STATEMENT BY SENATOR ORRIN HATCH ON PUERTO RICO

Senator Orrin Hatch

May 21, 2018​

En la tarde de hoy en el Hemiciclo del Senado Federal, el Senador Orrin Hatch (UT-R)hizo las siguientes declaraciones sobre el proyecto de ley que presentó junto al Senador Marco Rubio (FL-R) para ofrecer asistencia adicional a Puerto Rico.

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“Mr. President, I am here today to discuss new legislation to help Puerto Rico gain a stronger fiscal footing. But before turning to that I’d like to make a few comments regarding the current NAFTA today talks. 

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Mr. President, having said my piece about NAFTA, I’d like to turn to the main purpose i am standing here. Last Thursday I introduced a bill cosponsored by Senator Rubio entitled "the Puerto Rico economic empowerment act of 2018." The bill works to help the people in Puerto Rico as they continue to face a stagnant economy and recover from massive damage called by recent hurricanes. 

This bill will be a critical step towards resurrecting growth in Puerto Rico that directly targets relief to Puerto Ricans themselves and small businesses on the island. In briefings the bill provides the following --

First, the bill provides a payroll tax holiday for employees in Puerto Rico for two years, cutting their payroll taxes in half in order to give economic relief to the hardworking people of Puerto Rico who face an economy that has been stagnant and mismanaged for far too long.

Second, the bill provides equal treatment with respect to the federal child tax credit for Puerto Rican families with one or two children.
Not just for those who have three or more. This will provide more equitable treatment to Puerto Rican families with respect to the federal child tax credit to help families to reduce child poverty.

Third, the bill provides greater flexibility for Puerto Rico in various small business administration programs to assist Puerto Rico's small business owners during a time of prolonged economic downturn.

Fourth, the bill confronts the long-standing problem in trying to monitor Puerto Rico's economy that stems from lack of inclusion of Puerto Rico in many federal statistic surveils the bill also calls for the establishment of a federal statistical research data center in Puerto Rico.

These and other provisions in the bill follow recommendations of the bipartisan congressional task force on economic growth in Puerto Rico. I had the opportunity of chairing that task force with four members from the house and four members from the senate. We also made sure that the task force was evenly split with regard to political affiliation. I know such evenhanded bipartisanship and compromise is rare around here, but we were able to do it. We came up with a 125-page report that made many different suggestions.

Not wanting that work to go to waste, Senators Rubio and I have been working hard to craft those proposals into this bill, and I am confident it truly embodies the purpose and bipartisan spirit of that bicameral task force. Although I do not have a score on the bill yesterday from previous scores on similar provisions would add up to over $3.5 billion of relief, largely in tax relief to our fellow citizens, fellow Americans in Puerto Rico. Once I obtained an updated score, I will recalibrate the offset accordingly, if necessary.

In the meantime, the final clause of the bill is entirely offset by redirecting funds from the prevention and public health fund established under the so-called affordable care act. Redirecting from that fund helped provide upsets for the 21st century cures act and for the bipartisan budget act of 2018. Both of which received bipartisan support.

I hope that all of my colleagues can join Senator Rubio and me in support of this bill. After all, our prior efforts have not solved many of the ongoing issues in Puerto Rico. For example, toward the end of 2015, we passed promesa into law. Promesa was the result of the efforts of the Obama officials in the obligations. It largely took their bankruptcy scheme but loosely added provisions to spur economic development in Puerto Rico, particularly in the energy states. One promise of promesa touted by the Obama administration officials was that it would circumvent a advice cue us and wasteful -- a viscous and wasteful sequence of events of lawsuits. Theoretically, the law was going to stop creditors in Puerto Rico from facing off in prolonged court battles. 

I voted for promesa because Puerto Rico's long span of fiscal irresponsibility needed to be stopped and a promise of limiting litigation was inviting. Unfortunately, the law has failed to prevent a tidal wave of litigation as was promised. Promesa was also set up -- it also set up an oversight board to facilitate voluntary debt resolution negotiations or movement of disputes to a court-supervised bankruptcy-like process. The promise of voluntary debt resolutions has not been fulfilled even for a restructuring agreement between creditors and Puerto Rico's power authority called PREPA, which had been agreed upon by both sides. 

