Finance

Dems baffled by Trump's Puerto Rico debt comments

Is President Trump pushing to eradicate Puerto Rico's debt, or isn't he?

That's the question the Democrats are asking Wednesday, after the president suggested hours before that he'd support loan forgiveness for the embattled U.S. territory as it struggles to recover from the widespread devastation caused by Hurricane Maria.

"The problem is that I don't know how to interpret it," said Rep. José Serrano (D-N.Y.), a Puerto Rican native who supports loan forgiveness for the island.  

"I know you guys need answers that sound intelligent, but with this president you don't know what he's going to say in an hour," he added. "If he means the debt has to be forgiven, the debt has to be dealt with, the debt has to be taken care of, I'm all for it. But does he mean that? Is he saying that? 

"That's the question."

Rep. Nydia Velázquez, another New York Democrat born in Puerto Rico, said she's "encouraged" by Trump's latest comments, but she's also trying to determine what they mean.

"He's a businessman. He understands that it will be a difficult path for Puerto Rico, and the public debt will have to be on the table and that a big hair cut has to take place," Velázquez said. "I'm encouraged by the fact that he understands that the public debt is a big impediment to put Puerto Rico on track to economic recovery."

On Tuesday night, after returning from a trip to Puerto Rico, Trump stirred a whirlwind when he said eliminating the territory's enormous debt would be necessary for the hurricane recovery effort.

"They owe a lot of money to your friends on Wall Street and we're going to have to wipe that out," Trump said during an interview with Fox News. "You can say goodbye to that."

That sentiment marked a stark change of tone from last month, when Trump seemed to blame Puerto Rican officials for creating a financial crisis that was hindering the storm recovery.

"Texas & Florida are doing great but Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble," Trump tweeted on Sept. 25.

Further muddling Trump's position on the debt issue, Mick Mulvaney, the White House budget director, quickly contradicted Trump's promise for loan forgiveness. 

"We are not going to pay off those debts," Mulvaney told Bloomberg News. "We are not going to bail out those bond holders."

The White House on Wednesday is expected to deliver a request to Congress for a $29 billion spending package combining federal flood insurance funding with new resources for emergency recovery efforts in response to hurricanes Harvey, Irma and Maria. The Democrats say that, in the near-term, emergency relief should take priority over the broader debt problems dogging Puerto Rico. 

"This is an emergency," said Serrano. "When we have a tragedy, we don't say, 'You busted the budget.' You just go and fix it."

Serrano, joining many Democrats, is urging a more robust response from the Pentagon.

"I'm one who favors - I can't believe I'm saying this - the military going in at full blast," he said. "We need boots on the ground. The military knows how to do this, and they do it well."

But Serrano also emphasized that Trump's next step on the debt question is anyone's guess.

"We never know what he's thinking," he said.

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