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Biden Urges Puerto Rico Debt Relief While Seeking Florida Votes

Jennifer Epstein

(Bloomberg) -- Democratic presidential nominee Joe Biden is calling on the federal government to offer debt relief to Puerto Rico as part of a broader plan to support the bankrupt U.S. territory as he works to appeal to Puerto Rican voters in Florida.

Biden would encourage an end to the territory’s fiscal austerity, according to a plan released by his campaign on Tuesday as he traveled to central Florida, a must-win state for November. He would also accelerate and increase federal funding for recovery from hurricanes and Covid-19. He is also proposing a federal working group for Puerto Rico that would report directly to the president.

Biden’s plan comes as his campaign launches its Hispanic Heritage Month outreach and as some polls show him weaker among Latino voters than previous Democratic nominees. A Monmouth University poll of Florida released Tuesday showed him leading President Donald Trump 58% to 32% with Latinos, while exit polls showed Hillary Clinton winning 62% of their vote in the state in 2016.

Biden’s plan includes “a commitment to ensure that debt is not a barrier to economic growth and calls for a new path for tackling Puerto Rico’s unsustainable debts,” senior adviser Carmel Martin said in a preview of the plan.

Puerto Rico’s federally-appointed financial oversight board “needs a meaningful shift in approach,” the campaign said in its plan. While Biden is not calling for the repeal of the law that created the board, the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) of 2016, he is open to additional legislation if necessary, Martin said.

Puerto Rico, which joined the U.S. after the Spanish-American War in 1898, fell into bankruptcy in May 2017 after years of population decline and borrowing to cover budget deficits. Debt of the island government and its utilities reached nearly $74 billion by that time.

Biden favors reversing board-imposed fiscal austerity while working with Puerto Rico’s government. He would also support an audit of Puerto Rico’s debt, of which billions of dollars may have been issued in violation of the territory’s constitution. “An audit of Puerto Rico’s debt will enable Puerto Rico to plan for a fair and sustainable fiscal path forward,” the campaign said in its plan.

Biden will also work to ensure that low- and moderate-income people, as well as pensioners, are protected in any debt restructuring, the campaign said.

The plan also includes a push for greater transparency and accountability of federal funds to help Puerto Rico rebuild. Biden’s campaign said agencies would work closely with local governments to deploy the money and create a dashboard to keep the public aware of federal spending on the island.

He would also forgive $300 million in Federal Emergency Management Agency loans that were given to 76 Puerto Rican municipalities under the Community Disaster Loan program. Such forgiveness is often done for municipalities in the states but for Puerto Rico it requires the approval of the homeland security secretary in consultation with the treasury secretary.

Biden is also pledging to strengthen Puerto Rico’s power system and other infrastructure, and to improve its notoriously weak health care system, including by directing his health and human services secretary to address the low Medicare Advantage payment rates.

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