Marco Rubio thinks it’s a terrible idea for Puerto Rico to declare bankruptcy.
He doesn’t even want Congress to give the island that option now. He says the way for Puerto Rico to fix its $72 billion debt crisis is to revitalize its economy.
“The problem with Puerto Rico is its economy is not growing… It’s too expensive to do business there. The tax rate is too high,” Rubio argued Thursday night at the CNN-Telemundo GOP presidential debate.
He also blamed the current governor for failing to cut government spending.
“I think the leadership on the island has to show their willingness to get their house in order,” Rubio said.
Rubio’s stance could hurt him as he tries to woo Hispanic voters in his home state of Florida and beyond.
He’s against restoring ties with Cuba or lifting the embargo and now he’s against bankruptcy for Puerto Rico. Florida has large populations from both islands.
Puerto Rico’s Governor Alejandro Garcia Padilla fired back at Rubio Friday, accusing him of working for the “vultures that fund his campaign.” In other words, Rubio is taking the side of the hedge funds who bought Puerto Rican bonds and demand to be paid back in full.
Puerto Rico says it will run out of money by the summer. It has already defaulted twice.
The economy is shrinking, and its population has dwindled by 440,000 in the past decade, making it even more difficult to generate enough tax revenue to pay the debt.
Governor Garcia Padilla wants Congress to grant Puerto Rico Chapter 9 bankruptcy rights. All 50 states have this, but not Puerto Rico. It wouldn’t allow the island to declare bankruptcy, but it would enable cities and other municipal entities to do so.
It’s the law Detroit used when it filed for bankruptcy in 2013. Under Chapter 9, a municipality has to show that it is broke and can’t pay its debt. The bankruptcy court then allows it to come up with a plan, which could potentially include paying creditors less than the full amount.
President Obama supports Chapter 9 — or something similar — to make it easier for Puerto Rico to restructure its debts.
Hillary Clinton and Rubio mentor Jeb Bush also support giving the island bankruptcy rights.
At the debate Thursday, Rubio indicated he would consider granting Puerto Rico Chapter 9 as a “last resort.” But first the island would need to lower taxes, cut its budget and trim regulations.
House Speaker Paul Ryan, a Republican, has vowed that Congress will do something to aid Puerto Rico by the end of March.
