Instead of Promised Debt Relief, Trump Pushes More Loans on Devastated Puerto Rico

Despite loud and growing demands that Puerto Rico's debt be cancelled outright, President Donald Trump is being blasted for doing the exact opposite by calling on Congress to saddle the U.S. territory with even more loans amid a massive humanitarian crisis on the storm-ravaged island.

On Tuesday, the Trump administration requested that Congress include a $4.9 billion Treasury loan for Puerto Rico in a $36.5 billion disaster relief package, which the U.S. House of Representatives is set to vote on this week. The island would also receive a $150 million loan to cover matching funds for FEMA grants, bringing the loan total to $5.05 billion.

But as the progressive advocacy group Justice Democrats declared, "additional debt isn't relief."

Rep. Ro Khanna (D-Calif.)--who supports the Justice Democrats--has added his voice to the call for major debt relief.

"Puerto Rico's recovery from Hurricane Maria must be driven by direct aid and debt relief," Khanna tweeted, "not more loans and austerity."

Hurricane Maria struck the island three weeks ago, wiping out the island's electric grid and leaving 3.4 million American citizens with limited access to fuel, food, and drinking water. So far, the federal government's disaster relief efforts have been widely condemned as woefully inadequate.

But even before Hurricanes Maria and Irma devastated the territory, it was struggling with its $74 billion in debt. In May, Puerto Rico declared bankruptcy.

Last week, Puerto Rico Gov. Ricardo Rossello sent a letter to congressional leaders to request additional funds. In the wake of "the unprecedented island-wide devastation suffered in Puerto Rico that has led to independent damage assessments in the range of $95 billion," Rossello wrote. "Puerto Rico is on the brink of a massive liquidity crisis that will intensify in the immediate future."

The loan would "address the immediate liquidity issue that Puerto Rico is having," and allow the island's government to make fund payroll and pensions, Office of Management and Budget (OMB) spokesman John Czwartacki told Politico.

"The money cannot be used for debt service," an anonymous Trump administration official told Reuters.

The loan proposal comes just days after Trump suggested on Fox News that the island's debt would need to be wiped out, and Wall Street "can wave goodbye" to future loan payments. The administration quickly walked back the president's remark, with OMB director Mick Mulvaney saying he "would not take [Trump's comment] word for word," and that the government would not "pay off those debts" or "bail out those bond holders."

However, as The Intercept reported Saturday, political support for wiping out Puerto Rico's Wall Street debt is growing. Both Rep. Luis Gutierrez (D-Ill.) and Sen. Bernie Sanders (I-Vt.) have endorsed debt relief.

As Mark Weisbrot, co-director for the Center on Economic and Policy Research, argued earlier this month, "it is the U.S. federal government's current mandate of perpetual austerity and economic shrinkage that is really preventing any economic recovery for the island in the foreseeable future."

And while Puerto Rico was already on "a downward spiral of increasing poverty, unemployment, and deteriorating of public health and education long before the hurricanes hit," he concluded, there will be no adequate recovery for the island unless the debt burden is lifted.

"We cannot solve one crisis," Weisbrot said, "without addressing the other."