As long as all the Puerto Ricans temporarily move to Florida and vote to flip Florida Blue in 2020 it is more than worth it. Trump won Florida by only 1.3% in 2016.
1
In Washington State we have an excellent pension system, I believe. Teachers' pension are funded by withholding from the teacher's individual paycheck and from the individual school district making the paycheck, similar to Social Security, so that teachers' pensions are integrated into the K-12 budget and not a separate item that lawmakers can just decide not to pay. There's a state board of actuaries which makes recommendations to the legislature about pensions and these are followed by the legislature. Teachers can't retire before age 65 without 30 full time years of service. The pensions are pretty skimpy, but teachers can buy up their pensions at time of retirement and of course have a defined contribution plan to help them save up to do that, if they choose to.
3
Seems fair. After all when you buy a bond you're essentially loaning money and there's an element of risk in any loan. I would like to see as part of the agreement a clause limiting the number of islanders who can move to the mainland. We're full, especially here in Florida. It is a rare place, even here in wealthy Naples, that I can go and not hear spanish or creole spoken.
4
For those of you not paying attention:this is America's version of the post-crisis EU struggle with Greece.
4
Look, investors face risk. If you want a guaranteed return, get a CD at an FDIC organization.
2
@Kate
"That will be a big complaint of general obligation bondholders, who cite the constitutional provision putting them at the front of the line to be paid"
Investors take risks, yes. But they should be able to rely on the law in force at the time of the investments to be reflective of the actual circumstances. If a company prospectus contained statements that were later revoked, there would be criminal prosecutions for fraud.
3
There must be beach front land and other state owned properties in PR. Why are those not being transferred to the bond holders?
3
And this should be an object lesson on why a sane person cannot ever vote for the Democratic Party. Everyone else bail out the NJ, IL, CA, and eventually NY public employee pensions due to a similar chronic underfunding? No thanks. All these governments need complete financial reform, as does Puerto Rico. It won’t happen until and unless the spend spend spend mentality significantly harms those who had been the primary beneficiaries.
5
Everyone must understand that the economic problems of PR are profoundly intertwined with the political issue. You can’t and must not separate them. It is flabbergasting to read some of the comments- but it’s in someways our fault. Compare us with Venezuela et al shows a gargantuan lack of knowledge about PR.
Our relationship with USA is very complicated-
A very good book to start with: Truman y Puerto Rico: el origen de un proyecto descolonizador fallido
“Truman and Puerto Rico: the Origin of a Failed Decolonization Project”
(to my knowledge hasn’t been translated to English yet)
Puerto Rico is very strategically located. USA expansion as an empire needed our geographic location. During the Cold War it was more important than ever-not anymore.
The pretense or dream that we will, someday, become a State within USA is ludicrous. USA will never, repeat - never grant us that. Politicians in your country keep the dream alive - for convenience- money - The amount of money transferred from PR to USA is in the billions of dollars. Ultimately, Puerto Rico will end as sovereign state in close relationship with USA - it’s inescapable.
I admire your country - I like NBA, the Super Bowl - your people - traditions, etc. -your educational and health care need a remake though.
5
@Efraín Ramírez -Torres
"Ultimately, Puerto Rico will end as sovereign state in close relationship with USA."
If the term "sovereign state in close relationship with USA" means maintaining the US citizenship for Puerto Rican nationals and large subsidies from the mainland, yes, this could happen. This just appears to be a modified version of commonwealth and not sovereignty.
1
Wrong. Sovereignty (independence ) is the key word not citizenship. The type of relationship will be the one which both countries agree upon - outside the territorial clause.
1
@Efraín Ramírez -Torres--LOL--an independent nation of US citizens.
Can't have it both ways.
2
There will be repercussions.
1
Well, the contracts clause of the US Constitution has been covered by Ricciardi below. But it is note worthy that all states have healthier economies than PR. And they have unlimited ability to tax wealth and income in their states. Frankly they have the ability to fund their debts and pensions, but they have not had the political willingness to raise the funds. Solution: the bond markets and rating agencies need to price and rate bonds of states with excessive debt more accurately. PRs bonds were mostly rated investment grade until shortly before the crisis. I am a small non-professional investor who owned PR Bonds for a decade, but I sold them and broke even a couple of years before the crash. Why? Because the high probability of default was obvious. Why didn't the professionals do the same? Greed.
