tv Newsmakers CSPAN May 8, 2016 6:00pm-6:33pm EDT
reacted and approved the ricotitive tool for puerto -- with the help of that code, puerto rico will get out of the recession. but then later congress thought it was too much and repealed the section. what governors did since 2006 on 2012, the empty space wealth creation that's created in puerto rico through this section was filled with loans. the total death -- debt of $37to rico in 1935 with
to 2012, it 2006 was doubled. so we got to $72 billion in debt just because they tried to fill the gap. with loans. that's the history and we have to deal with that. >> governor last year you declared the debt of puerto rico unpayable and this past week, the government development bank missed most of a payment. there was a larger $800 million payment due in july on the constitutionally prioritized general obligation debt. will you be able to make that payment july 1?
>> today the answer is no. we will be able to have an idea to have that money. it's not an issue of whether i want or do not want to pay, etc. do not have the money. the money does not exist. the same happened last monday and the same will happen the first of july. we don't have the money. >> last year the commonwealth did increase the sales tax charged in puerto rico so revenues have been running slightly above lester's level. haveould puerto rico not the money if year-over-year revenues are up? >> that is a very good question. freeze thisvicing year as well. we met our obligation last year but this year the debt service
increased too. budgett service ratio to is 36%. the state with the higher ratio is hawaii with 13%. one third of puerto rico. the average in the united states is 5%. the average in the world is 7% and we are at 36%. heavya burden that is too for the commonwealth. >> governor, there is a bill before congress to help rescue the territory from its debt. conservatives and republicans in of what are very leery they say is bailing out puerto rico. one of the things they are concerned about is that they say puerto rico has got itself into
this mess that it is not producing audited financial statements. guarantee that they will not be back six months from now or a year from now saying that they need further assistance? that they need a bailout? >> let me answer that but first address the premises. we have not been asking and we have not been offered a bailout. anyone who has said we have been asking or offered a bailout is lying. second, if we do not act now in congress does not grant puerto rico a debt restructuring process law, then a bailout will be inevitable and it will be very expensive for u.s. taxpayers. if they act now it will cost 02
u.s. taxpayers. if they do not act there will be a heavy cost. >> how heavy of a cost? >> billions of dollars. how much will it cost? is that the question? >> yes. >> it will be dozens of billions. the more conservative estimate that i heard from an economist here is $20 billion in a couple of years if we do not restructure our debt now. that will not be needed. what we need from that bill is that the restructure process that came out will be a process that is workable. something that is doable.
ryan's commitment. i trust bishop and nancy pelosi's commitment and the president to the secretary of treasury. they're working together with us to fix that. the board.d to fix they say it is an oversized board but if you go into it it is a control board. it will not be applicable to new york state or michigan state. puerto rico is not a city. puerto rico is the whole jurisdiction. the control board will work. >> another revised version of the bill is expected next week. they hope to have a voting committee the week after, possibly on the floor of the house by the end of may.
then were getting to june and in the senate we don't know. by this time, people are thinking we might not be able to get a bill until september. is that too late for puerto rico? >> it's already late. into aalready humanitarian crisis. >> septic tanks in public school are overflowing. now with the zika virus that makes it worse. we haven't been able to pay the to the therapists for kids with special education. we haven't been able to pay the full amount of bus drivers to take kids to school. we are struggling to pay the fuel to patrol cars and firefighters. it's an everyday job of
borrowing from peter to pay paul. into anmething getting unsustainable atmosphere. we've been struggling here but we are getting to the end of the road. we have been there for the united states every time that they asked us to fight for them. in a conflict or any war. our infantry division were granted the gold medal of congress and we do not ask if the conflict is fair or unfair. if it's good or bad. we just go there for the united states. it's time for congress to let us -- bilateralthe by relationship. >> it is important to make one
point that viewers may not be following. the reason congress has been asked to get involved is that for to rico does not have access to chapter nine of the u.s. bankruptcy code. what were talking about now is because of the 1984 amendments to the bankruptcy -- code excluded puerto rico from being able to file chapter nine, there is this question of what happens if the governor puerto rico isn't going to be able to pay its bills. there isn't an orderly process to restructure its debt. that's part of the reason why congress is getting involved here. on the issue of this unitarian crisis you have an talking about and you been talking about for some time. this week there were reports that baseball players from mailing -- major league baseball from the pirates who were supposed to play in san juan where seeking to move those games to miami because of concerns over the zika virus.