The oversight board was also intended to oversee and monitor budgets for the various indebted arms of the government of Puerto Rico. On this front, I have also been disappointed as it seems that the oversight board has largely been operating in the dark, often relying on the government of Puerto Rico for information of questionable validity. That said, I am not without hope. The oversight board has recently been slightly more aggressive in its demands for transparency from the government of Puerto Rico, and I hope they are successful in obtaining useful verifiable information. However, the government of Puerto Rico has been and remains largely opaque. 

Mr. President, it is just one example. I have asked government officials in Puerto Rico for audited financial statements for nearly three years now. Let me repeat that. I have been waiting nearly three years for audited financial statements from Puerto Rico. Unfortunately, to the best of my knowledge, the government of Puerto Rico has not provided audited financial information since fiscal year 2014. 

This is obviously problematic when trying to figure out how to best help Puerto Rico. And this is not a one-off issue. Recently following numerous claims by government officials in Puerto Rico of severe, even crisis level liquidity shortages, Puerto Rico finally got around to looking into hundreds of standard government bank accounts and revealed late last year that it found nearly $7 billion of stranded cash. 

This is just one of many examples of how disorganized and inconsistent accounting continues to prevail in Puerto Rico. Damaging the credibility of the government. But it doesn't end there. There have recently been attempts by the government of Puerto Rico to potentially politicize the Puerto Rico institute of statistics. Obviously, this is concerning. In a report by the congressional task force on economic growth in Puerto Rico, members of congress from both chambers and both sides of the aisle expressed that the institute of statistics quote, has emerged as a highly professional, autonomous and apolitical organization that is bringing greater transparency to economic, financial, and fiscal conditions on the island, end quote. 

Indeed, a recommendation of the task force was for the institute to continue to protect its independence. Unfortunately, the institute has been forced to litigate its independence, given an ill-conceived effort by the government of Puerto Rico to overhaul and potentially politicize the institute.

Mr. President, I know that there is bipartisan support for our fellow Americans in Puerto Rico. Indeed, I heard a lot of support by members here on the floor following the devastating hurricanes that hit the island. Some members seem genuinely concerned while others seem more interested in trying to cast doubts on or politicize the disaster response from the federal government led by the administration. Nonetheless, I remain committed to working with anyone from either side to help and support the people of Puerto Rico. 

However, that work must involve compromise and mutual understanding of each other's concerns. That has not always been the case, in my view. I have tried to work to provide tax relief to people in Puerto Rico, yet I continue to hear from some, including former Obama administration officials that I must include access for Puerto Rico to be earned -- to the earned income tax credit. Mr. President, I have been clear about my concerns that the administration of such a provision carries with it many possible problems as highlighted by a report by the nonpartisan joint committee on taxation. 

Moreover, Puerto Rico already had its own earned income tax credit, which it subsequently did away with. It seems to want to resurrect the idea now and have every right and ability to institute such a credit on the island. However, I cannot support the, quote, advice, unquote from some that I must support a provision involving cutting a big check from the federal general fund to the government of Puerto Rico for them to administer such a credit.

I also cannot support the views of some in Puerto Rico, including government officials, that they were somehow left out of our tax reform efforts because they didn't receive, did not receive a special carveout unavailable to anyone else. Subsidiaries of the US-headquartered firms that are organized as controlled foreign corporations in Puerto Rico for federal tax purposes were treated the same as similarly situated taxpayers anywhere else. In addition, if being somehow left out of tax reform means that provisions to provide some sort of tax haven status as some in Puerto Rico asked for, then I think that the proponents of such a view do not understand recent history.
 
In my more than 40 years in the senate, I have always been a proud advocate of accountability and oversight. That is why I support greater transparency in the Puerto Rican government as well as the oversight board. I also support ongoing federal efforts, including those of the treasury department to carefully and closely monitor federal funds provided to Puerto Rico through disaster and other relief. 

As always, we owe a duty to taxpayers to prudently safeguard their hard-earned dollars from being channeled into inefficient and wasteful uses. These and other reasons are why in connection -- in conjunction with Senator Rubio and anyone else here who wishes to join us I am advocating for the provisions contained in the Puerto Rico economic empowerment act of 2018 that I introduced today. 

Mr. President, let me end by reiterating that I want to work on a bipartisan basis and in the spirit of compromise with anyone here in this chamber to help our fellow Americans in Puerto Rico. Truly, theirs is an uphill battle as they continue to face many different add verities. That has been the case for years, and I hope we can set our partisan politicking aside and get to work. With that, Mr. President, I suggest the absence of a quorum. “