Puerto Rico senator seeks to make bond payment

Puerto Rico defaulted on debt of its PFC bonds on Monday by paying only a fraction of what was due, showing the depth of the island’s economic and cashflow problems and potentially opening the door to broader defaults and litigation from bondholders.

Although, the US financial market is expected to remain at bay from the developing situation in Puerto Rico, due to a relatively small debt of $72 billion. The island’s legislature reconvenes in one week. In the dire times, they are hoping that the laws can be restructured to treat them as equal as Detroit’s communities to be covered under the bankruptcy municipality or another reform that will alleve their economic struggles. But some argue that Puerto Rico’s convoluted political status has hastened to its economic decline, because it receives less federal funding than U.S. states and must get congressional approval for certain actions as it tries to manage its debt. In contrast, being a territory and not a state, it is not protected under the municipal bankruptcy statutes to declare bankruptcy and ensure protection from creditors. Even less probable is statehood, which Rep. Luis Gutiérrez (D-IL) described last week as a “pipedream” and “distraction”. But the fact is that large Wall Street investors hold a minority of the Puerto Rican debt.

The funds demanded that the island’s treasury secretary advance funds to PFC, saying that the legislative acts authorizing the notes that secure the bonds require Puerto Rico to honor payments.

Later, Boehm sits down with Maurice McTigue of the Mercatus Center to discuss a major bit of news that was lost in the media’s frothing over the presidential debate: the debt crisis in Puerto Rico. As financial journalist Felix Salmon explains, the power would essentially be taken from the people and given to the courts, with decisions on taxes and privatization no longer made through the legislator but rather through the judicial system. That is why we must continue to advocate for a range of policies that can drive lasting positive change for Puerto Rico and will set the Island up for sustainable success as we look toward the future. Puerto Rico is especially lavish when it comes to the shifty-sounding subcategories of General Administration ($699 in PR vs. $212 in America) and Other Support Services ($644 vs. $347).

For example, Puerto Ricans contribute federal payroll taxes at the same rate as other Americans, yet Medicare only reimburses medical providers on the island at a rate that is less than two-thirds the national average.