Does Bush’s Goal Of Democracy Around The World Include Puerto Rico?… Acevedo’s U.S. Affairs Director Not Cooperating With Fortuño… Bush Thanks Fortuño But Rumsfeld Has Bad Memories of Puerto Rico… Republican Chairman Says Bush Plan Is Dead, Wants Tax Bill This Year

Janauary 21, 2005
Copyright © 2005 THE PUERTO RICO HERALD. All Rights Reserved.

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Does Bush’s Goal Of Democracy Around The World Include Puerto Rico?

President Bush made the promotion of liberty and democracy throughout the world the theme of his second term in his Inaugural Address.

A question about his goal is whether he will apply it to the unincorporated U.S. territory of the Commonwealth of Puerto Rico.

Much of what the president said in the speech can be applied to the Puerto Rico political status issue.

From the federal perspective, Puerto Ricans enjoy the rights of liberty and freedom: Federal policy has long held that Puerto Ricans have the right to determine that the territory will become a sovereign nation and to seek U.S. statehood. Puerto Ricans also enjoy the U.S.’ rights of individuals.

Additionally, Puerto Ricans have a democratic system and exercise self-government at the local government level.

They do not, however, have democracy and self-government at the national government level. A government in which they do not have equal voting representation makes and implements their national laws and regulations.

The main impediment to full democracy for Puerto Rico is the contention of one of Puerto Rico’s two largest political parties that the Commonwealth can become a nation to which the U.S. is bound, with the Commonwealth determining the application of U.S. laws and entering into international agreements as if it were a sovereign nation and the U.S. continuing to grant citizenship and all assistance Puerto Ricans now receive and granting new financial assistance as well.

This proposal was developed by the Commonwealth’s new governor, Anibal Acevedo Vila ("commonwealth" party/D). It was raised this in Washington by the vice president of the "commonwealth" party. Carolina, PR Mayor Jose Aponte called for limiting the authority of federal courts in the Commonwealth -- a key element of Acevedo’s status proposal.

In comments here Thursday, Acevedo reiterated his procedural plan for pursuing his future status proposal. The plan includes the option of a convention in which he hopes his status proposal will win support from nationalists who want true nationhood for Puerto Rico in addition to those who want his vision of "commonwealth’ nationhood.

Federal officials have previously said that his status proposal is impossible as well as undesired but the Bush Administration has yet to answer the question of whether it agrees.

It is expected to do so this year, however, through a report of the President’s Task Force on Puerto Rico’s Status, due by December 6th, although it may be issued earlier.

Acevedo hopes that he can convince federal officials to agree to the proposal by saying its adoption by the convention represents Puerto Rican "self-determination."

Puerto Rico’s official representative to the U.S. Government, Resident Commissioner Luis Fortuño (statehood/R), and majorities in both houses of Puerto Rico’s Legislative Assembly disagree with Acevedo’s plan and proposal. They want the federal government to clarify Puerto Rico’s options for democracy at the national government level.

Progress on the issue is waiting for the Bush Task Force’s report, initially due early in Bush’s first term.

Acevedo’s U.S. Affairs Director Not Cooperating With Fortuño

New Governor Acevedo is taking steps in Puerto Rico to suggest that he will cooperate with the statehooders who won most offices in the territory last November but his chief representative in the States is not following the same approach.

In his first days in office, Puerto Rico Federal Affairs Administration (PRFAA) Director Eduardo Bhatia failed to invite Resident Commissioner Fortuño to a major federal-Commonwealth meeting, took more than one verbal swipe at the resident commissioner, and made it clear that he expects to promote initiatives different than Fortuno’s.

Fortuño took the slights in stride, saying nothing more than that the Acevedo Administration would have to work with him to succeed in Washington. His point was well taken because fellow Republicans control the federal executive branch and the U.S. House of Representatives and have a majority in the Senate and because he has been embraced by House leaders and the Bush White House.

In response, Bhatia -- who works for "Democrat" Acevedo -- said, ". . . we will find our way into the Republican Party." He explained that this would be accomplished through lucrative, taxpayer-funded contracts with Republican lobbyists and through selected Republicans in the Congress.

Acevedo confirmed this Thursday, saying that the chief Washington lobbyist of his predecessor, Sila Calderon ("commonwealth"/no national party) would be retained and citing the lobbyist’s ties to President Bush. Former Republican National Committee Chairman Charles Black has reportedly been paid $100,000 a month to counter the influence of Fortuño and other Puerto Rico Republicans with their fellow party members in the federal government.

The meeting Bhatia excluded Fortuño from was a conference today (January 21st) between federal executive branch agency representatives and Puerto Rico mayors from both the "commonwealth" and statehood parties. The exclusion ignored the fact that the resident commissioner is the Commonwealth’s official representative to the federal government as well as ignored Fortuno’s close ties with the Bush Administration.

Earlier, Bhatia told a reporter that the Acevedo Administration was planning to unveil a proposal for federal economic assistance -- tax breaks -- in a few weeks. He allowed that Fortuño and Puerto Rico’s Legislative Assembly -- dominated by statehooders -- would be asked to support the request. But he also suggested that the proposal would be advanced in Washington whether they agreed or not.

