A Marshall Plan for the Caribbean

Author: David R. Kotok, Post Date: September 24, 2017

“George Catlett Marshall, Jr. (December 31, 1880 – October 16, 1959) was an American statesman and soldier. He was Chief of Staff of the United States Army under presidents Franklin D. Roosevelt and Harry S. Truman, and served as Secretary of State and Secretary of Defense under Truman.” Source: Wikipedia.

Hurricane Irma - Florida Keys

His brilliance on behalf of the United States was multi-dimensional, military and diplomatic. But he is most remembered for his initiative after World War II when the eponymous Marshall Plan helped rebuild defeated enemies. That remarkable initiative has created some of the strongest allies for the present day United States. It blunted the spread of communism during the Cold War era. It provided financing and assistance to destroyed countries and their citizens. It allowed them to become friendly and durable allies of the United States and not our enemies. For details see: https://en.wikipedia.org/wiki/Marshall_Plan.

So let’s take some editorial Sunday morning risk and propose the Tillerson Plan on behalf of the current Secretary of State. And let’s prospectively credit President Trump with supporting a Caribbean initiative that would become a modern day American hurricane response that honors the memory of George Marshall. Not only would this be a funded initiative for the American territories of the Virgin Islands and Puerto Rico but it would also extend aid and assistance to other Caribbean island nations. Of course, there could be collaborative efforts with other countries (like France or Netherlands) that have sovereign history with one island or another. And there are the independent Caribbean island nations to be included as well.

Imagine the huge positive response America would obtain with a US program to help the victims and their rebuilding effort. Imagine a modern day Marshall Plan for the Caribbean that includes the US citizens and also extends beyond American borders to our hemispheric Caribbean neighbors.

Funding requires Congress. My colleague John Mousseau envisions a special bonding authority for the American geography similar to those that were used in other circumstances. Funding sources for such an initiative can include a lateral segue of repatriated monies currently sitting abroad in special treasury bills under a tax code that has severe disincentives to their repatriation. In other words, the money is already there, sitting, waiting. And now we have a one-time, targeted, program opportunity.

All of that initiative requires a plan and a Trump Administration request for a one-time program. President Trump and Secretary of State Tillerson can do the asking. My best guess is they would get it through Congress since the politics incur little cost and reach into households of millions of Americans.

There would be conditions, of course. They can include a requirement that the money must be spent with American firms. That is now typical of foreign aid programs anyway.

And for the American geography a small percentage of the two trillion dollars currently now sitting abroad that awaits a repatriation tax law change could be used to fund this program. Instead of sitting in short term treasury bills and waiting for a law change, that same money could be immediately directed toward this initiative.

And there could be soft loan repayment structures. There can be rules and oversight. There are a lot of details to be determined once the concept is accepted.

The political benefits to our current president are huge even as the cynics would depict him negatively as opportunistic given our dysfunctional current political climate. But there are many who would applaud such an effort as a Trump equivalent of the Marshall plan.

Some personal notes are in order. In our Cumberland office are several folks whose families originate from Puerto Rico. We have personally heard and seen their familial stories of which there are many. The vastness of the damage allows us to project those stories to many thousands and maybe millions of others we do not know personally. We have other interactions to the Virgin Islands. And there are still others within our Cumberland business associations that encompass Caribbean nations and their consultants and advisors. So we believe that this full disclosure is necessary since some may accuse us of a conflict of interest by writing this commentary.

We wouldn’t write this if hurricane damage were not as deep as it is. Here is an example that my friend, and a serious economist, Joel Naroff noted in an email to me about Puerto Rico. Joel wrote: “according to reports, 1,360 of the island’s 1,600 cellphone towers were downed, and 85 percent of above-ground and underground phone and internet cables were knocked out. Most roads are covered with debris and few gas stations have power.”

Please take that single data fact and extend it broadly to all elements of a society with three and half million people (American citizens) who are living under a financially bankrupt government. That’s right, our fellow citizens in dire circumstances, living under a financially bankrupt government.

Joel asks if this Congress and President can be called into action and deliver. Others ask if it is recognized by Washington that these are American citizens as are those in the Florida Keys or Houston.

Our view is that the “America First” policy must include all of its citizens. That recognition must take place quickly in Washington.

But we would also recommend the initiative go beyond our territory and adopt the Marshall Plan heritage and legacy for the entire Caribbean. It seems to us that our country would benefit enormously from this approach.

George Marshall and Harry Truman saw devastation and acted. Can Rex Tillerson and Donald Trump see it as well? We hope so.

David R. Kotok
Chairman and Chief Investment Officer
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