i wanted to ask you, what method youth -- what message do you think that would send and what would you say to americans in the mainland who are worried about visiting puerto rico right now. >> that's just ignorant. >> the same chance you have to get zika in puerto rico you will have in miami. zika is dangerous. zika is like the flu, it is less than a flu, but it is bad for pregnant women and for women expecting or looking to get pregnant. is if youuggestion are a woman and you are looking to have a baby. or if you are already pregnant do not go to florida. don't go to puerto rico, the caribbean, or brazil. if the u.s. olympic tame will not show up in rio de janeiro?
because that is the mecca of zika. it's just ignorant. it is offensive to puerto rico. roberto clemente died because he tried to get humanitarian help to nicaragua after the huge earthquake and there was a lake there were people dead in the , the infrastructure was completely destroyed but he tried to get there. today, baseball players are , just no to puerto rico to try to move the economy a little bit showing up for some games in puerto rico -- to honor roberto clemente who died that way and they say no to a mosquito? it is offensive and ignorant. >> governor, what do you say to your own citizens?
what you say to those puerto ricans and any citizen considering leaving the island now? that the yard is always greener at your neighbors -- you know the saying. now we are just helping people to move back because they went to the united states thinking they will get a job immediately and wouldn't knock some much effort. some of them are playing back again. the median age of puerto ricans leaving the island are 28 years. its young people and productive people. the fact is that we have --
we've been effective in reducing crime rates to the half and reducing the unemployment rate from 16% to 11% but we need to do it harder to convince people to stay here. it will be more expensive for u.s. taxpayers puerto rico moved to the states and then claims a government aid in the states rather than puerto rico. that's another reason for congress to act and to convince to convince them if they are rate left we need to continue reducing our current rate and our employment rate. so they are able to move your family forward here in puerto rico. next governor, one of the portions of the bill that congressional democrats are coming out against is the provision that lowers the
minimum wage in puerto rico to $.25 forthe fort younger workers. republicans are talking about a report put out by a commission last year by your government that said lowering the minimum wage would actually help the economy in puerto rico moreover, the twist in the bill is that you alone would have that right to waive the minimum wage. letquestion is why not just the minimum wage stay as it is, let republicans have a symbolic victory and not have to lower the minimum wage. mentionedort that you is a report that i commissioned by the doctor and her team. she is a former economist. i agree with many of the studies. completelytudy of
with any amendment. i do not ask her to correct anything that was against it. report and make but publicly iy was against that specific measure. because it goes against the economy. there is plenty of evidence in -- the ability to have more money and leave poverty back. the economy improved. people who can buy more things, houses and cars help the economy to move on. what we need is the competitive advantage that we lost. i'm not asking for a new 936. but i'm telling congress about the action and reaction of what they did. and just about what some of you said before, that conservative
members of congress are saying there are two things about that. the answer is no. they took us out of the bankruptcy code without asking. they illuminate section 936. puerto rico told them. we were right. crisis wasng of this in congress. think that our soldiers did not have the same attitude. when they're asked by the president to go to war. you got into that trouble alone you get out alone. >> within the bill, you would have the power alone to waive that minimum wage provision. you could do nothing and the -- in the minimal wage would stay the same so why not keep it in the bill? >> because i'm the governor now
always try to protect my people. if someone with that attitude of the past would come borrowing the attitude or trying to keep government people. rico ipower is in puerto think we will be safe here. it's not that bad, but i'm not running again. i'm trying to protect the people of puerto rico of any government of the future. as you presume, the power is in not justco and we can weide not to act and then will remain as in the states. the meta-something that we can live with. >> we have about five minutes left.
