House Members Revolt on "Celebrating" Puerto Rico’s Constitution…NY Democrats, DC Reporters, Boycott Calderon’s News Conferences

July 19, 2002
Copyright © 2002 THE PUERTO RICO HERALD. All Rights Reserved.

. .. House Members Revolt on "Celebrating" Puerto Rico’s Local Constitution

The U.S. House of Representatives passed its Resources Committee leadership’s resolution "celebrating" the 50th anniversary of Puerto Rico’s territorial constitution, but 32 members voted against the brief -- and innocuous -- statement in a protest against Puerto Rico’s continuing territorial status.

The protest was a surprise since such resolutions are usually passed unanimously and since the resolution had been written by the top Republican on the committee, Chairman James Hansen (UT), and the top Democrat, Nick Joe Rahall (WV). They rewrote the measure after rejecting language proposed by Puerto Rico Resident Commissioner Anibal Acevedo-Vila ("commonwealth" party/D) that would have said that Puerto Rico has (non-existent) "commonwealth" (versus territorial) status and referred to the compact between the United States Government and Puerto Rico that authorized the local constitution.

The changes by Hansen and Rahall took out most of the language that Acevedo proposed. They eliminated all suggestions that could support "commonwealth" party claims about the islands’ status, limited other statements to brief facts about the local constitution, and added language recognizing the U.S. citizenship and patriotism of Puerto Ricans. They also wrote that Puerto Rican culture has "enriched" United States culture rather than suggested that Puerto Ricans are a people separate from their fellow U.S. citizens.

The changes eviscerated what Acevedo hoped to accomplish to such an extent that he did not accept them . . . until this column and Puerto Rico Senator Miriam Ramirez de Ferrer (statehood party/R) disclosed what was going on.

The changes created the expectation that the rewritten resolution was so non-controversial that it would be passed by unanimous voice vote. This was so pervasive that Acevedo did not return to Washington from Puerto Rico for the resolution's consideration and Hansen and Rahall did not go to the House Floor for what were expected to be perfunctory statements.

But Jose Serrano (D-NY), who was born in Puerto Rico, got up and objected. He opposed the resolution because, he said, it really celebrated the "colonial" status of Puerto Rico and the U.S. Congress should not celebrate colonialism. Serrano made an impassioned -- and, at points, personal -- statement explaining and decrying Puerto Rico’s territorial status. He also called for action to enable Puerto Rico to become a State of the United States or a nation, whether fully independent from or temporarily associated with the United States.

The Floor managers of the resolution, Wayne Gilchrest (R-MD) and U.S. Virgin Islands Delegate Donna Christensen (D), briefly responded to Serrano. Christensen recognized that Puerto Rico’s territorial status could not be its ultimate status. Gilchrest said that Avecedo had requested the resolution to give dignity to the people of Puerto Rico.

Another statement critical of the resolution and Puerto Rico’s territorial status was then made by one of the most senior Republicans, International Relations Committee Chairman Emeritus Ben Gilman (NY). He said:

    • Most Puerto Ricans and most citizens of the States of Puerto Rican heritage do not support continuation of Puerto Rico’s current status. The status only obtained .06% of the vote in the most recent status referendum.
    • Most of these citizens would not be pleased by the resolution. It was not favored by the statehood and independence parties which together consistently obtain a majority of the vote.
    • The constitution "enshrined Puerto Rico’s status as a U.S. territory."
    • The governing arrangement for Puerto Rico established with the constitution disappointed even "commonwealthers" at the time and is a "sad anachronism today." A longtime "commonwealther" governor called federal powers over Puerto Rico "undemocratic." Even current Governor Sila Caledron ("commonwealth" party/no national party) says the arrangement is out of date.
    • Calderon and Acevedo cannot speak for Puerto Ricans on status issues because a majority of the vote was for candidates who ran on platforms advocating statehood or nationhood.

Peter Deutsch (D-FL) made another statement against the resolution later. Deutsch said that he supports statehood for Puerto Rico, the options for the islands are statehood and independence, and he cannot celebrate the constitution since it symbolizes Puerto Rico’s current "colonial" status.

