issue on the red side of the isle. But it does seem strange that there is so little opposition coming from either side. Even stranger is the fact that there has been very little mainstream news coverage about this decidedly un-sexy financial story.
But how did Puerto Rico get into this situation? It’s simple. In 1976, Congress allowed American companies to enjoy massive tax benefits if they would set up shop in Puerto Rico.
Not surprisingly, many corporations moved production lines there. Not only did they enjoy cheap Puerto Rican labor, but they also saved untold millions in federal taxes. In the mid-nineties, those tax breaks were rolled back and they expired in 2006. Since then, Puerto Rico has been piling on the debt in order to maintain the standard of living that it had become accustomed to.
So, Congress hands a free lunch over to big corporations, (mostly pharmaceutical manufacturers) then when the fun is nearly had- sticks Puerto Ricans with the cleanup bill.
Now, the Obama Administration’s former staffers and Congress are working backroom deals to pass the bill off onto the American people. Classic.
Once again, whenever any foreign nation, major corporations, or American politicians lose their ways, fall into debt, or need a big war to satisfy an allegiance to some weapons cartel, the American taxpayer is always there with an open wallet just begging to lend a hand. Never before, have the chimes of freedom sounded so similar to the ring of cash registers.
Regards,
Ethan Warrick
Editor
Wealth Authority
