Puerto Rico is in serious trouble. The island is facing a massive debt crisis, on par with Greece and Argentina. This past August, the commonwealth missed a $58 million payment it owed (mostly to the residents of Puerto Rico), according to Vox. The country’s debt now totals around $72 billion, with little way out of the hole. Puerto Rico is a territory of the United States, not a state or a city, so it cannot declare bankruptcy and neither can any of its towns, municipalities or school districts. There is nothing on the books about how to deal with the present situation.
How does a territory ratchet up so much debt? In this case, it seems to be a combination of bad policies and bad luck. For years, Puerto Rico offered bonds to cover its budget shortcomings, a highly popular move with investors since the bonds were tax exempt in all 50 states. Then, in 1996, U.S. manufacturers began to leave the territory after Congress ended their tax breaks.
The country did not restructure and continued to accumulate debt. It got even worse in 2006, when the U.S. economy tanked and Puerto Rico could not adjust with currency depreciation. In theory, the country’s once cheap debts could have been used for public works projects to boost the infrastructure, but instead the territory ran a more generous welfare program than it could afford in the long-term, so when the hard times hit, they were just left with their debt.
This is a lot of convoluted economic talk, but the crisis has humanitarian concerns as well. More than 150 Puerto Rican schools have closed since 2010, according to The Boston Globe. The government will soon have to start laying off public employees like police officers, firefighters and some medical personnel. Not to mention that the Zika virus has hit Puerto Rico especially hard and is worsened by the fact that residents cannot afford to buy window screens to prevent mosquito bites.
In an op-ed published in The New York Times, writer and composer Lin Manuel-Miranda, the voice behind the hugely popular musical “Hamilton,” made a plea for the place where he spent childhood summers.
“Please let us not get bogged down in Puerto Rico’s status,” he wrote. “If a ship is sinking, you don’t ask, ‘Well, what type of ship is it and what type of ship should it be?’ You rescue the people aboard.”
Puerto Rico’s status is a big part of the unique problem it is facing. Its inability to declare bankruptcy — like Detroit did in 2013 — has left the Obama administration and many Democrats in Congress pushing for a restructuring of the territory’s economic framework, arguing that its costs would be minimal to the U.S. taxpayer. This has received pushback from both sides of the aisle, with some Democrats saying this would assert too much control over the Puerto Rican government and some Republicans raising concerns about what that would mean for the sovereign debts of the states.
Should Puerto Rico become its own nation? That would certainly help solve some of its woes. It could set its own currency and its businesses would not be forced to adhere to the policies of the much wealthier United States. However, the people of Puerto Rico do not appear to want to become independent. In a 2012 referendum, over 60 percent of those who cast votes wanted full statehood, while just a little over 5 percent voted for independence, according to CNN.
Puerto Rico’s residents are in a very questionable position in which they are American citizens, but disenfranchised. They cannot vote in the presidential general election, but are allowed to vote in the primaries. The country has a representative in Congress, but he also cannot vote. As a result, people who Puerto Ricans had no say in electing hold the fate of the territory in their hands. As John Oliver pointed out in a March 2015 episode of his show, “Last Week Tonight,” the law that won’t let Puerto Rican citizens vote is “a 100-year-old legal decision written by a racist that was always supposed to be temporary.”
It’s a complicated issue, but surely it’s obvious by now that this arrangement is not working. The longer this debt crisis goes unresolved, the worse it’s going to get in Puerto Rico. The people there are Americans, and they deserve more than what we are giving them.