4
Nonsense. The states in the worst fiscal situation, with almost no exception, are those thave have been dominated for years by Democratic politicians in bed with outragously overpaid public employee unions. The meme that best describes the situation is when six public employee union members, all being paid double or triple overyime, stand around a hole in the street watching a single public employee unuion member actually working with a shovel.
This is not a taxation issue - it's a ridiculous over-spending issue. That overspending issue is why dozens and dozens of retired public employee union members in California have lifetime pensions paying them in excess of $500k, $750k or incredibly, more than one million dollars annually in retirement.
There are more than 100,000 retired public employees in Illiinois drawing lifetime six figure annual pensions, all paid for by tax payers, many of whom cannot afford to retire themseleves.
Puerto Rico is just more of the same. Pretending that stiffing creditors in bankruptcy is the right thing to do is the sort of behavior that would have the administrators of private pension programs arrested and jailed. For some reason this is tolerated for politicians and their supporters. It's taxpayers and bondholders that get stiffed.
3
@Fred Rick
You forget that 1) most public employees are not high paid (think librarians and laborers) and 2) public employees have and are paying their share of pension contributions into these systems; it is the governments that have not been doing the same.
3
It's a great idea, but first states like IL, NJ and CA should borrow enough to fund their pensions, plus pay for lots of new benefits, and only then use the PR model to stiff these greedy people who lend money to states.
3
Greedy people that lend money to states? What does that even mean? Without bond buyers, there are no bond funded spending programs.
7
Why isn't Puerto Rico required to sell assets, such as publicly owned real estate, museums, buildings and other holdings? Don't bankruptcies usually require such liquidations in order to pay debts?
10
Interesting a 17% decrease in public pension payout. In Conn the average first year pension payout is now over $60,000 at age 62 and 17% would make it $48,000 still about $10,000 more than Warren Buffet gets in Soc Security (about $39,000). Sounds like a great start and ditto to the 6 figure police/fire that are listed in the paper. Next go after lifetime health care for state workers and family. We are over $100 billion unfunded in pension and health care and it must start somewhere.
9
I guess debts are not debts anymore. Individuals, companies and now whole governments are free to repudiate their debts. They eat at the buffet, then skip out on the bill. Who suffers? Savers.
8
Debts have always been dischargeable in bankruptcy - that’s why they attract interest. And that has always included governments, whatever various constitutions say.
2
Your statement is objectively untrue. It is a bedrock principle of the legal system that states cannot repudiate debts via bankruptcy.
4
That's basically how our current President ran his businesses. Three Chapter 11's, wasn't it?
4
I hope Cuomo and the NYS legislature is reading this article. 3B in deficits this year alone! Where is the money to support these debts? Just wait till the next recession when Wall Street bonuses dry up and the interest payments still come due. 51% of New York State revenues come from the top 1% of income earners. How long till they just decide its just not worth it to live here anymore? How long till the rest of us feel the same?
10
Per capita public debt and per capital income will approximately aligned after the restructuring.
The demographics of out migration simply make this tough--pre-Maria or post-Maria.
More haircuts are likely down the road.
3
General Obligation bonds are supposed to be the gold standard of municipal/state debt. Buyers were told for years that they had the highest priority on the resources of the government issuing the bond under the law or state constitution and therefore they would always get paid. Then Detroit went bankrupt. The General Obligation bond holders who were supposedly first in priority got a 60% to 26% reduction in their bonds and the pensioners got a 7% reduction. Now, PR goes into quasi-bankruptcy and the General Obligation bond holders who supposedly protected are guaranteed payment under the PR Constitution are getting a 66% reduction and pensioners are getting a 17% reduction. A pattern is developing - the protections of General Obligation are being overridden. Does anyone doubt that when Illinois, New Jersey or California can't pay their bills that the rules will be changed to protect the pensioners? I live in New Jersey and as my NJ Bonds come due, I have not been replacing them. Sooner or later there is going to be a run to sell municipal bonds when people realize that no matter what the law or bond issuance says, the pensioners will get paid first. Then state and municipality finances will collapse.
17
Investing in an island when climate change predicts rising oceans is the ultimate in contrarianism.
3
The underlying bigotry in so many of these comments is maddening and saddening. I truly hope this solution works. Most commenters seem ignorant to the root of Puerto Rico’s problems - I’m looking at you, US Government. Hopefully a fresh financial start coupled with a new government next year will put this beautiful island back on track.
