Biden’s promises to PR will fall short without congressional majority, observers say


By The Star Staff


Joe Biden’s election as the 46th president of the United States may bring good news to Puerto Rico but will not result in the island’s admission as a state or in changes to the federal Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), the law that created a bankruptcy process for the island, unless Democrats get a clear congressional majority, observers said Sunday.


“Those things he can do by executive order for Puerto Rico, he will do them, but things that require congressional approval will be difficult to do,” said John Mudd, a bankruptcy attorney.

While Democrats kept control of the House but with a smaller majority, they may only achieve a majority in the Senate only if they win two seats in a runoff election in Georgia to create an evenly divided upper chamber in which Vice President Kamala Harris would hold the tie-breaking vote. The Senate is deadlocked in a 48-48 split.


“Puerto Rico’s admission as a state is possible if Democrats get the Senate,” former Puerto Rico Secretary of State Kenneth McClintock, one of the most senior Democrats in the local chapter of the Democratic Party and a superdelegate at the 2020 Democratic National Convention.


McClintock as well as Mudd expect no changes to the federal PROMESA law as the Republican-controlled Senate would be reluctant to give them the green light.


McClintock said governor-elect Pedro Pierluisi should expect a “more aggressive” Financial Oversight and Management Board if President Trump finally appoints three members to fill vacant positions and replace some of the current members.


In his platform for Puerto Rico, Biden promised to support efforts to more effectively address the debt burdens hampering Puerto Rico’s economy. He also promised to reverse the policy of fiscal austerity imposed by the oversight board, support an audit of the debt, and ensure that low- and moderate-income people and pensioners are protected in any debt restructurings.


“Nothing that has to do with PROMESA will happen [with the GOP keeping control of the Senate],” Mudd noted.


Biden has pledged that Puerto Rico will receive the federal disaster reconstruction funding that it urgently needs to support the long-term recovery of Puerto Rico and increase its ability to withstand any future storms. Specifically, he will accelerate access to promised reconstruction funding while ensuring transparency and accountability for public funds. Biden also promised to forgive disaster relief loans to Puerto Rico municipalities so they can recover faster. The Federal Emergency Management Agency has lent roughly $300 million to 76 Puerto Rican towns.


Biden has also said he will address historically low Medicare Advantage payment rates and their consequences to the island’s health system by directing the secretary of Health and Human Services to develop and recommend payment reforms and enhancements to the program. He has also said he will ensure Puerto Ricans have adequate access to the Nutritional Assistance Program.


Biden has also promised to help improve Puerto Rico’s economy. Asked about the Internal Revenue Service (IRS) directive for Puerto Rico to find an alternate source of revenue to the 4 percent tax imposed on U.S. subsidiaries through Act 154, Mudd said he doubts the IRS will continue to allow companies to receive credit against their federal taxes because the estimated $2 billion paid by the firms “is more than what the federal government allocates for Medicare.”


Asked if Biden will follow President Trump’s policy of bringing manufacturing from China to Puerto Rico, McClintock said the policy of the island government will be to promote legislation introduced in Congress by Resident Commissioner Jenniffer González Colón.


He was referring to legislation that will bring manufacturing to Puerto Rico by promoting the job growth and capital investments in Distressed Zones.