In late September, just over a week after winds of 155 mph flattened homes and struck down power lines and more than 30 inches of rain inundated parts of Puerto Rico, a leader of the recovery efforts with the Army Corps of Engineers offered his blunt assessment of the damage.
"This is a massive undertaking, one in which I don't think we've undertaken before in terms of this magnitude," Col. James DeLapp told CNN. The closest thing he could think of by way of comparison: "When the Army Corps led the effort to restore ... electricity in the early stages of the Iraq war in 2003 and 2004."
It took years and tens of billions of dollars to rebuild Iraq, where DeLapp was a commander. And now it's going to take that kind of effort to remake Puerto Rico after Hurricane Maria. Congress has approved $6 billion to help the island.
"Without unprecedented levels of help from the United States government, the recovery we were planning for will fail," Natalie A. Jaresko, executive director of a board created by Congress that oversees the commonwealth's finances, told the House Natural Resources Committee last month. A week later, the Puerto Rican government asked for $94.4 billion in additional aid _ $33 billion more than Texas requested for its hurricane recovery.
When the White House released its latest funding request Nov. 17 _ $44 billion in all _ only a small amount in direct aid was designated for Puerto Rico. The administration said in its letter to Congress that it is awaiting estimates on damages from Puerto Rico and the U.S. Virgin Islands before providing more money. But it also said that for the first time that Congress should waive restrictions on reconstruction so Puerto Rico can be built to a better standard than before the storm.
As the funding dispute continues, Puerto Rico is struggling to restore power and drinking water, and buckles under a $74 billion debt that has left it unable to pay for nearly anything. Meanwhile, there are many in Washington who are looking at the near-total devastation on the island as a once-in-a-lifetime opportunity to transform the U.S. territory in a fundamental way. They are pushing not just for an improved electrical grid or sturdier buildings, but also for a business-friendly, free-market tax haven that would be a boon for the U.S.
In late October, House Speaker Paul Ryan, R-Wis., went to the American Enterprise Institute, the conservative-leaning Washington think tank. There, in a private talk, he turned to Puerto Rico, and he explained that he wanted to see the island transformed into the "Singapore of the Caribbean," according to Andrew G. Biggs, a resident scholar at AEI who was told of the comments and later disclosed them at a public forum.
That term was coined by John Paulson, a hedge fund manager who bought hotels and property in Puerto Rico. In 2014, he predicted that a law allowing U.S. investors to pay little or no tax if they moved to the island would spur an influx of money. That prediction hasn't panned out.
Biggs wholeheartedly endorses the idea of reinventing the island, and is no mere scholar at AEI. He is also a member of the Financial Oversight and Management Board for Puerto Rico _ the body created by Congress in 2016 to oversee the island's disastrous finances. He said he's spoken with congressional staff members, who ask: "How come we don't have Singapore of the Caribbean?" His response: "We're working on it," with the warning that such changes won't happen overnight.
Mostly that's because Biggs and others believe that huge amounts of money _ well more than what might normally be required after a natural disaster _ need to go to Puerto Rico in what amounts to a latter-day Marshall Plan (or more like a recent-day International Monetary Fund plan), but with one big catch: The money needs to be contingent on significant changes to the island's labor, welfare and tax laws, all of which conservatives see as liberalism run amok.
"I hope this will be like the alcoholic who hits rock-bottom, and says, 'OK, we're bankrupt, now we really gotta change the way we're doing things,'" Biggs said. But he thinks a coercive approach is necessary. "It has to be conditional, where you have to give them incentive."
Rebuild, yes _ but with some very big strings attached.
Conservatives have long considered exempting the island from the federal minimum wage, currently $7.25 an hour, which they say is too high relative to the standard of living there. Over Democratic objections, Republicans in 2016 lowered the island's minimum wage to $4.25 an hour for some younger workers, though it did not take effect because the island's governor declined to implement it.
It could also mean relaxing overtime pay requirements for workers. For example, now an hourly worker must be paid overtime after eight hours worked in a calendar day. In addition, all workers receive Christmas bonuses equal to 2 percent of annual pay. While the island is exempt from federal income taxes, anyone earning over $60,000 a year is taxed at a 33 percent rate.
Some in Congress are warming up to making major changes to such laws. Asked if he'd favor conditions for future funding, Sen. Ron Johnson, R-Wis., who heads the Homeland Security and Governmental Affairs Committee, said: "Yes, it's been a troubled territory. It's been bankrupt. The utility's been bankrupt." Asked if the island needs some sort of Marshall Plan, he said, "They need serious help, but they need serious reform."
Even the territory's nonvoting member of Congress from Puerto Rico, Jenniffer Gonzalez-Colon, a Republican, seems open to that. Questioned three times about whether she objected to strings-attached funding, she declined to rule out the idea, and finally said she believed reform efforts were needed.