Bhatia’s stance was similar to the one that he took on the question of Puerto Rico’s ultimate political status. He said that the governor’s voice was the most important one on the issue in Washington.

Acevedo Thursday corrected Bhatia’s statement that his administration would have a federal economic assistance proposal within a few weeks. He said that it might reveal a local economic plan next month but his federal economic strategies would await reports that congressional agencies are doing for the U.S. Senate Finance Committee on Puerto Rico’s economy, its treatment under federal economic programs, and options for addressing any needs.

On another occasion, Bhatia made contradictory critical comments about Fortuño. He said that the resident commissioner had an "ideological agenda" regarding economic assistance for the territory -- asserting that he did not -- but "we don’t know Fortuno’s position" on tax benefits for Puerto Rico.

Bhatia’s comments recalled the personal attacks he levied against opponents in his unsuccessful campaigns for mayor of San Juan.

Acevedo Thursday joined Bhatia in making an uncalled for attack on Fortuño, saying that the resident commissioner was "looking for excuses" on an issue. (See next story in this edition of UPDATE.)

Bhatia’s assertion that Fortuño has an "ideological agenda" on economic assistance ignored the fact that the major economic proposal of Acevedo as resident commissioner and Governor Calderon had an "ideological" basis: it would only have been possible under Puerto Rico’s current political status. The measure proposed tax exemption for profits that companies based in the States receive from manufacturing subsidiaries in the territory organized as foreign corporations. It would have created a substantial impediment to either nationhood or statehood by being "permanent."

Bhatia this week said that approval of the proposal -- which was repeatedly rejected by federal authorities during the Calderon Administration – would be difficult. But Acevedo said Thursday he was still considering pushing for it.

Contrary to Bhatia’s contention that Fortuño did not have a clear position on federal tax benefits for Puerto Rico, the resident commissioner has repeatedly spoken about four federal tax policy goals.

One would include income from Puerto Rico in a nine percent tax cut for income from domestic manufacturing. Puerto Rico income was excluded from the tax cut after Acevedo as resident commissioner complained about its initial inclusion by the U.S. Senate Finance Committee. A last minute letter on the issue months later failed to correct his mistake.

A second Fortuño goal is to extend U.S. Internal Revenue Code Section 30A, which provides manufacturers based in the States with a tax credit for their spending on wages, factories, and local taxes in the territory. The credit is limited to existing users and expires at the end of this year. As resident commissioner, Acevedo rejected congressional offers to have the credit extended but he said Thursday that it would be reconsidered.

Another Fortuño goal is to get Puerto Rico included in the Enterprise Zones program. The program provides tax benefits for investments in underdeveloped and distressed communities. Acevedo Thursday questioned the value of the incentives to Puerto Rico.

A fourth goal is to preserve Puerto Rican inclusion in a program that refunds Social Security and Medicare tax payments to employees with three or more children if the Bush Administration proposes exclusion, as it did last year. Acevedo only acted on the issue as resident commissioner to protect Puerto Rican inclusion in response to public pressure.

Bhatia also asserted this week that there was no interest in the federal government in acting on the issue of Puerto Rico’s future political status. Since he had only spent a couple of days in the nation’s capital when he made the assertion, he said that his conclusion was supported by recent history.

In fact, however, recent history supports the opposite conclusion. There were major efforts to enable Puerto Ricans to choose the territory’s future status involving the president and Congress from 1989 through 1991 and from 1996 through 1998. In each effort, legislation was passed by the U.S. House and was seriously considered in the U.S. Senate. The bills were, however, blocked in the Senate by conservative opposition generated by Bhatia’s "commonwealth" party, although the Senate did pass a resolution on the issue in 1998.

Further, a law supporting a Puerto Rican status choice was enacted in 2000. It was not implemented by the Bush Administration only because of opposition from then Governor Calderon and then Resident Commissioner Acevedo.

Their negative lobbying also caused the Bush White House to delay the work of the President's Task Force on Puerto Rico’s Status, which had also been created in 2000.

Bush Thanks Fortuño But Rumsfeld Has Bad Memories of Puerto Rico

While PRFAA Director Bhatia tried to get around Resident Commissioner Fortuño in dealing with the Bush Administration, President George W. Bush was personally thanking Fortuño for helping him win re-election. Bush thanked Fortuño for campaigning for him in Florida. Voters of Puerto Rican origin in Florida were widely considered a key battleground of the last presidential election.

Bush spoke with Fortuño at a White House meeting of the Republican National Committee. Fortuño is Puerto Rico’s Republican National Committeeman. Also present were Puerto Rico Republican committee chair Tiody de Jesus, widow of the late Governor Luis Ferre, and Republican National Committeewoman Zoraida Fonalledas.

Fortuño did not find similar fond memories of Puerto Rico at the Pentagon in a meeting with Secretary of Defense Donald Rumsfeld, Secretary of the Navy Gordon England, and the secretaries of the Army and the Air Force.

What he found, instead, were lingering ill-feelings about the way that the administration of former Governor Calderon acted on the issue of the closure of the Navy’s primary training range for the U.S. Atlantic Fleet, located on the island of Vieques, PR.