secretaryr, treasury jetblue is going to bid for the commonwealth on monday and when i ask you if you think that the treasury should be prepared if congress cannot pass this bill to make some kind of commitment to exchange puerto rican bonds with treasury bonds to essentially refinance puerto rican debt in the treasury debt with similar maturities. have you asked treasury if they would consider this? >> i think they really can do that but that will not solve the problem, that will kick the can and we are trying to convince congress to solve the problem, not to kick the can. possibility and it's not in the treasury's view. they think they do not have that authority right now and i think they do. they are right when they said it
will not solve the problem. , congresshe problem needs to act. >> your government has also issued a debt exchange proposal. what insurance is will investors have that puerto rico will not read a fault if they accept this new offer from your government? >> two things. craters are one group. obligations and guaranteed by the sales tax and are subordinated -- those guaranteed by the government development banks. there are plenty of groups in the fight a lot among each other. them is asking for
deal that solves the crisis. proposalsi received that will bring back the crisis in a couple years. that is something, i have to admit that. january 2 year i will not be the governor so i could say to the crisis andolved the kick the can to the next governor. but that would not be fair. i'm asking them to solve the --sis and to put parameters on the oversight board that we are proposing i'm proposing that puerto rico will be reliable through federal funding and many other measures if we do not comply with the plan that i proposed last september. i put it forward and it is already in places.
plan and inscal december and january i amendment -- i a mend it to make a 10 year fiscal plan. what i'm saying is let's stick anyhat land and if i at point do not comply with that or there it can mature are some mature penalties that puerto rico will have if they do not stick to their own plan. but the plan is public and you can see it. during last september. >> governor, puerto rico has basically been reduced to begging congress to help save it. you have complained about the control board. the oversight board for there is realistically nothing that puerto rico can do when congress acts. i'm wondering if this whole debt crisis has changed your thoughts on the issue of statehood or
nationhood. namely you would've had access to chapter nine bankruptcy in the earned income tax credit which you don't now. medicare, medicaid reimbursements. i'm wondering if this is changed your mind it all on that issue. your against statehood and nationhood? >> people here in puerto rico are against it, too. there's more than one reason. let's ask these questions. nationhoodence and going to save argentina and portugal or ireland or greece? from defaulting? is statehood helping illinois? did statehood help new york city or detroit city? the answer is no. or orange county >> so with
chapter nine bankruptcy -- it would have in the case of chapter nine bankruptcy. >> it will not be enough. chapter nine will only apply to public cooperation but will not be enough. it's like what's happening in illinois. or greece or argentina. what we need is a responsible government. my predecessor has $16.2 billion in loans. that's a lot of money. default took it in 2011. it wasn't something that happened 30 years ago, it was having that happened five years ago. to add liquidity to a public corporation because it was not solvent. it was very responsible. what we need is a responsible
government. >> governor, there has been an intense lobbying campaign here in washington by groups believed to be back here. bailoutcalling this a even though there is no taxpayer assistance being offered in this bill. some people believe they are being financed in part by investors that participated in the let debt offering that your government made an 2014. it was a $3.5 billion bond issue after the credit rating of puerto rico had been but downgraded. was it a mistake? those bonds allowed us to have more room to negotiate within and we tried. saidu remember, when i that the debt was unsustainable, everybody said that it wasn't right. now everybody agrees that the
debt is unsustainable. the numbers are the numbers. thatis not politics is when you're before you declared it unsustainable you had been saying they would be payable. what changed over those 12 months? >> well that i was trying to negotiate with them. i improved an increase in the oil tax. to add liquidity to the government development bank. i tried many measures. it something that's part of the plan. it something that you need to comply. etc. you do one thing today like a silver bullet and you end the controversy. you need to continue and some of -- i other steps were wasn't able to comply with due to the inability to go to the crater thate to the
was not able to negotiate. so we gain some breathing room. but now we are about to end that breathing room. that's why were asking them, let's do this that's good for you and good for us. have no doubt that this campaign that lies about puerto rico that the race is about puerto rico that it came from vodafone. >> governor, we are unfortunately all out of time. thank you for being this week's "newsmaker." >> having me and i will be whatever you need at the other and of the line. turn to the two of you and nick, if i could begin with you. what you make of him saying that they will definitely not make this july 1 payment?
