Subject: Re: BACKGROUND: Puerto Rico
From: Bonnie Rubin <[email-masked]>
To: "Ann O'Leary" <[email-masked]>
Cc: Huma Abedin <[email-masked]>, Jake Sullivan <[email-masked]>, Amanda Renteria <[email-masked]>, John Podesta <[email-masked]>, Robby Mook <[email-masked]>, Jennifer Palmieri <[email-masked]>, Kristina Schake <[email-masked]>, Brian Fallon <[email-masked]>
Date: Fri, 3 Jul 2015 22:25:15 -0400

Hi All,

I'm working on a time and will let you know as soon as possible. I'll also
send a call in number.

Thank you,
Bonnie

On Jul 3, 2015, at 9:51 PM, Ann O'Leary <[email-masked]> wrote:

Thanks. Let's do it tomorrow so we can rework it if needed and get it out
on Monday. Amanda and I both need to be on call.

Ann O’Leary
Sent from my iPhone
(510) 717-5518 (cell)

On Jul 3, 2015, at 6:24 PM, Huma Abedin <[email-masked]> wrote:

Minus HRC
She has lots of questions about this statement.
Doesn't want to put it out till we have a conversation.
Bonnie will reach out to schedule a call. Ann, Do you want to do Monday or
tomorrow if it can't wait so long.

Sent from my iPhone

On Jul 2, 2015, at 4:40 PM, Ann O'Leary <[email-masked]> wrote:

Madame Secretary -

Amanda and I have been working on the Puerto Rico debt and health care
crisis in order to advise you politically and substantively on making a
public statement on the matter.  Per your good advice, I've spoken several
times to Dick Ravitch (who is very involved in the situation both advising
the Governor of Puerto Rico, as well as in regular conversation with
Secretary Lew about it) and Amanda has been in regular touch with Jeff
Farrow, who you may remember was President Clinton's special advisor on
Puerto Rico and still does a tremendous amount of work on PR issues.

With their expert counsel, we have drafted a statement for your review,
which I am attaching and pasting below (and also sending under separate
clean email for your quick review).  A couple of important points to note
on messages we want to convey:

(1) All agree that we need to make clear the Puerto Ricans are American
Citizens and we must express empathy and bring the power of the federal
government to the table to provide them with tools and supports to get out
of this crisis and on a path to prosperity;

(2) On Chapter 9 bankruptcy and debt restructuring. Dick Ravitch wants to
make sure that you understand that the current bill put forward by the PR
Congressional Rep. Pedro Pierluisi would only allow PR to grant Chapter 9
bankruptcy reorganization to their publicly owned companies (e.g. water,
electricity and highway authorities) and municipalities (in the same way
States can provide this authority to cities - e.g. Detroit and Stockton),
but would not give the authority to PR itself.  Dick feels strongly that PR
is ultimately going to need this authority themselves, but that politically
it will be hard to get for two reasons: (1) giving it to PR is
acknowledgement that PR is not a state and is distinct from states, which
are prohibited from declaring bankruptcy under the Constitution; (2) the
hedge funds have invested in PR itself, whereas mutual funds have
investment in the utilities - hedge funds are hoping that the debt
restructuring happens in the government entities to free up dollars to make
them entirely whole.  Despite these constraints, Dick's advice is to make
clear that you recognize that PR needs debt restructuring authority under
Chapter 9 and call for support of the bill as a first step.

(3) Health - In 2008, you made very clear that you support full parity with
Puerto Rico on Medicare and Medicaid.  Since this time, the health crisis
has heightened -- 60 percent of Puerto Ricans rely on Medicaid or Medicare
to get their health insurance, and we have continued to underfund them so
that doctors are fleeing the island and residents are fleeing to relocate
to Florida in order to seek health care.  As a bargain in the ACA
negotiations, PR was given a $6.5 billion Medicaid grant that was supposed
to last them until 2019, but they are expected to use this money up by the
end of 2017.  And they now have 75 percent of their Medicare recipients on
Medicare Advantage, but the government announced an 11 percent cut in
premium subsidies to MA which will impact their access. We believe that you
should recommit to parity, but recognize that we need to start on a
"pathway to parity."  Chris Jennings and I did a back of the envelope
estimate (CBO has scored parity) and guess that it could cost $40-50
billion over 10 years to get there so we want to be careful about
overcommitting.

(4) On the politics, Jeff Farrow and others strongly have urged us to make
your position clear on allowing Puerto Ricans to express their will on the
question of statehood (same thing you said in 2008).  We have included this
sentiment in the final paragraph and I'm also attaching some background
pulled together by our policy team on the PR statehood vote in 2012 and the
DOJ money allocated for a vote in 2014.  This memo also includes
information on what the other candidates have said on the debt crisis and
statehood question.

Please let Amanda or me know if you have questions and let us all know
whether you APPROVE of this statement below and attached.

Thanks,
Ann

*DRAFT HRC Statement on Puerto Rico Debt Crisis*

*July 2, 2015*

The people of Puerto Rico, our fellow American Citizens, are hurting right
now under a weak economy that has been struggling for years. Puerto Ricans
are proud American citizens who work hard and contribute to our Nation
every day and they deserve a chance to get ahead.  Congress and the Obama
Administration need to partner with Puerto Rico by providing real support
and tools so that Puerto Rico can do the hard work it will take to get on a
path toward stability and prosperity.

The challenge is multi-faceted, and will ultimately require broad authority
to allow Puerto Rico to restructure its debt and pay back its debtors in an
orderly fashion.  As a first step, Congress should provide Puerto Rico the
same authority that states already have to enable severely distressed
government entities to restructure their debts under Chapter 9 of the
Bankruptcy Code.  This authority would allow Puerto Rico to provide a
debt-restructuring tool to its municipalities and public agencies,
including the three largest government corporations – the electricity,
water and sewer, and highway authorities – which hold over a quarter of all
the government debt.

We're not talking about a bailout, we're talking about a fair shot at
success.

We also have to step back and look hard at how Puerto Rico’s economy
arrived at this dire situation.  The deficit is a consequence of an economy
that has lagged that of the States for decades and shrunk for eight of the
last nine years.  Puerto Rico needs a longer-term plan to address a
declining population, eroding employment base, high utility rates and the
impact of unequal federal investments.  It will take tough decisions and
real economic reforms.

But we should also recognize that the inconsistent — and incoherent —
treatment of Puerto Rico in federal laws and programs has substantially
contributed to the economic decline.  One troubling example of this
treatment is the lack of equity in federal funding for Puerto Rico under
Medicaid and Medicare.  This problem has been demonstrated in recent months
by a scheduled cut in Medicare Advantage premium reimbursement rates.  In
2008, I called for an end to the disparate treatment of Puerto Rico in
federal health programs.  Today, I renew that call, and commit to helping
Puerto Ricans get on a path towards equitable treatment under Medicaid and
Medicare.

Underlying all of this is the fundamental question of Puerto Rico’s
ultimate future. That question needs to be resolved in accordance with the
expressed will of our fellow citizens, the people of Puerto Rico. And let’s
not forget that no matter the outcome, Puerto Ricans will remain proud
Americans who contribute to our Nation every day.

-- 
Ann O'Leary
Senior Policy Advisor
Hillary for America
Cell: 510-717-5518

<Puerto Rico Status and Candidate Statements.docx>

<Puerto Rico Statement - DRAFT for HRC Review.docx>