Sen. Menendez Speaks about Economic Crisis in Puerto Rico (VIDEO)

On Tuesday Bob Menendez, the senior U.S. senator from New Jersey and former chair of the Senate foreign relations committee, delivered an address from the floor of the Senate on the economic crisis facing Puerto Rico and the role of the United States in mitigating its effects:

I rise today deeply concerned that the growing economic crisis in Puerto Rico threatens to destabilize the island, and that we must step-in and help our fellow American citizens before the financial crisis becomes a calamity. And I again urge, as I recently did in a letter to Secretary Lew, along with seven members of the Congressional Hispanic Caucus – that the Department of Treasury move beyond simply providing technical assistance and take a full-throated leadership role to resolve this crisis immediately – as we’ve done in previous financial crises.

If we do not act, the result could be financial disorder that will, at the end of day, be much more expensive, much more chaotic, and will, in both the long- and short-term, cost both Puerto Rico and the United States. The fact is – a potential solution rests in the hands of the Administration – with Treasury and HHS. As we said in the letter to Secretary Lew, the world is watching Puerto Rico. And we must ensure that the United States does everything in its power to take strong, bold, substantive action that stabilizes the situation and protects the 3.5 million American citizens on the island and their families.

Technical assistance and advice from Treasury is all-well-and-good, but in my view it’s just not enough.

Treasury needs to take an active role and Congress needs to approve the pending debt restructuring legislation I introduced along with Senators Blumenthal, Schumer, and other Senate colleagues that would allow the government of Puerto Rico to authorize its public utilities to rework their debts under Chapter 9 of the U.S. Bankruptcy Code. This is in the best interest of both Puerto Rico and the mainland.

The fact of the matter is, Puerto Rico would actually be running a surplus – a surplus! – If it did not have to make debt payments. Allowing government-owned corporations to restructure their debts using a sound legal process would give the island breathing room to make necessary reform and would not cost U.S. taxpayers a dime. This could go a long way to promote the fairest and most efficient outcome.

This idea has been endorsed by the editorial boards of the Wall Street Journal, the Washington Post, Bloomberg View, the New York Times, the Los Angeles Times, the Boston Globe and others… I would like to submit them for the record. The bill is also supported by the non-partisan National Bankruptcy Conference and numerous bankruptcy lawyers and judges.

Additionally, it is clear that the island’s health care system is adding additional pressure to the overall financial situation accounting for 20 percent of the island’s economy – and responsible for third of its overall debt burden. 60 percent of Puerto Ricans living on the island are enrolled in Medicare and/or Medicaid. And because of the disparity in how these two health programs are funded relative to the 50 states, the financial crisis is only exacerbated.

To help alleviate some of this pressure on the health care system, I have introduced the Improving the Treatment of the U.S. Territories Under Federal Health Programs Act of 2015 with Senators Schumer, Nelson, Gillibrand and Blumenthal. This legislation includes several policies that will ensure Puerto Rico providers – both hospitals and physicians – are treated more equally to the states under the Medicare and Medicaid programs.

Just as importantly, this legislation ensures that beneficiaries on the island are treated equally, too. As citizens of the United States, it is imperative that Puerto Ricans be afforded the same access to care, coverage, and health benefits as everyone else. While I believe this legislation will go a long way toward addressing the island’s systemic health care issues, there are several steps the HHS can take immediately and without the need for Congressional action.

They can change payment calculations under Medicare Advantage and Medicare’s inpatient hospital rules to more accurately reflect the costs and demographics on the island. By making necessary adjustments to certain key payment formulas, HHS could make the practice of medicine a financially-viable option in Puerto Rico – and stem the tide of physicians leaving the island for the U.S. mainland and ensure our fellow Americans living on the island are able to receive the care they need and deserve.

I urge not only Treasury Secretary Lew, but HHS Secretary Burwell to do all they can to provide financial and health care-related relief to Puerto Rico to help curb the island’s financial crisis.