"I think all states need to be accountable for the taxpayers' money," she said. "Puerto Rico will have some requirements that the rest of the states don't have."
That would be a bitter pill to swallow for most officials on the island and many Democrats in Washington. Recovery funding has never been tied to broad changes to local or state laws, and many blame Puerto Rico's current predicament on Washington's past actions.
In an interview, Ricardo Rossello, the island's Democratic governor, said he would oppose any effort to make future funding predicated on changing the commonwealth's law. "We don't think it should be contingent on certain things," he said. "We are committed to doing those reforms anyway." He referred to a measure he signed in January that made significant changes to the territory's labor laws.
Some observers agree, noting that the territory's oversight board, which was created by a 2016 law _ the Puerto Rico Oversight, Management and Economic Stability Act _ has already prompted some changes to laws. They are skeptical that big changes are needed.
Antonio Weiss, a senior official at the Treasury Department under President Barack Obama and point person on matters dealing with Puerto Rico, said: "That strikes me as a wholly inappropriate means to try to extract reforms that a locality in the past has rejected. You don't throw a lifeline to someone in the water and say, 'You can have this lifeline if only you do the following three things.'"
Weiss recommends that future recovery and reconstruction funds be conditioned on "transparency and accountability and proper stewardship."
Rossello and other island officials sought to reassure skeptical members of Congress that Puerto Rico was up to the task of overseeing the rebuilding by referring to renewed efforts at transparency. Still, Rep. Rob Bishop, R-Utah, Republican chairman of the House Natural Resources Committee, said Puerto Rico had a "credibility gap" while casting doubt on just how much the island could be trusted with future funding.
The territorial government's response to the disaster has been uneven at best, inept at worst.
While President Donald Trump was criticized for his administration's early post-storm response, questionable actions on the island after the hurricane also hampered relief efforts, congressional testimony recently showed.
The ongoing investigation of the contract with inexperienced Whitefish Energy is Exhibit A. In October, the Puerto Rico Electric Power Authority (PREPA) _ the island's bankrupt utility _ awarded a $300 million contract to the two-man Montana company, of which no one had heard of. Under criticism, the governor canceled the deal later that month.
Documents released by the House Natural Resources Committee show that Whitefish charged the government of about $300 an hour _ the national average is about $39. The contract also assumed a 16-hour, seven-day workweek, allowing for huge amounts of overtime.
"Neither PREPA nor Whitefish seemed to know how to draft a FEMA compliant contract," the committee concluded in a memo.
PREPA Executive Director Ricardo Ramos said the reason Puerto Rico picked Whitefish was simple. "My priority was securing the immediate assistance that we needed to begin restoring power as quickly as possible to our most critical customers," he told the Senate Energy and Natural Resources Committee Nov. 14. Whitefish was one of only two entities willing to come to the island, he said. Still, he allowed that some steps in the contracting process "could have been done better."
Ramos resigned Nov. 17.
Committee chairman Lisa Murkowski, R-Alaska, seemed exasperated that Puerto Rico did not seek immediate emergency assistance from the mainland.
"I heard many times as we were traveling there that in fact the real recovery ... didn't begin until a month later, effectively Oct. 30, when the mutual aid switch was flipped and the effort really began," she told Ramos.
In October, the seven-member oversight board, which is controlled by Republicans, executed what amounted to a complete takeover of the power company, appointing a former Air Force colonel, Noel Zamot, as "chief transformation officer," which would have effectively made him CEO. Many in Congress approved of Zamot's appointment, including Gonzalez-Colon and Rep. Jose E. Serrano, D-N.Y., who has ties to the island.
But Rossello, who controls the utility, opposed the appointment, saying the board was overstepping its authority. On Nov. 13, a federal court in San Juan agreed and blocked Zamot's appointment. Republicans are considering changing the law that created the oversight board to install him.
The power grab did not end there. The oversight board sought to exercise its authority to review all contracts over $10 million executed by the territorial government. And it seems likely the board will try to wield even greater influence, including the privatization of the power company.
It could well be that Puerto Rico will have even more of its sovereignty stripped away and more power will be given to an unelected board.
In a memo released before of the hearing at which Zamot and Jaresko appeared, the Natural Resources Committee suggested that strengthening the board's power was possible. Bishop, the committee chairman, later said he'd rather have the territorial government and the board work together with the federal government, but warned that "new tools" might be needed.
"There may be some opportunities to put into language some kinds of reforms," he said. "There's going to be a whole lot of people with a whole lot of ideas."
By Dec. 5, months after Maria hit, roughly one third of the island's 3.4 million people were still without power. That amounts to a humanitarian disaster.
