Puerto Rico Gov. Alejandro Javier Garcia Padilla on Wednesday tore into congressional Republicans — especially Florida Sen. Marco Rubio — for denying the island territory Chapter 9 bankruptcy protection in the midst of a financial meltdown.
Appearing at the National Press Club in Washington, Garcia Padilla said Puerto Rico will now default on its $72 billion debt, either failing to pay $1 billion due New Year’s Day or $422 million owed in May. The governor, who announced Monday he will not seek re-election as he’s bogged down by dismal poll numbers and a corruption scandal in his administration, cast Congress as complicit in the island’s cash crisis even as some observers place blame for the troubles on graft.
“There is no money to pay essential services and pay the creditors,” Garcia Padilla said, after lawmakers declined to extend Chapter 9 in this week’s omnibus spending bill. “Hedge funds proved more persuasive over Congress than the well being of 3.5 million American citizens living in Puerto Rico.”
Asked about how 2016 White House hopefuls had weighed in on this topic, Garcia Padilla noted that all of the Democratic contenders — and former Florida Gov. Jeb Bush, a Republican — “addressed the issue in favor of Puerto Rico.” (President Barack Obama also supports extending bankruptcy protections.)
Rubio, the son of Cuban immigrants, was singled out for criticism by the governor, who predicted Puerto Rican voters could impact Florida outcomes next fall.
“Marco Rubio knows better,” Garcia Padilla said. He observed that only New York has more Puerto Rican residents than the political battleground state of Florida, and predicted that the island’s situation would draw more members of this community into American politics.
“They will be [here] on Election Day,” he said.
Rubio announced his position on Puerto Rican bankruptcy in a Sept. 4 Medium post, writing that the territory’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.” He went on to call Chapter 9 a last resort to be considered only once the island follows those steps.
Garcia Padilla said at the Press Club that he had already made massive spending cuts, reducing government expenditures 24 percent. “There’s no money,” he said repeatedly.
For his part, House Speaker Paul Ryan released a statement Wednesday announcing that lawmakers would craft a “responsible solution” to the territory’s fiscal woes by March.
“While we could not agree to including precedent-setting changes to bankruptcy law in this omnibus spending bill, I understand that many members on both sides of the aisle remain committed to addressing the challenges facing the territory,” he said. “That’s why I am instructing our House committees of jurisdiction to work with the Puerto Rican government to come up with a responsible solution by the end of the first quarter of next year.”
One issue that went unmentioned during Garcia Padilla’s Press Club speech was the role public corruption has played in the island’s predicament, including during the governor’s administration. Earlier this month, the FBI arrested 10 Puerto Rican government officials on bribery and extortion charges, and Special Agent Carlos Cases explicitly linked their alleged actions to the territory’s financial troubles.
“Unfortunately, this is one more case of graft, greed and corruption that over the last 20 years have contributed to the government of Puerto Rico’s fragile financial condition and on the brink of bankruptcy,” he said in a statement.
The chief federal prosecutor for the territory went even further in comments at a press event: “If we put together the money related to those cases of corruption and fraud, we really wouldn’t have the economic crisis at this time. And I’m not talking about ten years ago, I’m talking about some four years and nothing more,” said U.S. Attorney Rosa Emilia Rodríguez-Vélez, according to Spanish-language media.
Despite this scandal, the governor defended his record in office on Wednesday, saying he inherited the territory’s challenges from his predecessors. When InsideSources asked Garcia Padilla about the impact of public corruption on Puerto Rico’s fiscal health, he said only, “We have been able to reduce that, but it’s something that we need to keep fighting everyday.”