FAIRFAX, VA. – In a letter to House Republicans sent today, Frontiers of Freedom urged conservatives to reject the recently introduced PROMESA bailout legislation for Puerto Rico. The measure, which was introduced by Rep. Sean Duffy, puts Puerto Rico’s bondholders on the hook for decades of government waste and jeopardizes the American taxpayer.
“Some Republicans have been too quick to defend this misguided bill, claiming that it is not a bailout because it does not send taxpayer funds directly to Puerto Rico,” said Frontiers of Freedom President George Landrith. “But that claim misses the point and is not in line with reality. This is a direct bailout at the expense of the Commonwealth’s bondholders, who are regular American taxpayers themselves, and it risks putting all taxpayers on the hook for a taking of their retirement money. This problem was created by decades of the Commonwealth’s terrible fiscal mismanagement and atrocious policies that killed off jobs and crippled the Commonwealth’s economy. A bailout won’t fix this problem. It goes far deeper than that. Real and comprehensive reforms are needed. A bailout is actually a step deeper into the abyss.”
The letter states, “Eighty percent of the bondholders holding Puerto Rican debt are individual savers who bought bonds directly, or through mutual and retirement funds. With PROMESA, Congress would retroactively change the rules in the middle of the game, barring these bondholders from their basic right to legal recourse if Puerto Rico defaults on their bonds, and enabling Puerto Rico to use their money to fund other obligations…. Inflicting this financial harm retroactively on Puerto Rico’s senior bondholders would likely constitute a taking of private property by the federal government for public use, forcing taxpayers to compensate those bondholders as required by the Fifth Amendment.”
Frontiers of Freedom, founded in 1995 by U.S. Senator Malcolm Wallop, is an educational foundation whose mission is to promote the principles of individual freedom, peace through strength, limited government, free enterprise, free markets, and traditional American values as found in the Constitution and the Declaration of Independence.