If you have a retirement fund or pension, or you’re a taxpayer, get ready to have your pockets picked.
The Obama administration wants Congress to enact a bankruptcy plan for Puerto Rico, forcing holders of Puerto Rican debt (including New York City pension funds) to settle for less than they’re owed.
Puerto Rico is over $70 billion in debt and already defaulting. House Speaker Paul Ryan has promised action by March 31, and the Supreme Court took up the issue on Tuesday.
Federal law bars Puerto Rico from going bankrupt. If Congress rewrites the rules now retroactively, it will jolt municipal bond markets. Jittery lenders will demand higher interest from states and cities that need to borrow, whacking taxpayers who foot the bill.
Bankruptcy’s not the answer. Congress needs to show Puerto Rico some tough love by imposing a financial control board that will curb the island’s profligate spending and cut its bloated government payroll.
Puerto Rico’s pols have flunked civics. The island is mired in cronyism and corruption. Congresswoman Nydia Velazquez, D-N.Y., calls a control board a “colonial power grab.” Nonsense. A control board turned around New York City in the 1970s and the District of Columbia in the 1990s without resorting to bankruptcy.
Allowing the island to weasel out of its debts will encourage more irresponsibility. Last Christmas, the island’s governor doled out $120 million in bonuses to employees, just before defaulting on millions in debt. The island is a socialist paradise where only 40% of adults work, but those who do are guaranteed paid vacations and other perks.Read the rest of this IBD editorial HERE.
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