Enough is enough. The Financial Oversight and Management Board for Puerto Rico (FOMB), created under the Puerto Rico Oversight Management and Economic Stability Act of 2016, is ruling this United States territory like it was its own private farmhouse, imposing ever more oppressive austerity measures on the more than 3.1 million U.S. citizens living on its soil.
The members of the FOMB are simply blind to the suffering they are causing our people.
After three years of massive and historic cuts in government spending -- never seen in any state of the union -- up to the point of directly impacting the services provided to the citizens, the Board now demands an unprecedented 25 percent cut in pension benefits for 167,000 retired public servants. By comparison, in Britain’s financial crisis during the ’90s, the Conservative Party, led by Prime Minister (PMP) John Major, adjusted the pensions of nearly 4.2 million retired workers at a minus 8 percent clip for a period of up to five years, or until some benchmarks in budgetary surpluses were met. The reduction lasted four years and the Labor government of PMP Tony Blair restored the level of pensions in 2001.
The same occurred in Ireland during the ’80 and in Greece at the start of the current millennium.
But that is not the case in Puerto Rico, a U.S. territory since the end of the Spanish-American War of 1898. The cuts imposed by the Board will be deeper and permanent and our people cannot survive it.
The numbers tell the story. Of the 167,000 retirees impacted by this unnecessary action, more than 70,000 receive $2,000 or less in pension benefits each month. The FOMB’s reduction will put the monthly allocation for these U.S. citizens at $1,750; nearly 33 percent less than any retired public worker in America.
If that wasn’t enough, the cuts will drive more people to welfare. The 70,000 that will be most affected by the action will have to look for options to meet their monthly needs. Most, if not all of them, will be forced to request food assistance just to survive and because Puerto Rico does not receive the same level of federal funding for our Nutritional Assistance Program (NAP), they will not have enough to go on. The same goes for health services as many of the impacted will be placed in the position of selecting between food or medicines.
In the end, this decision will cost the local government more than it will be saving. That’s a reality that even the Board cannot deny.
The sad thing about this completely unwanted action is that Puerto Rico’s government, unlike the cases of Britain, Ireland or Greece has the ability to pay for pension benefits at the current level without affecting other budgetary areas, including the installment payment of the accumulated debt, which, currently surpasses the $70,000 million mark.
In the most recent budget proposal presented to the FOMB, the local government allocated the amount of $1,991 million for the payment of all pensions. It also assigns a good portion to the eventual payment of the debt services. This is the same formula used during the past two operational budgets (2017 and 2018) without any problems; not until this month.
Furthermore, in three years the Board has not yet presented a credible economic development plan. It has not acted on the 2016 Congressional Task Force on Economic Growth in Puerto Rico recommendations of extending the federal work credit and to grant the island parity in Medicaid funds. The Board’s sole move so far have been imposing ever more profound budget cuts.
We cannot stand by and watch the Board destroy lives of so many of our retirees, we need to act.
As the Speaker of the Puerto Rico’s House of Representatives, I urge the Congress to immediately intervene on behalf of the U.S. citizens living on the island and to put an end to the imposition of pension cuts. They are unnecessary and dangerous. Each member of Congress must recognize the possibility that this move by the FOMB will culminate in a humanitarian crisis not seen in any U.S. jurisdiction since the Independence War.
PROMESA was not a blank check to the FOMB to bypass the limits, prohibitions and obligations imposed by the Act. The unelected members of the Board must not have the power to rule over U.S. citizens. Congress has to take a proactive stand; words only will not be enough.
Carlos ‘Johnny’ Méndez is Speaker Puerto Rico House of Representatives.