A northern Virginia group has spent an unknown sum of money airing television ads in southeast and northern Wisconsin blasting Republican members of Congress for considering legislation to fix Puerto Rico’s debt crisis. Speaker of the House Paul Ryan (R), and Congressman Sean Duffy are the targets of the Center For Individual Freedom, or CFIF, a group that has noisily opposed any Congressional action on Puerto Rico.
Duffy is a lead author of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) legislation, which seeks to give Puerto Rico tools to manage its debt crisis. The U.S. domain is weighed down by $72 billion in debt, has already begun defaulting on debt payments. Clean water is becoming harder to find on the island as trash and pollution pile up and the local government has no way of paying for proper sanitation.
Unlike other public entities, like the City of Detroit, Puerto Rico cannot file for bankruptcy or similar debt restructuring. This inability to file for bankruptcy is why Congress is weighing in on the matter. Speaker Paul Ryan has said something must be done about the Puerto Rico, but the solution must not involve a taxpayer bailout.
The Center For Individual Freedom has spent at least $200,000 on a television ad that features a retiree who claims her life savings will be destroyed if Congress acts to let Puerto Rico restructure its debt. Just how much of that money has been spent on ads that aired in Wisconsin is not known.
Calling PROMESA a “bailout on the backs of savers” the CFIF ad claims that retirees and individual investors will be hardest hit by any attempt to restructure Puerto Rican debt. “Congress wants to bail out Puerto Rico with Teresa’s retirement savings,” a narrator claims. “My life savings will be crushed,” Teresa – her last name is not known – says as she shakes her head.
While the ad tugs at heartstrings, the fact is any investment is a risk that could go wrong for investors. Nothing in PROMESA targets small bond holders or investors who hold Puerto Rican debt and those same investors would have been exposed to the dangers that come with bankruptcy if they had invested in state or municipal bonds. Puerto Rico is in an odd situation because Congress hasn’t yet applied the same bankruptcy laws to the territory that already apply to states, municipalities and private entities.
The ad earned a “Two Pinochios” rating from The Washington Post, which also called its claims “misleading.”
According to Congressional lobbying disclosure records, CFIF has spent $12,000 in 2016 lobbying Congress on various matters, including PROMESA. The two lobbyists for the group are Timothy Lee and Jeffery Mazzella. Mazzella is the president of CFIF and, according to IRS records, in 2013 had an annual salary from the group of $193,081. Lee is a vice president at the organization.
Anthony “Tony” Fabrizio, who, according to the Los Angeles Times, was a tobacco lobbyist at the time, founded CFIF in 1998. Although he is not currently listed on the CFIF website, Fabrizio was serving as the organization’s chairman as late as 2013. He is also a partner at the public affairs firm Fabrizio, Lee and Associates, where his clients include the US Chamber of Commerce. Prior to starting his firm he worked for Sen. Bob Dole’s failed presidential campaign in 1996.
According to Bloomberg News, CFIF has previously benefited from “millions of dollars” in funds from Crossroads GPS, a non-profit group established and managed by Karl Rove, former political guru for President George W. Bush.
The conservative Heritage Foundation think-tank has argued that while PROMESA needs improvement from a conservative policy perspective, it does not amount to a taxpayer bailout or government-enforced bailout of the Puerto Rico. “The discussion draft does not contemplate any direct bailouts and thus meets this key conservative priority,” a briefing paper from Heritage asserted when the first draft of the legislation emerged.
The think-tank is not entirely happy with all provisions of the bill, but the underlying principle of giving the Puerto Rican government tools to work with to solve its debt crisis is not something Heritage opposes. A key improvement to the legislation, in Heritage’s view, would be to require regular and more accurate reporting of unfunded government employee pension liabilities.