Posted on 08/03/2017 7:30:51 AM PDT by Kaslin
President Donald Trump is in need of some political wins. Congress is stuck in procedure and partisanship, with no real hope for an end in sight, so the odds for legislative victories are long…at least right now. But like everywhere else in life, people love a winner, and a few victories, even small ones, can go a long way toward rallying more people (and more Congressional support) toward his legislative goals.
The office of the President is unique in the world, in that it matters very little what its occupant does - people want to see their president doing “something.” President Barack Obama always polled well because people saw him “accomplishing” things he said would make the country better and help people. They didn’t, but he got credit for the action while almost being exempted from the result.
President Obama’s “pen and phone” served him much better than it did the country. But his example can be a roadmap for President Trump.
While Obama overstepped his Constitutional authority and was regularly smacked down by the Supreme Court, there are plenty of legitimate opportunities for President Trump to exercise his executive authority that would benefit the country and give him some much-needed, though smaller victories.
These won’t be Obamacare repeal, tax reform, or a wall being built on the southern border-level achievements – a president can’t do those things alone – but that doesn’t mean they can’t be significant or important.
One area in which President Trump could, and should, act unilaterally is on Puerto Rico’s bankruptcy.
The US territory may be an island paradise, but it’s also an economic disaster. With more than $70 billion in debt, which balloons to over $100 billion when you add in pension liabilities, Puerto Rico defaulted on its obligations in July of 2016, violating its own constitution.
To deal with this catastrophe, the federal government passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) under President Obama. PROMESA created an oversight board to help steer the island through bankruptcy. The Board consists of seven members, six selected by Congress and one appointed by President Obama. Obama’s appointee, New York Judge Anthony Gonzalez.
But that board is not acting openly or transparently, according to investigative journalists following the case.
Under PROMESA, the board is charged with first paying “essential services,” then service on their debt. But the board has refused to define what qualifies as an “essential service,” allowing the board to be in a position to decide on whim who wins and who loses.
Picking winners and losers based on politics over the law sets a horrible precedent that will ripple across the country as other states and cities flirt with their own bankruptcy.
Puerto Rico’s bankruptcy may seem small in the grand scheme of things, especially in a country with $20 trillion in debt. But how its bankruptcy is handled will set the precedent of how all future bankruptcies are handled.
Illinois has a seemingly insurmountable debt, for example. While the worst case, the state is hardly alone. Profligate spending coupled with massive pension liabilities mean many states and municipalities could be marching down the bankruptcy path in the near future. How Puerto Rico’s collapse is handled will be the model going forward. While it may not seem like something you should care about, you should have a keen interest in how it goes.
Municipal bonds have been a major haven for retirement accounts, so your retirement could be dependent, in part, upon how these bankruptcies are handled. That’s what makes Puerto Rico so important – it could serve as the template for something that could significantly impact the retirement security of millions of Americans.
President Trump, as authorized by PROMESA, could replace Judge Gonzalez with a fiscal conservative who will ensure Puerto Rico’s bankruptcy, and therefore future state and city bankruptcies, is handled in regular order and not influenced by political favoritism.
Transparent negotiations made in good faith with creditors should be the norm, and the President has a chance to make it so - while putting others on notice that cronies and politically favored entities will not take priority over the law.
It may seem like a small message, but it is a crucial one.
The Obama administration set the bankruptcy process on its ear with the auto company bailout, picking winners and losers, favoring political donors over investors and the law. President Trump knows bankruptcy laws from his time in business, and he knows experts in managing debt. He should exercise his legal authority to replace Obama’s appointee with a strong fiscal conservative to lead the effort and put everyone on notice that the old way of doing things is over.
He doesn’t need Congress to do it and, if he sold it well, it would be an important and much needed notch in the victory column. And once you start adding up notches in the victory column, they have a way of multiplying.
Let Illinois and PR and the rest go bankrupt.
Nuke PR.
Illinois is not a territory, so it will need to be differently handled. States have always been able to “default,” but not file for bankruptcy.
Additionally, Illinois constitutionally protected its pension obligations, which most states did not do.
The best bet would be for a federal judge to appoint a “special master” who would be in charge of budgeting for the Commonwealth-territory. They would be in charge of tax policy and spending, and could suspend or cancel existing spending programs and existing debts.
A second “special master” would compose amendments to their territorial constitution to both fix longstanding problems and to preclude future problems, such as requiring a balanced budget and giving their governor a line-item veto.
A third “special master” would become the state ombudsman.
Under PROMESA, the board is charged with first paying “essential services,” then service on their debt. But the board has refused to define what qualifies as an “essential service,” allowing the board to be in a position to decide on whim who wins and who loses.
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Never let a crisis go to waste. PR’s bankruptcy is another opportunity for the political class to steal money.
Why is Trump in need of a “much needed win”?????
The stock market just hit 22000. Growth triple anything Odumbass ever accomplished, Immigration self-fixing, deep state being uncovered.
I see winning all over.
Sell puerto rico to mexico since it is already nearly indistinguishable from mexico, and use the proceeds to pay off the debt
“Municipal bonds have been a major haven for retirement accounts, so your retirement could be dependent, in part, upon how these bankruptcies are handled. That’s what makes Puerto Rico so important – it could serve as the template for something that could significantly impact the retirement security of millions of Americans.”
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Unless the bonds are taxable with the requisite higher rate, they are not suitable for IRA’s, 401K’s, etc.
The author missed on that one.
Most people don’t care about Puerto Rico and their problems. The republicans allowed them to reorganize their debts.
Focusing on tax cuts and regulatory cuts is something that would make a clear win for all americans and extend the economic expansion and stock bull market.
Puerto Rico’s problems were caused by Puerto Ricans.
The Puerto Ricans need to fix it themselves.
That’s called “Acting like adults instead of kids”.
Their first step is to quit voting for liberals.
Their second step is to go find the politicians that stole all the money and throw them into prison and confiscate everything their family has.
The third thing is to balance the budget.
The fourth thing is to teach their children to never vote for liberals.
That’s a good start on the road to recovery.
The only “win” is to cut them loose.
Now that would be a hard sell indeed, given how Mexicans feel about PR.
IIRC, 7 states have constitutional protections for public pensions. Another 34 have inferred protections through court rulings. Something’s gonna have to give.
Bailing out Puerto Rico is a “win?”
Mon Dieu!
Grant them independence.
And cancel automatic USA citizenship.
Hundreds of thousands of Puerto Rican “Americans” have moved to central Florida, where they vote 80% Democrat, and where they politically threaten the possibility that a GOP president can be elected.
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