Calderon acted contrary to an agreement that the Government of the Commonwealth had entered into with the federal government regarding the range. The agreement was negotiated by Calderon’s predecessor and Acevedo’s opponent in the last election, Pedro Rossello (statehood/D), with then President Bill Clinton. Calderon acted contrary to the 2000 agreement in three respects.

  • A referendum was conducted on Vieques with the option of an immediate closure of the range in 2001 -- versus an immediate end to training with explosives and closure of the range on May 1, 2003.
  • A lawsuit was filed against the training.
  • Puerto Rico police did not make an adequate effort to protect the range against break-ins by protesters.

Calderon and then Resident Commissioner Acevedo also lobbied for a closure of the range in 2001. They failed and the range closed on the Clinton-Rossello Agreement date of May 1, 2003.

But their actions led to adverse consequences for Puerto Rico. One was that the federal government decided to keep three-quarters of the range in perpetuity rather than make it available for Puerto Rican use, as called for by the Clinton-Rossello agreement.

In addition to denying the land to Puerto Ricans, federal ownership means that the environmental clean-up standards for the land are lesser than those desired by Puerto Rican leaders, according to the Congressional Research Service.

Acevedo said Thursday that his administration could seek to have the federal law retaining the former range land in federal ownership repealed. He did not say what the chances of success are.

He also disputed the Congressional Research Service’s interpretation of federal law that the clean-up standards for the land are lesser because of the federal ownership.

Another adverse consequence of the Calderon Vieques policy was that the federal government decided to close the large Navy base on the island of Puerto Rico near Vieques -- and do so on an expedited basis -- depriving the Puerto Rican economy of hundreds of millions of dollars a year. Although the base’s primary activity in recent years was to support the training on Vieques, it was expected to continue to operate under the Clinton-Rossello Agreement as approved by federal law. U.S. Navy officials said that the Calderon Administration’s actions contrary to the agreement convinced them that it was not wise to rely on the Government of Puerto Rico’s representations that it wanted the base kept open.

Calderon-led efforts to force the Navy to discontinue use of the Vieques range in 2001 also contributed to the federal decision to move the U.S. Army’s Southern Command headquarters out of Puerto Rico. Rossello had also convinced Clinton to move the headquarters there in 1999. Military officials were unhappy with the anti-U.S. military environment created under Calderon. Moving the headquarters away from Puerto Rico was another $100 million a year blow to the territorial economy.

The Army headquarters had been located at the Army’s Fort Buchanan in San Juan, PR. Fortuño got the negative reaction to the Government of Puerto Rico from Rumsfeld and others at the Pentagon when he urged that Fort Buchanan not be closed. The base is considered to be a candidate for closure in a federal effort to decide this year on shuttering 20-25 percent of the U.S. military’s existing base capacity.

Acevedo said Thursday that the Calderon Administration’s handling of the Vieques range issue in which he had a major role would not justify the closing of Fort Buchanan, although he did not say that it would not contribute to a decision to close the base.

He also took a jab at Resident Commissioner Fortuño saying that Fortuño was "looking for excuses" on the issue.

Republican Chairman Says Bush Plan Is Dead, Wants Tax Bill This Year

The chairman of the U.S. House committee that handles tax and Social Security program matters this week said that President Bush’s plans for reforming Social Security and the tax code would have to change.

One change called for by House Ways and Means Committee Chairman Bill Thomas (R-CA) of special interest to Puerto Rican leaders would try to reform both Social Security and the tax code this year. The Bush Administration’s strategy for the reforms would have Social Security tackled this year and the tax system overhauled next year.

The timing of the reforms is of special interest to Puerto Rican leaders because they want new federal tax incentives for investment in the territory enacted before tax code Secs. 30A and 936 expire at the end of this year. Sec. 936 gives companies based in the States a tax credit equal to 40 percent of their tax liability attributable to operations in Puerto Rico.

Thomas’ rationale for considering the two reforms simultaneously is that the issues are interrelated. House Republican leaders are also said to consider tax reform a more compelling issue than Social Security reform, one of Bush’s pre-eminent second-term goals.

Recalling the saying that "the president proposes and the Congress disposes," Thomas said that partisan attacks are making Bush’s Social Security plan "a dead horse" that "cannot" win passage by the Congress. The plan would allow younger workers to divert a third of their Social Security tax payments into private investment accounts. Democrats oppose the idea as do some Republicans.

Thomas favors it but also thinks that changes in Social Security should be made in the context of broader policy reforms. He suggested doing away with payroll tax deductions to finance Social Security and creating a savings plan for long-term or chronic health treatments. Thomas also pointed out that the current payroll tax -- which is collected on the first $90,000 a year of income -- benefits the affluent more than the needy. Some Republicans favor increasing the $90,000 cap to address Social Security’s long-term financing problems.

The chairman of the Senate committee with jurisdiction over the issues Thursday also called for a broader approach to retirement issues than Bush’s plan is understood to propose. Senate Finance Committee Chairman Charles Grassley (R-IA) suggested greater tax incentives for private retirement accounts outside of the Social Security system.

The "Washington Update" appears weekly.

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