Representative Nydia Velázquez (D-NY) hosted a forum on Tuesday, July 18, 2017, to discuss strategies to improve economic growth in Puerto Rico. The forum, which took place in Washington D.C., comprised members of the Bipartisan Congressional Task Force on Economic Growth in Puerto Rico and a panel of experts.
Attending the discussion were members of the Bipartisan Congressional Task Force on Economic Growth in Puerto Rico Rep. Tom MacArthur (R-CT) and Rep. Sean Duffy (R-WI), who also sponsored H.R.5278 – PROMESA; members of the Small Business Committee Rep. Steve Chabot (R-OH) and Rep. Yvette Clarke (D-NY); Rep. Norma Torres (D-CA) Ranking Member of the United States House Natural Resources Subcommittee on Indian, Insular and Alaska Native Affairs; House Minority Leader Nancy Pelosi (D-CA), Rep. Joseph Crowley (D-NY), Rep. Robin Kelly (D-IL) and Rep. Luis Gutierrez (D-IL).
The panel of experts that consisted of Desmond Lachman, resident fellow at American Enterprise Institute; Sergio M. Marxuach, director of public policy at the Center for a New Economy (CNE); Edwin Meléndez, director of the Center for Puerto Rican Studies and professor of urban affairs and planning at Hunter College; Mario Marazzi Santiago, executive director of the Puerto Rico Institute of Statistics (PRIS); Juan Lara, chief economist at Advantage Business Consulting and professor of economics at the University of Puerto Rico (UPR); Héctor R. Cordero Guzmán, professor at the Austin W. Marxe School of Public and International Affairs at Baruch College.
Congress Members on “The Real Key to Puerto Rico’s Future”
In their opening remarks, Congress members acknowledged the need to implement strategies in order to foster economic growth in Puerto Rico. "It is our responsibility to help the Island," said Rep. Duffy (R-WI). He asserted his belief that the Puerto Rican government needs to make its regulatory environment more business friendly, improve its permitting process, and “take the government out of the way.”
Rep. MacArthur (R-CT) stated that the “real key to Puerto Rico’s future is real economic growth,” further stating the need for federal support in achieving this goal.
House Democratic Leader Pelosi spoke fondly of her visits to Puerto Rico and stated that she will join House Speaker Paul Ryan at the negotiation table on any initiatives regarding the crisis in Puerto Rico.
Destined to Repeat Greece?
The discussion, conducted as a hearing, began with statements by the expert panel and was followed by questions from Rep. Velázquez, Rep. Torres, and Rep. Kelly. As the first panel member to speak, the American Enterprise Institute’s Lachman called for structural reforms as a way to counteract austerity measures. He warned that excessive budgetary tightening might lead to a loss of output for the island. Lachman made several references to Greece and expressed his concern regarding Puerto Rico’s crisis mirroring Greece, stating “Those who do not learn from history and from Greece are destined to repeat it." Furthermore, he warned that the recession might worsen if economic growth strategies are ignored and stated that because of Puerto Rico’s inability to control monetary policy, structural reform in the labor market needs to occur. As an example, he proposed lowering the federally mandated minimum wage in order to increase demand and remain competitive with neighboring countries.
Rep. Norma Torres (D-CA) disagreed with this measure and questioned the extreme nature of this proposal due to its effects on the population. Baruch College’s Cordero Guzman countered that the opposite needed to occur. He stated the issue affecting labor in Puerto Rico is in fact not that wages are high, but that wages are low and that many citizens resort to informal employment or multiple jobs to survive.
CNE’s Sergio M. Marxuach addressed the federal government’s treatment of Puerto Rico and referring to it as “at best benign neglect.” He stated that some of the policy tools created by PROMESA are not working as expected. He particularly highlighted the Fiscal Oversight Board’s lack of transparency and “has added a new layer of opacity to fiscal policymaking in Puerto Rico.” Regarding growth, Marxuach proposed a two-prong strategy in order to restore economic growth, a short term and a long term. Due to the island’s lack of access to short term financing federal assistance is needed to jumpstart short-term growth including removing long standing “inequitable and discriminatory policies.” Finally, he expressed the need for Puerto Rico to create a long-term local economic development strategy. Similarly, Lara, of UPR, also brought up the need for temporary assistance and recommended further GAO studies on federal parity for the island.
Edwin Meléndez, director of the Center for Puerto Rican Studies, reaffirmed the shared responsibility in restoring economic growth for Puerto Rico. The Fiscal Oversight Board, which oversees finances; the Commonwealth’s Government, which controls structural adjustments to services and brokers economic initiatives with the private sector; and Congress, which is responsible for the economic and legal oversight of territories. He singled out Puerto Rico’s energy as a barrier to economic growth and cautioned against the privatization of a state utility as it would similarly create a private monopoly. As an alternative, he agreed with the recommendation by the Puerto Rico Private Sector Coalition of introducing “open access and market frameworks” to support “sustainable and competitive energy pricing.” Additionally, he encouraged Congress to act on the recommendations given by the Congressional Task Force on Economic Growth for Puerto Rico in order to provide economic tools for the island.
In his testimony, Mario Marazzi Santiago, of PRIS, focused on the island’s lack of credible data and argued for the need of trustworthy data in order to have good governance and consequently increase economic growth. This message seemed to resonate with Democratic Representatives Velázquez and Torres as well as Minority Leader Pelosi, who seemed visibly shocked at Marazzi’s account of previous statistical failures in Puerto Rico. Rep. Velázquez agreed with the need for accurate statistical data in order to properly enact policy.
Closing the session, Rep. Velázquez acknowledged the difficult road ahead in pushing forward with Congressional action related to economic growth for the island.
You can read some of the full statements in the links below or watch the full session here: https://youtu.be/aaZGu7l-VcU
Full Statements and Press Releases
Desmond Lachman, resident fellow at American Enterprise Institute
Sergio M. Marxuach, director of public policy at the Center for a New Economy
Democratic Minority Leader Nancy Pelosi (D-CA)