>> as you can tell it's a big question in the bond market now because the governor has missed a few payments already. as the governor explained there are different classes of debt. they fall in a different place in the debt stack. the general obligation debt is seen as the most senior debt. the governor has made a proposal where they would restructure their debt miss a they could pay half of the debt service they have right now. some people are saying you have enough money to make this it hundred million dollar payment even if you may not have money to make some of the other payments for. so the fact he is coming out and saying right off the bat we are going to miss this payment, it will be seen as more of a watershed moment that some of these other defaults have been. >> how will the market respond? >> there is no surprise in the market that puerto rico is in trouble. puerto rico has been trading differently from other municipal credits for a number of years. puerto rico has not done well.
it's not incredibly clear how big of a surprise this is but there is this question of the ability to pay versus willingness to pay and he is saying you don't have the ability so we will see how the market response to that. so what do you think happens if they default? >> i think you do have an .ncreased risk of litigation litigation against the government and creditors. the governor claimed you do not have just one issuance of debt, you have competing pledges and there is a risk that some of them will sue each other. ricanshot is, the puerto economy is not growing. as we heard, people are leaving the island easily. they call it the $99 solution. these are u.s. citizens.
they have american passports. they are able to come here easily. the problem is how will you get if and not to grow able to the capital markets and raise money and are not able to refinance the existing debt, what business will want to open up and higher more employees in puerto rico and the environment. it doesn't really help the problem at all. >> the government -- the governor says if they default the could be a bailout that will be needed from washington which means billions of dollars? >> probably. you will have an increased request for health care funding, you are already having that. even though this is being categorized as a bailout, it is not a bailout because it is no pet -- taxpayer money on the table right now. you're talking about writing down creditors.
i think you see increased odds that pressure will build on democrats and republicans to put real money on the table. >> will there be a bill passed on the house floor? >> that is the big question. paul ryan has a lot at stake. he has put his stamp of approval on this bill. he said he wanted to get something done by march 31 and they blew that deadline. there is going to be the bailout next week, it's going to be talking about. there are a lot of people on the fence wing to see what the revisions to the bill look like. the people i'm talking to say they are close to getting the agreement but the proof is in the putting when they actually see it. >> one of the architects of that bill is the chairman of the committee.
we want to thank both of you for talking to us, we appreciate it. >> tomorrow about the wilson center hosted a discussion by taking a look at the types of benefits that soldiers receive and how the programs differ from those for civilians. that's live at four clock p.m. et. looking at the history of the federal reserve and what changes if any are needed at the agency as it continues to manage u.s. monetary policy. as from the american enterprise institute. see it live at 5:30 a.m. et on c-span. how isis usesat the internet and social media to recruit supporters. panelists discuss u.s. efforts to combat online material from terror groups and whether companies should be forced to ban suspected terrorists. this was hosted by the
congressional internet caucus advisory committee. panel.ing to this this panel is put on by the advisory committee to the congressional internet caucus we are hosted by the congressional internet caucus. we would like to think our senator john thune and patrick leahy for hosting us here today. the caucus hosts events every few weeks on salient topics to the internet and policy and we invite you to come out for events coming out the rest of the summer. today we have several excellent panelists with us. we have m a from the center for democracy and technology on the free expression project. we have them from the department of justice countering extremism over there. wheels and shamus hughes, the