January 17, 2017
The
Honorable Mitch McConnell
Majority
Leader
United
States Senate
Washington,
DC 20510
Dear Mr.
Leader:
As the 115th Congress
begins, we write to underscore the need for additional legislation early in
this session to address the economic and fiscal crisis in Puerto Rico. The Puerto Rico Oversight, Management, and
Economic Stability Act (PROMESA) provided Puerto Rico with important fiscal
oversight and debt restructuring tools, and now the Oversight Board and
Puerto Rico’s new Governor must take the critical next steps required by this
federal legislation. Working with the
new Governor, the Oversight Board now must
certify a Fiscal Plan and set a path to comprehensively restructure the debt
before the expiration of PROMESA’s automatic
stay. Treasury has continued to provide both the
Oversight Board and the new Governor with technical assistance as requested,
and will remain able to do so after the transition to the next
Administration.
Despite the
important progress achieved to date with bipartisan support, the work is not
done. As Puerto Rico moves forward on
these next steps, Congress must enact measures recommended by both Republicans
and Democrats that fix Puerto Rico’s inequitable health care financing
structure and promote sustained economic growth. Without congressional action to address these
issues, Puerto Rico’s return to growth and opportunity will be a significant
challenge. Most urgently, Congress
should address Puerto Rico’s “Medicaid cliff” funding issue before April as
recommended last month by the Congressional Task Force on Economic Growth in
Puerto Rico. Failure to do so would jeopardize
health care for up to 900,000 poor U.S. citizens living in Puerto Rico.
CONGRESSIONAL TASK FORCE
REPORT
On
December 20, the Congressional Task Force on Economic Growth in Puerto Rico,
established by PROMESA, released its Final Report. The bipartisan report provides an overview of
the economic challenges facing Puerto Rico and a series of potential solutions
that, if crafted well and enacted quickly, are necessary for a sustainable
economic recovery. It is important that
Congress not only turn ideas into action, but in doing so, address Puerto
Rico’s significant remaining economic and social challenges in meaningful ways
to help put Puerto Rico on a path of sustained economic growth.
As the
report acknowledges, Puerto Rico faces an imminent shortfall in health
care funding that could leave up to 900,000 Americans without coverage if
Congress does not act in the near future. Puerto Rico’s already
vulnerable health care system is stretched further by a Zika outbreak that, as
of January 4, has resulted in over 34,000 cases, and will affect numerous
women, children, and families for years to come. It is time to provide a long-term solution to
Puerto Rico’s historically inadequate federal Medicaid financing, which
threatens the viability of Puerto Rico’s Medicaid program and worsens Puerto
Rico’s fiscal crisis. If Congress fails
to craft a long-term solution, immediate action is still needed to ensure full
fiscal year 2018 financing to avoid the “Medicaid cliff” identified in the
report. Without action before April,
Puerto Rico’s ability to execute contracts for Fiscal Year 2018 with its
managed care organizations will be threatened, thereby putting at risk
beginning July 1, 2017 the health care of up to 900,000 poor U.S. citizens
living in Puerto Rico.
Additionally,
Puerto Rico continues to suffer from double digit unemployment and a labor
force participation rate that is only two-thirds that of the U.S.
average. A federally-financed, locally-administered Earned Income Tax
Credit (EITC) in Puerto Rico would create incentives for work and increase
participation in the formal economy – just as it has done for decades in the 50
states and the District of Columbia.
Instead of recommending the immediate enactment of an EITC, the Task
Force only suggested Congress further explore the proposal. We strongly encourage Congress to enact this
powerful economic driver to bolster Puerto Rico’s future. Our analysis of the situation over the last
several years demonstrates that an EITC would be the most effective and
powerful tool to address these structural challenges to economic growth.
Beyond those two major
issues, the Task Force recommended a number of other policies that we agree
should be enacted. First, we appreciate the bipartisan recommendation for
Congress to continue authorizing Treasury to provide technical assistance to
Puerto Rico. Furthermore, while we recommend a different approach to
expand the Child Tax Credit to more Puerto Rican families, one that is locally
administered, we welcome the Task Force recommendation for Congress to expand
the Child Tax Credit in Puerto Rico, to the extent it is well-designed and
supplements an EITC program for Puerto Rico.
We support the Task Force’s acknowledgment of the importance of data in
benchmarking economic growth and fiscal developments in Puerto Rico and the
recommendations to improve data quality and timeliness. Finally, we are
pleased with the recommendations on small business incentives, and the need to
include Puerto Rico in funding and training programs that address Puerto Rico’s
differential treatment in some Federal programs. It is time for Congress to move quickly to
put these recommendations into law.
Last summer, Republicans and
Democrats in Congress took decisive action in PROMESA to help improve Puerto
Rico’s fiscal position by establishing an independent oversight board and
providing it with comprehensive debt restructuring tools. As you know,
these tools were provided to Puerto Rico as an alternative to a federal bailout
and provide Puerto Rico’s government and the Oversight Board with comprehensive
authorities to address the debt crisis. Members of Congress now must work
together quickly to enact well-crafted legislation to encourage growth and
opportunity for our fellow citizens in Puerto Rico.
The Treasury Department and
the Department of Health and Human Services stand committed to working with you
to achieving those goals throughout the remainder of the transition to the next
Administration.
Sincerely,
Jacob J. Lew Sylvia
M. Burwell
Secretary Secretary
Department of the Treasury Department
of Health and Human Services
Identical letter sent to:
The Honorable Charles
E. Schumer
The Honorable Paul D.
Ryan
The Honorable Nancy
Pelosi