Governor Garcia Padilla’s Working Group for Fiscal and Economic Recovery of Puerto Rico also recently released a five-year plan earlier this month. While I don’t agree with everything included in the plan, it shows a determined and legitimate effort to confront the economic crisis facing the island.

Unfortunately, the current debt structure and legal restraints threaten the effectiveness of these proposed reforms. Without providing some flexibility and room to maneuver, all of the difficult choices in the world won’t be able to resolve this crisis.

Now, I want to make it absolutely clear: I am NOT – I am not — calling for a federal bailout of Puerto Rico. But there is still much we can and should do to restore solvency to an island home to 3.5 million Americans. Our bond with these 3.5 million Americans who live on the island has always been strong.

And our relationship with Puerto Rico is extensive. With more than 5 million Puerto Ricans residing in the United States – more than in Puerto Rico itself – we are inextricably tied.

I shouldn’t need to remind this body that from the infancy of our nation, the people of Puerto Rico have been there for us – and now we need to be there for them. Puerto Rico was ceded to the United States in 1898 after the Spanish American War. Less than two decades later, in 1917 Congress passed the Jones-Shafroth Act granting American citizenship to residents of island. But even long before they were granted U.S. citizenship, Puerto Ricans have had a long and proud history of fighting on the side of America.

As far back as 1777, Puerto Rican ports were used by U.S. ships, enabling them to run British blockades and keep commerce flowing which was so crucial to the war effort. It was Puerto Rican soldiers who took up arms in the U.S. Civil War, defending Washington D.C. from attack… and fought in the battle of Fredericksburg. In World War I, almost 20,000 Puerto Ricans were drafted into the U.S. armed forces.

And let’s not forget about the 65th Infantry Regiment known as the Borinqueneers – the segregated military unit composed almost entirely of soldiers from Puerto Rico that played a crucial and prominent role in World War I, World War II, and the Korean War – one of the most highly decorated regiments in military history.

I’m proud to say that I worked with Senator Blumenthal and others to make sure that the heroic Borinqueneers – the only active-duty segregated Latino military unit in the history of the United States and the last segregated unit to be deactivated – received well-deserved and long-overdue national recognition when we passed a bill last year awarding these courageous patriots with the Congressional Gold Medal – the highest expression of national appreciation for distinguished achievements and contributions to the U.S.

It is very easy to point our fingers at our brothers and sisters on the island and fault Puerto Rico for carrying more than $70 billion in debt but I challenge my Senate colleagues to work with me on finding solutions to step up to our responsibility at the federal level by seeking opportunities for Congress and the Administration to correct some of the inequities that have contributed to this crisis. I’m talking about the unequal Medicaid and Medicare funding that I referenced earlier; the exclusion of Puerto Rico from the Supplemental Security Income program that aids the most vulnerable Americans; the exclusion of Puerto Rico from the child tax credit and earned income tax credit, which encourages low-income individuals to seek employment, and, as previously mentioned, the exclusion of Puerto Rico from Chapter 9 of the U.S. Bankruptcy Code.

Now more than ever, we need to be asking in Washington: what steps can be taken to help manage this crisis? Unequal treatment at the federal level is, whether we want to own up to it or not, a contributing factor in the current economic crisis, and the lack of federal support has encouraged heavy borrowing by the Puerto Rican government, going back many, many Administrations.

We must do our part – both in Congress and the Administration – to address this crisis, and we must act now, with urgency.

I think the point is clear. As I said, we have a special, historic, unshakeable bond with Puerto Rico and now is the time to strengthen that bond.

The time has come to prevent the worsening fiscal crisis in Puerto Rico. The time has come to help Puerto Rico. And we can do so simply by giving them the wherewithal to help themselves through the U.S. bankruptcy code, as we should with any similar entity, to have an orderly restructuring and get their economic future back in shape.