And I can’t even get started on the commenter who trashes PR as a tourist destination. If you’ve never been, GO. And not just to San Juan - I’ve circumvented the coast and transversed the mountains of Puerto Rico. I’ve been visiting there for 45 years and look forward to going again and again.
8
@David PR is crime ridden. I remember the police were attempting to capture a man whom had killed 45 people at "the pearl. Mean while at Condado beach there are four armed men in flack jackets with automatic weapons? Really why would you need them. I was informed "never, never remain stopped at a stop light at night, slow down and run the light because people target those that stop at the lights. I caught four people breaking into my rental car at "Hobo's beach" and they pushed me around like a rag doll and pushed broken beer bottles toward my face. I will never go back to that island. The people are mixed, three different groups, one wants statehood, another "as is" and another that wants nothing to do with the USA. They pay no US taxes. They get Social Security!!!!
And when you think of the benefits of being a territory of the US they can't even balance a check book.
I would like to cut the umbilical cord and let them have their independence. We gave them Ramey USAFB, they don't bring anything to the table other than a port to park large cruise ships full of Americans on large ships that are located in Panama in the legal sense of the word.
We don't need Puerto Rico.
Maybe back in the day when Cuba was a threat (short lived). When we gave Ramey (USAFB) back we should have given them their independence.
4
What better example, Puerto Rico is no different than those in corrupt Ukraine, Venezuela, add Argentina, and probably a few countries in Central America. They all want it but couldn't pay for it, so they borrowed, and borrowed. And the financial institutions, everyone one them, sat back and bought their debt, and refinanced, and refinanced, and now Puerto Rico owes $billions. I can't prevent it, but the U.S. should not bail out Puerto Rico from its debt obligations. Why, because it is the attitude of their people that said, "borrow the money, someone will bail us out." It is sad that honest people must always be the ones that lift the dishonest out of the gutter. People that regularly work and pay their bills should not be the ones that bail out those irresponsible people. The people and the politicians all are ignorant people. They should be allowed to continue falling backwards until they are in the same situation as those in Venezuela. Maybe then will they learn.
13
@Me Too What bailout are you referring to? Did you actually read the article? The ones who are bearing the brunt of the consequences of this unfortunate situation are the Puerto Rican People: government employees who have lost their jobs and/or pensions, regular people who spent all of their savings in what are now disgraced bonds, regular people who have suffered from the cuts to government services, university students who experienced a 200% increase in tuition and realized that they could no longer afford it, among many others. So don’t worry— the US is not “bailing out” anyone.
5
@Me Too
$129 billion! Just think if people in Puerto Rico had a responsible gov't that accepted financial responsibility to their people, and prudently managed the assets of their country, which they did not, then why should we in America be named the ones to pay their bills? It is time to say NO! If Puerto Rico wants someone to bail out their banks and financial institutions, then I say call 1-800-Putin of Russia, 1-800- Salman of Saudi Arabia, 1-800- Zelensky of Ukraine, or 1-800-Maduro of Venezuela.
2
Only 33%, what happens if another storm comes? Its time to face reality. Who the heck would still want these bonds? Puerto Rico should default on all debt rename the island and start all over with no debt.
5
@Ralph Petrillo
"Only 33%, what happens if another storm comes?"
More haircuts
1
Who was foolish enough to buy any Puerto Rico bonds over the past ten years? Seriously, this eventuality has been coming for years.
Sure maybe a few sharpies played the over-reaction to the hurricane well, but people with fiduciary responsibilities should have stayed miles away.
They can write all the constitutional promises they want, but the repayment numbers have been crazy for a long time.
Numbers , and the reality they reflect, trump promises.
2
@Mike--A lot of people purchased the bonds because they offered some good returns relative to similar GO Bonds from states and cities. Many bondholders are small investors from Puerto Rico.
1
Here are the certainties of any resolution of Puerto Rico debt, regardless of the terms of that resolution:
1) Puerto Rico politicians will never pay off a single penny of the resolution debt. They will perpetually roll it over into new debt as it matures.
2) Puerto Rico politicians will persistently issue new additional debt.
3) #1 and #2 will continue indefinitely until Puerto Rico's politicians default again and cause the next bankruptcy.
17
A model for States? How about not spending more than you can forsee coming in ? How about those corrupt officials living in million dollar villas while making $40,000/year? What about all the unaccounted for money that has gone Puerto Rico's way? I am beginning to think that Trump's description of Puerto Rico is apt.
