Vox Sentences is your daily digest for what's happening in the world, curated by Dylan Matthews, Naomi Shavin, and Dara Lind. Sign up for the Vox Sentences newsletter, delivered straight to your inbox Monday through Friday, or view the Vox Sentences archive for past editions.
The bankruptcy of Puerto Rico; the French presidential election; the future of the House’s health care bill.
Puerto Rico is officially bankrupt — now comes the hard part
:format(webp):no_upscale()/cdn.vox-cdn.com/uploads/chorus_asset/file/8472247/GettyImages_629487806.jpg)
- On Wednesday, Puerto Rico filed for what’s pretty much bankruptcy (it can’t file under Chapter 9 of the federal bankruptcy code like local government can, but a federal law passed last year allows bankruptcy in everything but name).
- With bond debt reaching nearly $74 billion and pension obligations of roughly $49 billion, the territory’s level of debt, and subsequent move, is without historical precedent — even compared with Detroit’s $18 billion bankruptcy in 2013. [New York Times / Mary Williams Walsh]
- The day before, Puerto Rico was sued by several of its major creditors when a moratorium on lawsuits against the commonwealth created by last year’s congressional rescue law (called the Promesa law) officially expired. [Reuters / Nick Brown]
- The government of Puerto Rico has floated a plan to balance its budget over three years, but the level of austerity that would require is extreme — and protesters have already hit the streets over the proposed changes. Many others are voting with their feet and moving to the US mainland; Puerto Ricans are US citizens. This exodus is already happening — the Economist reports that the island’s population is 8 percent smaller than it was in 2010. [Economist]
- This situation is truly unprecedented, so it’s hard to say what will happen next, but most expect the general outline to go like this: Supreme Court Chief Justice John Roberts will select a judge, probably a US district court judge, to oversee bankruptcy proceedings; an oversight board will get to work negotiating debt cuts and proposing a plan of adjustment — which the judge will have to approve and which could yield further debt reduction; Puerto Rico will try to stanch its bleeding through austerity measures, like scaling back health care coverage or introducing pension cuts, but it may face pressure to sell assets, like beachfront property, to raise money to pay off its debt. [USA Today / Nathan Bomey]
- If this sounds bad for pensioners, it’s going to enrage Wall Street too. Reuters analyzed data from Moody’s Investors Service and found that “[i]n five of six recent public bankruptcies in which the debtor defaulted on bonds, pensioners walked away with full recovery, while bondholders took haircuts.” [Reuters / Nick Brown]
- And it will be terrible for just about anyone relying on public services. One of the first hit? Students. It was reported this morning that the island is closing 184 public schools, which educate roughly 27,000 students, and an alternate plan for their education has not yet been announced. [Wall Street Journal / Associated Press]
- It’s a very bad situation that’s been a very long time coming. Puerto Rico has essentially been in a recession since 2006, and recent estimations put 40 percent of its population in poverty. Meanwhile, in 2014 it saw a massive influx of money lent by hedge funds expecting to earn a 20 percent return on the loans. But the island’s economy never improved, and decades of such borrowing eventually caught up with it. Bankruptcy actually might have happened even sooner — if wealthy lenders hadn’t ruthlessly campaigned against it. [New York Times / Jonathan Mahler, Nicholas Confessore]
Bataille de France
:format(webp):no_upscale()/cdn.vox-cdn.com/uploads/chorus_asset/file/8468735/GettyImages_677956920.jpg)
- The French presidential election comes to an end this Sunday, with centrist Emmanuel Macron facing far-right Marine Le Pen in the second round. This is the first presidential election in the history of France’s Fifth Republic (which began in 1958) in which neither the leading Socialist Party nor the leading center-right party made it to the second round. [Vox / Zack Beauchamp]
- The stakes could hardly be higher, with Le Pen issuing threats to leave the euro and NATO and promising a full moratorium on all immigration, and Macron serving as a defender of the European project and promising to support migrants. [Reuters / Mathieu Rosemain, Andrew Callus]
- Macron is often likened to Angela Merkel, the German chancellor, because of his pro-Europe and pro-immigrant stances. He started his own political party called “En Marche” — which some read as an attempt to avoid association with the establishment, despite having a similar platform to the incumbent, unpopular Socialist government (in which he formerly served as finance minister). [Washington Post / Rick Noack]
- Le Pen represents the National Front, a racist and anti-Semitic fringe party founded by her Holocaust-denying father. Le Pen has fought to reclaim its image, even as she runs on an openly xenophobic platform. Her appeal comes from populist messaging and promises of increasing protections and the safety net for France’s working class. [CNN / Melissa Bell]
- Of course, there is a third option too. A French advocacy group called Citizens of the White Ballot is pushing for people to leave their ballots blank to signal dissatisfaction with the political moment and the choices before them. They are not messing around: In the first round of voting, there were 660,000 white ballot votes, which is a higher share of the vote than five out of the 11 candidates received. [Wall Street Journal / Max Colchester, David Gauthier-Villars]
- However, Macron heads into the final weekend far ahead in the polls. A survey this afternoon found that he is on track to receive 63 percent of the vote, and Le Pen only 37 percent. At one point last week, Macron dipped to 59 percent in polling and Le Pen rose to 41 percent — sparking fears that the election could be an upset Le Pen win — but it appears he has regained his healthy lead. [CNBC / Karen Gilchrist]
- One last curveball, though: Hacked emails (most likely obtained by Russian hackers, just like in the US election) from Macron’s campaign were leaked late on Friday. It’s unclear how incriminating, if at all, they are. Then again, there was nothing incriminating in Hillary Clinton’s emails either. [Reuters / Eric Auchard and Bate Felix]
The House health care bill faces an uncertain Senate fate
:format(webp):no_upscale()/cdn.vox-cdn.com/assets/4528749/492621335.jpg)
- Yesterday, the House narrowly passed the American Health Care Act — a bill aimed at repealing Obamacare and replacing it with a health care plan that pays for massive tax cuts for the wealthy by denying coverage to at least 24 million people. [Vox / Sarah Kliff]
- How could this possibly happen? The House couldn’t pass a health care bill in March, and that proposal was more moderate and had a Congressional Budget Office score that made its effects look unacceptable even to many Republicans.
