The Jubilee Blog

Puerto Rico‎ Proposes Debt Plan

 

Washington DC - Puerto Rico's Government Development Bank is meeting with investors in New York to share new details around a bond exchange first proposed by the indebted island last year. The proposal is not being made public but sources say it will include a "superbond" that investors could purchase in exchange for existing debt. The plan takes into account that the US Territory's budget gap is $2 billion larger than expected. Puerto Rico owes $72 billion in total debt.

    "Without bankruptcy protection, the only relief available to Puerto Rico now is through direct negotiations," stated Eric LeCompte, Executive Director of the religious development group Jubilee USA. "The debt needs to be sustainable and we can't support any solutions at the expense of pensions or social services."

 

Puerto Rico Cuts Services as Budget Gap Grows

Puerto Rico's government continues to cut public services as the economic crisis worsens. The Government Development Bank announced this week that the island's budget gap is $2 billion higher than expected. The prison system in Puerto Rico can no longer pay a vendor that feeds inmates. Some special education teachers are no longer being paid.

In recent years, 200 schools have closed. The island's only children's hospital, which doesn't own an MRI machine, cut its budget by 14% in last two years. Pension funds that the government used to pay the debt are expected ‎to run out of money by 2020.

"The situation is getting worse in Puerto Rico," stated Eric LeCompte, Executive Director of the religious development group Jubilee USA. LeCompte advises Puerto Rico's religious leaders and just returned from San Juan meetings with the island's Governor and US Treasury Secretary Jacob Lew to discuss solutions to the crisis. "Puerto Rico's debt crisis has real immediate human costs."

Donald Trump Criticizes Corporate "Inversions" During Presidential Debate

Republican Presidential candidate Donald Trump criticized the practice of corporations moving their headquarters overseas in name only to avoid US taxes during the presidential debate in South Carolina. Trump called these corporate "inversions" "one of the biggest problems" facing the United States. Democratic presidential candidates have also criticized the practice. According to the Congressional Joint Committee on Taxation, inversions could cost the US government nearly $20 billion over the next ten years.  

"It's clear the issue of inversions crosses party lines," noted Eric LeCompte, executive director of the bipartisan religious development group Jubilee USA. "This is an issue where Congress can work together and solve a problem that affects all of us."

After the pharmaceutical giant Pfizer inverted by merging with Ireland-based Allergan in November, Presidential candidates from both parties and Republican Senator Orrin Hatch called for legislation to stop inversions. In December, presidential candidate Hillary Clinton released a tax plan designed to stop the practice. 

Argentina Negotiates Debt Dispute with "Holdout" Hedge Funds

By Greg Williams

Argentina's new government begins negotiations in New York with groups that sued the country for more than $1 billion after the country defaulted on its debt in 2001. President Mauricio Macri took office in December and announced his intention to reach a settlement. The investor groups are known as "holdouts" because they refused to participate in Argentina's debt restructuring deals that 92 percent of investors accepted. US courts ruled Argentina could not pay the restructured debt holders unless it paid the holdout funds in full. Argentina refused and defaulted again in July 2014.  

Back-to-School Jubilee for Students

Millions of college students are returning to class next week, casting a spotlight once again on the growing student debt crisis. In 2015, the average 4-year college student graduated with $35,000 in debt, compared with just $9,000 in 1993. The total outstanding student debt in the US is over $1.3 trillion and that number nearly quadrupled from 2004-2015.

It is incredibly difficult to cancel student loans through bankruptcy, though a pending Supreme Court case could change that.

The student debt crisis reinforces existing patterns of inequality: it hits students of color harder than anyone. 

The same predatory lending practices that we see in poor economies have spread to the United States. Help us build an inclusive economy, starting here at home, by building Jubilee for Students.