But it is a disaster on another level, too: No power means no economic activity. No economic activity means no revenue for the government. No revenue for the government means more money the U.S. government has to provide.
In the disaster assistance approved by Congress in October, Puerto Rico and the U.S. Virgin Islands were given a low-interest loan of $4.9 billion for expenses like paying for basic services. That money is expected to last until year-end. The Trump administration has further waived or lowered many matching requirements for disaster assistance (typically about 25 percent for local governments) because there is no money to match.
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Guaynabo Mayor Angel Perez Otero recently appeared before the Natural Resources Committee, and Rep. Darren Soto, D-Fla.,, asked him about setting up locally run energy companies and cooperatives similar to those in his state and then allowing towns to bid. Perez Otero said something like that would be fine in the future, but there is no money to do anything like that right now.
"The thing is, right now there's a fiscal problem," he said. "We have lost revenues, we have lost businesses, and we have a lot of problems."
Add to that the problem of the island's debt, and the headaches become worse.
"FEMA has never disbursed funds into a bankrupt entity," said Weiss, the former Treasury Department official. "There is simply no playbook for how to address Puerto Rico today. It has to be written."
What exactly will be written is still a big question.
Even before the storm, Puerto Rico declared its debt unpayable under a type of bankruptcy granted by Congress in 2016.
The law allows the commonwealth to reorganize its $74 billion debt in federal court. An attorney for the oversight board recently suggested that it was considering debt payments for five years. Meanwhile, creditors have become increasingly concerned, as the already low value of the bonds plunge even further.
Trump muddled matters further in early October when he said Puerto Rico's debts may be "wiped out."
While administration officials were quick to note that such a drastic step was unlikely, some in Congress have been clamoring for action. On Nov. 15, Sen. Elizabeth Warren, D-Mass., Rep. Nydia M. Velazquez, D-N.Y., sent a letter to the oversight board seeking the elimination of all of the island's debt. "Creditors must now finally face the reality that Puerto Rico will never be able to repay its pre-existing debt," they wrote.
Bishop dismisses the idea of wiping the slate clean, though he doesn't rule out the idea of the federal government taking it on. "I would have a hard time just having the government take over the debt without some significant structural reforms," he said.
Many in Congress, on both the left and the right, are talking about making Puerto Rico better than before, by building underground transmission lines to better survive severe weather, creating so-called microgrids that would make the system more resilient during outages, expanding solar and wind power, improving the water system and making housing sturdier.
The problem is that under current law, that's not allowed.
Under the 1988 Stafford Act, rebuilding in a post-disaster world can be done only to pre-disaster standards. What that means in practical terms is that Puerto Rico can be rebuilt to the way it was, and no one wants that. Anything beyond that would require Congress to amend the law. The issue is likely to come up again in Houston and other parts of the country that are vulnerable to natural disasters.
Rep. Luis V. Gutierrez, D-Ill., who owns property in Puerto Rico and has at times lived there, believes the issue of what kind of repairs FEMA has authority to perform must be addressed in future recovery spending.
"Anybody that believes there's not going to be another hurricane, in Puerto Rico, I mean, that's like saying there won't be any more tornadoes in Kansas or forest fires in California," Gutierrez said. "So what FEMA should do is say, 'Hey, this is extraordinary circumstances. Look, we need special permission.'"
David Bibo, FEMA's acting associate administrator for policy, program analysis and international affairs, said this is an issue that's not going away. "The more disasters that we face, and the older the nation's infrastructure gets, the more we're going to be faced with these questions," he said. "The Stafford Act has a construct in place where we're building back to pre-existing design and capacity. And the degree to which there was some debilitation to begin with, it's a challenge."
In his Nov. 17 request to Congress, Office of Management and Budget Director Mick Mulvaney made it clear that the administration supported building bigger and better, noting that it wants Congress to provide money under the Stafford Act "without limitation of pre-disaster condition and causation." Some advocates saw that as a huge step.
"This is actually something the federal government has never done before," said Farrow, the former Clinton adviser. "The administration is doing quite a lot here. Both in terms of its providing funding and what it's providing funding for. It's a huge open door for Puerto Rico."
FEMA's Disaster Relief Fund, which pays for rescue services, housing assistance and other resources in the after disasters, isn't strapped for money. A Nov. 17 estimate of the fund on Nov. 17 put its balance at $15 billion.
Some conservatives in Congress have started to warn that the money may not be limitless.
"We're not Santa Claus bringing gifts," said Rep. Blake Farenthold, R-Texas, whose Gulf Coast district was slammed by Hurricane Harvey and who voted in favor of both earlier disaster recovery bills. "We're the federal government that's out of money trying to help people and government entities that are also out of money. So we want to help ... get people back to where they were, but we also don't want to be wasteful."