36
What about anticorruption measures? Most likely any plan will force Puerto Rico to cut back on services, which would be devastation to an already battered area.
6
It is to be expected that any bankruptcy plan will injure creditors to varying degrees based on the security of their holdings. What is troublesome about this plan is the drastic reductions to general obligation debt holders.
GO bonds are the fundamental basis of public entity debt as they are fundamentally secured by the tax pledge of the issuing entity. GO bonds are secured by the entity's pledge to raise taxes to any level necessary to provide timely payment of interest and repayment of principal when due.
If various states and localities were to follow this Puerto Rican precedent they will destroy their credit standing for a very long time. Even during the Great Depression, while there were defaults on certain state and locally-issued GO bonds, they were ultimately repaid.
"Haircutting" GO bondholders is not a good blueprint and other public sector debt issuers with taxing authority would be unwise to mimic it.
15
@George--Your comment makes me want to clarify something. In writing that Puerto Rico's restructuring tools might one day be extended to troubled states, I was referring to the Promesa law itself. Puerto Rico has no ability to seek protection from its creditors in bankruptcy court (nor do the states), but Promesa has given it some of the powers available in bankruptcy, so that it can restructure its debt in an orderly way. It's that kind of legal framework that I was referring to -- not the particulars of which types of bonds would be dealt the biggest losses if this were ever attempted by a state. I do understand your point about general obligation bonds.
8
@George--Your comment makes me want to clarify something. In writing that Puerto Rico's restructuring tools might one day be extended to troubled states, I was referring to the Promesa law itself. Puerto Rico has no ability to seek protection from its creditors in bankruptcy court (nor do the states), but Promesa has given it some of the powers available in bankruptcy, so that it can restructure its debt in an orderly way. It's that kind of legal framework that I was referring to -- not the particulars of which types of bonds would be dealt the biggest losses if this were ever attempted by a state. I do understand your point about general obligation bonds.
1
I am a retiree who is holder of PR bonds. I would never buy any PR bonds again, I dealt with PR honorably but I do not feel that I am not being dealt with honorably. If I were asked, I would tell my friends and family that I would never trust PR to keep its promises and I would never trust the “experts” who have harmed me and the other retirees holding PR debt.
14
Who sold you those bonds? There was never any way they would be able to pay but someone was making money selling them to you.
6
@KBM
What I don't understand is why you still hold these bonds? When my FL-retiree Dad died three years ago his portfolio included PR bonds. By then the Commonwealth was already in financial trouble. We liquidated them at roughly 90 cents to the dollar.
What have you been waiting for?
1
@James
speculators have been fluffing and morphing the PR bonds for many years now. KBM appears to have bought in to the promise that all bonds being sold at heavy discounts would be honored at full face value + interest ... no matter what. Big mistake by KBM.
1
Municipal bond investors (which I am not) need to start paying attention. States like Illinois, New Jersey, California as well as the major cities therein have issued a lot of bonds, yet still have unfunded pensions.
Bankruptcy judges (in the cases of Chapter 9) will prioritize pension debt even if other forms of debt are senior. The 7.5% coupons (hopefully you are getting a coupon, not just a zero coupon note) doesn't justify the risk.
The only way to get the municipalities to pay attention is to stop giving them fresh capital. A 32% haircut to bonds linked to revenue source is all you need to know.
Apple bonds are paying 3% if you need something greater than a 10-year treasury. Yes, you pay tax but will not be written down.
Public union members need to hire actuaries and do their own assessment. For a new worker, a 401k style account that is funded every year is superior to a promise that is consistently underfunded.
12
@James Apple is an American corporation, like Xerox was, with the same range of possibilities. The fact that it's a strong company today is no guarantee, at all, of the future.
4
@James NJ's pension debt is not a municipal plan. It is several different state plans with varying levels of funding and solvency. Had NJ been paying its full share into the plans we would not be where we are, but the original under-funding of NJ's pension was designed to provide some tax relief. Taxpayers never had it passed down to them because politicians saw the "tax relief" as a way to continue spending instead.
14
@beachlover Yes, I can't discuss state debt because there is no mechanism for a state to go through debt reorganization. I don't know if states will have to pay their revenue back bonds ahead of their general obligation bonds or if pension promises will be primary. There simply isn't a way for states to reoganize their debts.