- Essentially, the Freedom Caucus in the House pushed for a more extreme bill — and managed to pass it before it could be scored by the CBO — by hanging vulnerable moderate Republicans out to dry. Once the Freedom Caucus was on board, moderate Republicans who could make or break the bill decided they’d rather vote for it than risk a primary challenge or other blowback. [Vox / Matt Yglesias]
- Now the wildly unpopular bill heads to the Senate, where it is certain to face many obstacles before it has a chance at passing even on a totally partisan basis — which will take 51 votes. But the way the bill is written might make portions of it (in particular the insurance regulation changes) filibusterable, meaning that Republicans would need 60 votes, including eight Democrats, to include them. [Vox / Sarah Kliff]
- Republicans in the Senate seem utterly unimpressed by the House’s bill. Many have come out against both its substantive provisions and the reckless speed with which it was passed. [Politico / Burgess Everett, Jennifer Haberkorn]
- All eyes are on the Senate’s 13-member working group that is drafting their own bill. It’s a group composed entirely of Republican men, unsurprisingly. But it is also a group that includes hardliners such as Tom Cotton and Ted Cruz but also more mainstream senators like Lamar Alexander and Rob Portman, so it will be interesting to see if what they craft is nearly as extreme as the House’s bill. [Vox / Sarah Kliff]
- Meanwhile, the uncertainty that this whole process is creating for insurers was evident even before the bill passed. On Wednesday, Iowa’s largest remaining Affordable Care Act insurer threatened to leave the state marketplace. The same day, Aetna said it plans to leave Virginia’s individual marketplace. [Washington Post / Carolyn Y. Johnson]
- And Kentucky is already trying to roll back portions of its Medicaid expansion, even before Congress acts. [Reuters / Yasmeen Abutaleb, Robin Respaut]
Miscellaneous
- You may think you have complicated feelings about Donald Trump, but I guarantee you that those of Amanda Knox — whose defense Trump helped fund and whose innocence he defended publicly — are way, way more complicated. [LA Times / Amanda Knox]
- A Brooklyn school principal is being investigated … for being a member of the Progressive Labor Party, the ’60s-vintage Maoist communist group. The story is somehow even more absurd than that sounds. [NYT / Nikole Hannah-Jones]
- The melting of permafrost due to climate change is unleashing viruses and bacteria that humanity hasn't encountered in thousands of years, if ever. A 12-year-old boy has already died due to a 75-year-old frozen reindeer with anthrax unfreezing. [BBC / Jasmin Fox-Skelly]
- As many as 11 percent of Venezuelan children are suffering from severe acute malnutrition — a condition that can end in death. [WSJ / Juan Forero]
- Andrew Wakefield, the disgraced ex-doctor who fabricated data in an attempt to show vaccines cause autism, went out of his way to sow fear about vaccines in Minneapolis's Somali community. The extremely predictable result was Minnesota's worst outbreak of measles in decades. [Washington Post / Lena Sun]
Verbatim
- “Smith isn't the kind of Democratic Socialist who spouts off at Brooklyn parties about the ‘means of production.’ He's the kind of Socialist who has actually worked in a factory.” [Vice / Michael Bible]
- “Suppose your boss promotes your coworker and doubles his salary even though his work performance was no different than yours. When you ask her why, your boss replies that her partiality toward your co-worker is justified because their offices are on the same side of the hall. My guess is you’d raise hell.” [Niskanen Center / Christopher Freiman]
- “Imagine photos you’ve seen of people camping. Sort of dreary outside, it’s grey, the campers have a bunch of waterproof clothing on. A bunch of cumbersome camping gear around them. A big stick in their hand. ‘My camping stick.’ Mud on the ground. They’re cold. What … the fuck? What are they doing? They can go inside and yet they do not. It’s very insane.” [The Hairpin / Kelly Conaboy]
- “Variants on Nelly Furtado’s 'I’m Like A Bird' that have run endlessly through my head over the years, in moments serious, frightening, sorrowful, and, occasionally, intimate: 'I’m like a bird, I only fly away.' (The original.) 'I’m like a verb, I describe actions you can do.' 'I’m like a berg, I’m made of floating ice.' 'I’m like the verge, I’m a thing people stand upon.' 'I’m like a blurb, I briefly describe the book.' 'I’m like the Serge, hero of the Chrono Cross.' 'I’m like a word, I endlessly repeat.'" [A.V. Club / William Hughes]
- “The odds were long, but a couple of University of Kentucky students decided it was worth the risk to climb through the ceiling ducts to a teacher’s office to steal a statistics exam. Unfortunately for them, the teacher is a night owl.” [Lexington Herald-Leader / Linda Blackford]
Watch this: What happens when you bring meditation into public schools
Classrooms all over the country are trying something new: sitting and breathing. [Vox / Liz Scheltens]
Read more
Obamacare repeal is class warfare
Russia has a plan for winding down Syria's war. Too bad both sides want to keep fighting.
Why silly summer movies matter
The secret Uber program that prompted a federal criminal investigation, explained
America is in the middle of its deadliest drug crisis. Trump wants to gut the agency that can help.