The debate caused the vote on the resolution to be postponed for a day. Acevedo was so embarrassed and upset that he publicly attacked Serrano and, after returning to Washington, confronted Patrick Kennedy (D-RI) who joined Serrano in seeking votes against the resolution. During the argument, Acevedo called Kennedy a "foreigner." A Kennedy spokesman told reporters that the congressman was annoyed that, instead of presenting arguments, {Acevedo} responded with epithets." Acevedo later apologized.

While 389 House Members voted for the resolution, those voting against included both Democrats and Republicans and liberals and conservatives, and several key Members. 26 of the negative votes were cast by Democrats – particularly embarrassing for Acevedo.

After the vote, Calderon said precisely what Serrano was concerned she would – and what Hansen and Rahall hoped to avoid her saying by rewriting the resolution: she said it represents support for "commonwealth."

House Chairman Proposes 956 Amendment . . . but not Calderon’s

The chairman of the U.S. House of Representatives Ways and Means Committee introduced an amendment to Section 956 of the federal tax code . . . but it was not the amendment that Puerto Rico Governor Sila Calderon ("commonwealth" party/no national party) has been lobbying them for. Joining Chairman Bill Thomas (R-CA) in introducing the bill were the chairs of three of the Committee’s subcommittees, Nancy Johnson (R-CT), Amo Houghton (R-NY), and Jim McCrery (R-LA).

The legislation demonstrated just how unlikely it is that Congress will pass Calderon’s proposal. The proposal would permanently exempt from taxation 90% of the profits that companies based in the States obtain from subsidiary "controlled foreign corporations" (CFCs) in Puerto Rico. Not only did the Committee leaders’ legislation amend the same section of the tax code that Calderon wants amended, other provisions of the bill would change other tax rules for CFCs. Additionally, the bill is focused on the activities outside the States of companies based in the States and it includes a large number of provisions – hypothetically a perfect "vehicle" for Calderon’s 956 amendment.

The legislation was especially an embarrassment for Calderon since she has been saying that her proposal was just waiting for an appropriate vehicle in Congress. Surprised by the news, Calderon – in spite of the content of the bill – insisted "it is not the appropriate vehicle for her proposal.’ Why? "Because I have not been alerted," she said.

Calderon also again revised her timetable for her proposal’s approval. When she failed to meet her goal of getting it enacted last year, she set her sights on this year, eventually setting this summer as the deadline. When she learned that Thomas had ignored the proposal, Calderon said that she would continue to pursue it next year.

The bill includes some provisions that are intended to make companies based in the States more competitive outside the States, and others that are designed to prevent companies based in the States from setting up operations outside of the States. The restrictions are aimed at companies establishing corporate shells in tax havens in the Caribbean and elsewhere to avoid taxes on their operations in the States.

Although Calderon’s proposal is intended to require substantial economic activity in Puerto Rico, the legislation also illustrates that Congress is focused on preventing companies that are based in the States from moving elsewhere. This political climate is not conducive for Calderon’s proposal since it would provide a substantial incentive for companies to move from States to Puerto Rico.

It was no surprise that Thomas ignored Calderon’s proposal; he had already told a reporter that he was inclined against it. He made that statement after meeting with Calderon . . .and after Resident Commissioner Anibal Acevedo-Vila ("commonwealth party/D) and Calderon’s Secretary of Economic Development and Commerce, Ramon Cantero Frau, told reporters that Calderon had made progress in convincing Thomas to support the proposal.

Thomas’ opposition was probably a fatal blow to the proposal. As chairman of the Ways and Means Committee, he leads the House on tax issues and can probably single-handedly block a measure from enactment.

His predecessor blocked a proposal developed by the Clinton Administration with then Governor Pedro Rossello (statehood party/D) to extend the tax credits that companies based in the States with operations in Puerto Rico can obtain for wages, capital investments, and local taxes in Puerto Rico. The credits, under Sec. 30A of the tax code, are only available to companies currently receiving them and expire at the end of 2005. The proposal would have opened the credits to new companies and extended the credits until 2009. This proposal was supported by all of the Democrats in Congress and a number of Republicans on the tax-writing committees of both houses of Congress, but it was still blocked by the sole opposition of the Ways and Means Committee chairman.

A Ways and Means subcommittee chairman who did not co-sponsor Thomas’ bill is Phillip Crane (R-IL). Crane is the primary congressional sponsor of Calderon’s proposal. In an unusual move, Thomas defeated Crane, who had more seniority in Congress, for the Ways and Means Committee chairmanship.

