| Calderon Hires Top Clinton and Bush Political Aides
Governor Sila Calderon (‘commonwealth’ party/no national party) has hired one of former President Bill Clinton’s closest political aides and a longtime campaign adviser to President Bush and his father, former President Bush. The two political aides have been retained for the Calderon Administration’s drive to register citizens of States who are of Puerto Rican origin to vote in the States.
The two are Clinton adviser Craig Smith and Bush adviser Luis Garcia. With payments for the two for an initial couple of months topping $100,000, there is speculation that their annual contracts could easily exceed a total of $500,000 a year.
Smith began working for Clinton in Arkansas and handled political appointments for then Governor Clinton. He eventually became President Clinton’s Director of Political Affairs. He left the White House staff to be campaign manager of then Vice President Gore’s presidential campaign, but was replaced when the campaign initially floundered.
Smith currently works for Clinton through the Clinton Library Foundation and as the prime mover behind an organization of former Clinton appointees. He also works for the Democratic National Committee and two unions that usually strongly support Democrats, the American Federation of State, County, and Municipal Employees (AFSCME) and the New York City organization of the Service Employees International Union (SEIU).
The SEIU local may have been Calderon’s connection to Smith. It is headed by one of Calderon’s closest and most important allies in the States, Dennis Rivera, a Puerto Rican nationalist. Rivera allied with Calderon to stop Puerto Rico from becoming a State of the United States and to force the Navy to close its training range on the Puerto Rican island of Vieques.
AFSCME may also have helped Calderon with Smith. It is headed by Gerald McEntee, who worked closely with Calderon’s predecessor, Pedro Rossello (statehood party/Democrat) to enable national unions to sign up Government of Puerto Rico workers. McEntee considered the Rossello-sponsored law the greatest opportunity for a national union to expand in decades. He has tried to develop a close relationship with Calderon to expand union membership opportunities in Puerto Rico, especially because he was so supportive of the Puerto Rican political status choice that Rossello promoted and Calderon opposed.
Garcia worked in the 1998 and 1992 presidential campaigns of former President Bush and the gubernatorial campaigns and 2000 presidential campaign of President Bush.
The registration drive hopes to register 600,000 to 700,000 people and is budgeted to cost $4.3 million during the fiscal year that begins July 1. Its ultimate goal is to force federal acceptance of Calderon proposals for changes in federal policies and procedures regarding Puerto Rico.
New Law Restricts Cock Fighting, Originated in Acevedo Vila Committee
A new law on which Puerto Rico Resident Commissioner Anibal Acevedo Vila (‘commonwealth’ party/D) worked delivers a major blow to cock fighting in Puerto Rico.
The new law is the so-called ‘farm bill.’ A provision that originated in the House of Representatives Agriculture Committee on which Acevedo serves applies a prohibition on the transportation across State lines of animals for fighting ventures to Puerto Rico. It also increases the penalty for violating the ban from $5,000 to $15,000.
Although Acevedo has frequently spoken publicly about provisions of the legislation, such as a slight increase in food aid to residents of Puerto Rico and a preference for purchasing local products for the school lunch program in Puerto Rico, he has been silent on the cock fighting restriction.
Acevedo’s silence on the issue has affected other territories, including Guam, where cock fighting is also popular. Guam’s Delegate to the House, Robert Underwood (D), is now exploring options on the issue.
Puerto Rican Native Nominated for the Senate from New Mexico
Gloria Tristani, who spent many of the earlier years of her life in Puerto Rico, easily won the Democratic nomination for the Senate from New Mexico. She crushed a primary opponent 78% to 22% after having received the backing of State Democratic leaders.
Tristani opposes veteran Pete Domenici, the Ranking Minority Member of the Budget Committee, and she is expected to have a steep uphill battle. Domenici has obtained substantial funding for the relatively poor State. He has also paid substantial attention to Hispanic issues. Almost 40% of New Mexicans are Hispanic.
Included among the Hispanic issues of which Domenici has been supportive is a Puerto Rican status choice. In addition to supporting a choice, he has also made it clear that he would support Puerto Rico becoming a State if that is Puerto Ricans’ desire. Tristani, by contrast, says that Puerto Rico issues will have an active advocate in the Senate if she is elected. She has pro-statehood family ties, but has not disclosed a status preference.
Tristani has family roots in New Mexico as well as Puerto Rico. Her maternal grandfather, Dennis Chavez, was a senator from the State and is the most prominent Hispanic to have served in the Senate. Her father, Jorge Tristani, is a lawyer in Puerto Rico who served in the administration of former Governor Carlos Romero Barcelo (statehood party/D).
Tristani was appointed by then President Clinton to serve on the Federal Communications Commission after having served on the New Mexico State Corporation Commission.
Sharp Increase in Education Funds for Puerto Rico
Resident Commissioner Acevedo Vila pointed out a sharp increase in federal education funds for Puerto Rico beginning in 2000, as the Clinton Administration came to a close and as the Bush Administration and Democrats in Congress have agreed on new education legislation. Funding has increased from $986 million that year to $1.288 billion this year.
The increases will continue over the next several years primarily because of an initiative of then Resident Commissioner Romero Barcelo and former President Clinton that became law this year due to the continued support of Senators Edward Kennedy (D-MA) and Christopher Dodd (D-CT) and Representative George Miller (D-CA). It phases in State-like funding for Puerto Rico in elementary and secondary schools aid for needy children. Puerto Rico had long received the grants under a formula that provided about 72% of the funds that the formula for the States provided. Total education funding for Puerto Rico is expected to reach $1.39 billion for the fiscal year that begins October 1.
Crackdown on Companies Moving Offshore May Hinder 956 Amendment
Governor Calderon’s proposed federal tax subsidy for companies based in the States to stay or locate in Puerto Rico may be hindered by widespread support in Congress for preventing U.S. companies from incorporating in foreign tax havens.
The support is said to include majorities in both Houses of Congress.
The issue was exacerbated by the tax moves of two major companies in particular, but a number of other companies as well. The two most notorious cases involved the Texas—based energy company, Enron, that collapsed, and Stanley Works, the Connecticut-based toolmaker. Enron established a number of offshore companies in its practices that inflated profits of the company. Stanley is one of a number of companies moving its nominal headquarters to Bermuda, which does not tax the companies’ income.
Some of the companies are combining reincorporation in Bermuda or other tax-free locations with transfers of funds to Barbados or Luxembourg. The U.S. has tax treaties with the latter two countries, but not Bermuda. Companies then shift funds transferred under treaty provisions and federal law from one of the two countries to tax-free Bermuda. The maneuvers enable companies to lower their tax bills on profits 10 11%. Other provisions of the tax code enable companies to lower their tax liability from 35% to 21.5%, Internal Revenue Service data shows.
By contrast, Calderon’s proposal would enable companies to lower their tax burden to 3.5%.
Another aspect of the Calderon proposal makes it attractive in comparison to the tax dodge that Stanley and other companies are using, however. The Calderon proposal would ostensibly require that benefits be limited to profits on manufacturing actually conducted in Puerto Rico, while the Bermuda and other offshore locations of the companies using the existing tax dodge are often mail drops or little more. The difference is that the Calderon proposal is intended to move subsidiary manufacturing operations but not corporate official locations, while the practice that many companies are engaging in is to move corporate addresses to avoid taxation without moving actual operations.
This distinction could be used to promote the Calderon proposal, but the drive to block companies from moving headquarters’ addresses offshore to avoid taxation may be so intense that it ‘poisons the well’ for the Calderon proposal even though it does not propose the same objectionable practice.
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