Obama Cronies Cash in on Puerto Rico Bailout

AP Photo

This week, Puerto Rico is begging the GOP Congress for help escaping its massive $73 billion debt obligation. House Speaker Paul Ryan is spearheading legislation that would allow the island territory to shed many of its debts in federal bankruptcy court. The island’s debt crisis has not stopped it from opening its wallet to former members of President Obama’s inner circle.

SKDKnickerbocker, the powerful communications firm headed by former Obama senior staffers Anita Dunn and Bill Burton, has a $3.4 million contract with Puerto Rico to handle public relations for the island’s current debt crisis. The contract includes up to $500,000 in paid advertising to promote a bailout of Puerto Rico.

Dunn was White House Director of Communications in the first Obama term. Burton was national spokesman for Obama’s first Presidential campaign.

Also handling parts of the Puerto Rico contract is Barbara Morgan, former spokesman for Rep. Anthony Weiner’s ill-fated mayoral campaign.

“The fact that the Puerto Rican debt crisis resulted from years of over-spending, political cronyism and outright corruption goes a long way to explain why Puerto Rico’s political leaders have poured many millions of dollars into a small group of politically connected legal, lobbying and consulting firms,” Ken Boehm, chairman of the National Legal and Policy Center told the New York Post.

The island territory hasn’t just tapped Obama alums for media advice. Jim Millstein was Chief Restructuring Officer at the Treasury Department during Obama’s first term. His finacial-restructuring firm, MillCo, stands to reap more than $50 million in fees from the territory if Congress allows it access to bankruptcy courts.

Puerto Rico has certainly been acting as if it expects a Congressional bailout. In December, the territory paid out around $120 million in Christmas bonuses to its workers, rather than make debt repayments. Earlier this month, the island passed a law authorizing the territory’s Governor to unilaterally suspend debt repayments, so it can continue to pay its government employees.

While the island is willing to stiff its bondholders, they will no doubt honor all the terms of their contracts with Obama’s former staffers.

Amassing a $73 billion debt on an island of just three million people is quite an accomplishment. Borrowing more than $24,000 per resident ought to provide a platinum level of public services for the citizens of Puerto Rico. It has certainly provided platinum-level contracts for politically-connected consultants.

It is no coincidence that the GOP Congress is trying to rush through its Puerto Rico bailout while most Americans are paying attention to the Presidential contest. It is a very good reason, though, while exit polling has found a majority of Republicans angry at Washington.


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