While Crane is not close to Thomas, the other main sponsor of Calderon’s proposal, Ways and Means Committee Ranking Minority Member Charles Rangel

(D-NY) and Thomas constantly fight. When the New York Times asked Rangel about Thomas, the New York Democrat said, "I don’t have any training in psychiatric evaluation."

Thomas is known for deeply immersing himself in the details of policy, for his impatience, and for his combativeness. He is not a politician who easily changes his positions.

White House Doesn’t Expect -- or Support – Calderon’s 956 Amendment

White House officials told Puerto Rico Republican committee leaders that they do not expect Governor Calderon’s Section 956 amendment to pass Congress. They also suggested no support for the proposal, which Treasury Department officials have told congressional tax writers that they do not favor.

Attending the meeting with the Puerto Rico Republicans were: Ruben Barrales, President Bush’s Director of Intergovernmental Affairs and Puerto Rico Status Task Force Co-Chair; Bush’s top adviser, Karl Rove; and other staff. The Puerto Rico Republican leaders were former Governor Luis A. Ferre, Republican National Committee Members Luis Fortuno and Zoraida Fonallades, and Puerto Rico Committee Secretary Carlos Chardon.

The presence of Rove was especially significant. He is close to Calderon’s lead lobbyist in Washington, Republican Party strategist Charlie Black, and Calderon hopes Black and her drive to register voters in Florida, where the President’s brother is up for re-election, will prompt Rove to overrule other Bush Administration officials on the 956 amendment.

The White House aides, however, told the Puerto Rico Republican leaders that they would consider an extension of Section 30A as an alternative to Calderon’s Sec. 956 proposal.

Their position conflicted with Calderon’s. Although she was elected pledging to obtain an extension, but she dropped the idea soon after taking office. The move was curious since the one impediment to its enactment into law – the former House Ways and Means Committee Chairman – had left office. But Calderon refused to consider an extension of the 30A credits even when Senate Finance Committee Majority staff told her representatives that the 30A extension might well be able to pass Congress and individual companies in Puerto Rico told officials of her administration that they wanted to seek an extension of Sec. 30A.

Calderon Administration officials said at the time that the 30A extension was not what Puerto Rico’s economy needed since it would primarily benefit labor intensive industries and they wanted to seek more ‘high-tech’ manufacturers. But after the White House also indicated an openness to the proposal, Calderon said it was "not viable" because of recent tax law changes. She did not explain what she meant by that.

New York Democrats Boycott Calderon NY News Conference;

Washington Reporters Boycott Calderon DC News Conference

New York Democratic leaders who are of Puerto Rican origin boycotted Governor Calderon's NY news conference July 15 to further kick-off her multi-million dollar drive to register residents of the States who are of Puerto Rican origin to vote in the States. They objected to the presence of New York Governor George Pataki (R-NY) who is up for re-election this year, and were concerned that the drive is at least partially intended to help Pataki win re-election. At a separate press conference in Washington July 17, Calderon discussed the voter registration drive and her multi-million dollar plan to celebrate the 50th anniversary of the Constitution of the Commonwealth of Puerto Rico. The event was held at the National Press Club, a central and prestigious locale. But while well-advertised, only six reporters showed up, an extremely poor showing at a news conference held by a governor at that location during the lunch time hour.

Democratic leaders such as Representative Serrano, Representative Nydia Velazquez, and Bronx Democratic Chairman, Jose Rivera, a state assemblyman, were joined in the boycott by Representative Rangel and others. They insisted on not attending in spite of pleaful calls from Calderon and Resident Commissioner Acevedo.

In addition to Pataki, other prominent Republicans attended, including New York City Mayor Michael Bloomberg. A few Democratic officeholders did as well.

After the debacle, Calderon scheduled another kick-off for the drive with New jersey Governor James McGreevey, a Democrat

New White House Staffer Assists with Puerto Rico Issues

The White House has a new staffer working on Puerto Rico issues. Toby Burke, formerly executive director of the Republican mayors and local elected officials organization, has joined the Intergovernmental Affairs office, headed by Ruben Barrales, President Bush’s point man on Puerto Rico issues. Burke is assisting Barrales and Deputy Debbie Spagnoli on the issues.

The "Washington Update" appears bi-weekly.

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