Puerto Rico will be left to its own devices to recover financially following the devastation left by the most powerful hurricane to hit the United States territory in about 90 years, according to Office of Management and Budget Director Mick Mulvaney.
Rejecting President Donald Trump’s assertion that the island’s debt may be forgiven, Mulvaney said on CNN’s “New Day” on Wednesday, “I wouldn’t take it word for word with that.”
“I talked to the president about this at some length yesterday as we flew home on Air Force One, and what we’re focusing on right now is the primary focus of the federal effort is to make sure the island is safe and we’re building the island,” he said, noting that the island was anywhere between $72 billion and $120 billion in debt before Hurricane Maria hit.
Upon returning to the United States after his at times cringe-worthy visit to the island, Trump suggested Puerto Ricans could “wave goodbye” to their debt.
“You know, they owe a lot of money to your friends on Wall Street, and we’re going to have to wipe that out,” he said on “Hannity.” “You can say goodbye to that. I don’t know if it’s Goldman Sachs, but whoever it is, you can wave goodbye to that.”
The vast majority of Puerto Rico’s 3.4 million residents remain without power, and about half do not have access to safe drinking water.
Referring to Trump’s comments, CNN host Chris Cuomo asked Mulvaney, “Why did he say it Why did he say we’re gonna get rid of the debt, then”
“Well I think the president knows that in order for Puerto Rico long term to fix itself, it’s going to have to deal with that debt situation. I think everybody agrees with that. The country was excuse me, the territory was very poorly run for a very long time,” Mulvaney responded.
“Puerto Rico is going to have to figure out how to fix the errors that it’s made for the last generation on its own finances,” he added.
Mulvaney echoed similar sentiments in a Fox Business interview.
“What I think you saw there was the president focusing on the reality that in order to get sort of its long-term fiscal operation back in order, Puerto Rico is going to have to figure out a way to restructure its debt, which is happening through the PROMESA process already,” he said.
PROMESA, short for the Puerto Rico Oversight, Management, and Economic Stability Act, was enacted in 2016 as a way to restructure Puerto Rico’s debt, which is primarily in the form of municipal bonds. The legislation also created an oversight board to watch over and assist the territory in creating long-term, effective reforms that also ensure it remains out of debt.
At its inception, the program was believed to be a long, uphill battle, according to the New York Times even without unforeseen circumstances such as Hurricane Maria:
“The federal oversight board has called for a debt moratorium even further reaching than the one Puerto Rico’s governor had sought, in hopes of using the savings to rekindle its shattered economy. Experts thought the recovery would take years, but their projections did not include Hurricane Maria and the collapse of the island’s power grid.”
PROMESA had many critics at the time it was enacted, though, including Sen. Bob Menendez (D-N.J.), who said in a statement in May 2016, “I’m afraid this bill provides little more than a Band-Aid on a bullet hole with regard to Puerto Rico’s unsustainable debt. Mark my words if we don’t seize this opportunity to address this crisis in a meaningful way, we’ll be right back here in a year from now picking up the pieces.”