Wednesday, July 01, 2015

It's not the IMF, exactly, but the shadow of austerity is hovering over Puerto Rico and Illinois


Miami Herald caption: "People walk through the streets after Puerto Rican Governor Alejandro Garcia Padilla gave a speech regarding the government's $72 billion debt on June 29, 2015 in San Juan, Puerto Rico. The Governor said in his speech that the people will have to sacrifice and share in the responsibilities for pulling the island out of debt."

by Ken

In some sense the good citizens of Illinois and Puerto Rico have common cause with those of Greece as fellow prisoners of the New Global Economic Order, which features open-season-style predation for the masters of that order, the people with capital to move where it's happiest, and austerity for everybody else. The master predators aren't big fans of the notion of "sharing the wealth."

Oh, they dropped some of it in Puerto Rico back when times there were propitious for fattening their coffers. Then those times passed. The capital is gone, and Puerto Ricans are left sitting on a mound of debt, and their chances of seeing daylight look mighty slim. Here are a couple of chunks of a report from San Juan yesterday by the Miami Herald's Nancy San Martin:

Down and out in San Juan as Puerto Rico debt disaster looms

Luis Santini Rivera, Guillermo Corporal, and Jose Acevedo (l-to-r) were among the legions of Puerto Ricans watching Gov. Alejandro Garcia Padilla's televised speech Monday about the commonwealth's debt crisis.

By Nancy San Martin

SAN JUAN -- Nine years ago, Roland Santiago earned $120,000, paid a mortgage on a house and drove a luxury car. Now, he’s collecting unemployment while he looks for a job that will cover rent at an apartment and other living expenses.

“Even for people who are prepared and experienced, there is little stable work available that pays well,” said Santiago, 45, who sold medical devices for a company that has since closed. “Things have really deteriorated.”

Signs of a struggling economy are evident: At shuttered restaurants and bars in previously thriving Old San Juan. In businesses across the island where owners spend much of their day coaxing customers through the doors. In statistics that show the population has plunged over the past decade. And by the exasperation expressed by those living through the turmoil.

“This is a disastrous situation,” said Carey Delgado, 32, who said she had to quit her job as a preschool teacher in December to ensure that her children, ages 14 and 6, stay on course at public schools that provide little more than basic instruction.

“I lost my job, my house, my car,” said Delgado while awaiting services at an unemployment office in the Cupey neighborhood. “Now, I’m in public housing, on food stamps and collecting unemployment. Like me, there are many others in the same situation.”

Delgado’s woes are part of the harsh reality outlined by Gov. Alejandro García Padilla, who says the U.S. territory can’t pay back some $72 billion in public debt and has called on Puerto Ricans to share in making sacrifices.

On Tuesday, the governor’s team began meeting with legislators and other leaders to discuss how best to resolve the financial crisis. He has said he wants a debt repayment moratorium of several years as part of a plan to bolster the island's finances and revive its economy.

Puerto Rico has the highest municipal bond debt per capita of any U.S. state. . . .

Taking hard steps now to avoid a worse calamity was the message García Padilla tried to convey in his televised address on Monday night.

“We must act now,” he said. “If we don’t assume that responsibility today, we risk not having solutions within reach or, even worse, losing control over them, giving the power of decision to others.”

García Padilla’s address followed the release of a grim report by former International Monetary Fund economists that suggests that Puerto Rico is in serious need of structural reforms, fiscal adjustment and debt restructuring. . . .


It was hard not to sympathize with Illinois voters' disinclination to reelect Democratic Gov. Pat Quinn, but you had to wonder if the voters who favored his Republican opponent in every county except Cook (Chicago) grasped who and what it was being offered as the Republican alternative. As Howie wrote here in August: "Will Illinois Elect A Sleazy Billionaire Sociopath As Governor? Meet Bruce Rauner." There's no question that the state's fiscal situation is in chaos, but the last thing Illinois needs is a man presenting himself as the Voice of Fiscal Prudence who is in fact a billionaire nursing-home and long-term-care-facility racketeer who apparently developed a habit of hiding in offshore accounts much of the wealth he extracted from the state by exploiting some of its most vulnerable citizens.

Instead of being safely locked away in some maximum-security facility, Illinois's new governor is serving as the state's de facto representative from the IMF, claiming that the only way to reform its finances is by imposing austerity. An ongoing standoff between Governor Raumer and the still-Democratic-controlled state legislature has now led to the passing of the deadline passage of a new budget, entailing some sort of version of a state government shutdown -- a term, it should be noted, that drives the governor's economic team bonkers.

Illinois House Adjourns Without New Stage Budget Deal

Illinois House Speaker Mike Madigan (D) and Gov. Bruce Rauner (R) are on opposite sides of the tug-of-war over Illinois's budget crisis. (Watch the clip here.)

ABC7 Team Coverage
June 30, 2015, updated 10:28pm CT

Six hours before the midnight deadline, the Illinois House adjourned Tuesday afternoon without a budget deal to avoid any cuts in state services.

They have been at a stalemate for weeks over a spending plan for the 2016 fiscal year, which begins Wednesday.

The Illinois House is now considering a temporary budget fix. House Speaker Michael Madigan proposed a $2.2 billion plan would keep core state services going through July.

"Obviously, I'm disappointed and frustrated with the General Assembly. We could and should resolve these issues on a prompt basis. This has dragged on for a while," Gov. Rauner said.

The Governor's team turned their nose up at a Hail Mary thrown by Madigan: a plan that would fund core services for one month. If Rauner agrees, he may lose leverage on a property tax freeze, budget cuts and other reforms.

"Let's get to work on the number one problem facing Illinois: the budget deficit. Let's not function in the extreme, let's function in moderation and make sure everyone is reasonable during this," Madigan said. . . .
As that earlier ABC7 report referenced above, "Shutdown Looms Due to State Budget Stalemate," explained:
The standoff arose after Rauner rejected a Democratic budget that was sent to him with a $3 billion budget shortfall. Democrats argue state taxes need to be raised to cover revenue lost after a reduction in the state income tax rate in 2014. Monday, a coalition of community groups, unions, and social service providers called for a progressive tax system that will ensure the top 1 percent pay more.
At that point a state representative named Will Guzzardi was quoted saying: "There is a fair and equitable solution to the problem: let's tax the very wealthy, let's tax the big corporations and let's use that revenue to fund the services our communities so desperately need." The alternative plan would be to make sure that the big corporations are zealously protected and the very wealthy amply rewarded, and to heck with everyone else.

Labels: , , ,


Post a Comment

<< Home