2
I strongly doubt the huge banks, hedge funds and investment banks will accept a big loss on their bonds. Many, knowing the riskiness of Puerto Rican bonds, bought them cheap but, still, a loss is a loss.
I frankly am glad the pensioners will not suffer. Government corruption was not their fault. Time will tell.
3
@akamai Of course government corruption was their fault. They elected those governments didn't they?
11
@KM Are you suggesting the PEOPLE of a nation are to blame for the corrupt and/or incompetent behavior of government officials or institutions? That corruption/incompetence ultimately affects them and only them. Do you seriously think anyone would knowingly vote for something or someone that will do them harm? Since when do we blame victims for the crimes committed by those in power? When did we become so insensitive and cruel that we can't even empathize with fellow American citizens? With fellow human beings, for God's sake!
2
These bonds were issued as triple tax exempt and were gobbled up by Las Vegas don Sheldon Adelson who gave over 5 million to the Trump campaign and the poor people of Puerto Rico when this is all over will still be poor. Good article
1
How about the actual root of the crisis: expensive pensions.
How much do these pensioners receive, exactly? Why were these pensions allowed if they were so expensive in the first place? Who OK'd them?
Who was running the asylum, here? The warden or the inmates?
How about The Times does an investigative report into this mess.
31
@Moderate Republican Expensive, relative to what? Private pensions? Americans have been working harder than ever, and for all that work, private pensions have been utterly devastated.
One shouldn't point at the failings of the private sector as a reason to gut benefits for those in the public sector who also have worked very hard, and deserve a decent retirement.
8
@Moderate Republican The average is $12,000 a year. After working for 35 years for the government, my mother receives $9,000 a year. It's a good thing that she had two kids and managed to put them through school. That way, we can help her with utilities, rent, and medication.
15
@Moderate Republican Even the so-called larger pensions of public employees are very modest in PR.
9
The real victims here are the executive officers, board members and shareholders of multinational financial institutions focused on short term profits.
Shouldn't those that profit from debt also profit from relieving debt?
Fair's fair.
2
Republicans should demand that cooperating with ICE, and other federal law enforcement agency is required before congress considers bailing any state out. The federal government should not help states that refuse to help them.
7
@Jay
Puerto Ricans are US citizens. They are not subject to immigration regulations.
14
@5barris Not defending Jay's point, but they were speaking about states. Aka, if a state like California wanted federal bankruptcy assistance, they would have to cooperate with ICE, and not have sanctuary cities.
Again, I'm not making a value judgement on their post, but that was what they meant. It seems that you saw "ICE" and didn't read the rest of the comment, assuming you knew what they were saying.
2
You are suggesting local law enforcement do the federal government’s job for it. An unfunded mandate.
4
As a retired corporate bankruptcy partner who practiced for more than 25 years in the NYC offices of 3 of the largest law firms in the world, I must point out that Puerto Rico is not in a bankruptcy case. Congress passed a special law applicable only to Puerto Rico to permit it to restructure its debts. The states are expressly prohibited from being debtors under the US bankruptcy code. Any law purporting to give the states the right to be debtors under title 11 would certainly be subject to constitutional challenge.
31
@James Ricciardi Also the US Constitution specifically prohibits this. Article I, section 10, clause 1. The clause prohibits a state from passing any law that impairs the obligation of contracts.
3
@Deedee Yes, but that is not dispositive. The bankruptcy clause gives Congress the right to pass a uniform bankruptcy law which impairs contracts. Title 11 could not work if bankruptcy courts could not impair contracts. So, while a state cannot pass its own bankruptcy law, Congress may be able to pass a bankruptcy law giving federal courts the right to impair the contracts of states. Congress has never tried to pass such a law, so no court has ever been faced with this issue.
6
A major cut in public pensions? For a commonwealth that is already poor? Just a one-third haircut for bond holders? But this is supposed to be a "model for states"?
This is a model for investment banks desiring to profit massively from the misery of the people of an American commonwealth.
The bond investors should take a 90% haircut, and Puerto Rico should be put back on a sustainable footing from which to begin to recover from both its economic meltdown and the disaster of the hurricane.
People over profits.
9
@Sean Do you realize pension funds of other states and unions hold some of those bonds?
18
@Sean CORRUPTION GRAFT NEPOTISM - get all tRump-like people out. Dont treat PR as a colony, but as a ‘state’.
@Sean So you believe that government and governmental agencies should be allowed to borrow money and not have an obligation to pay it back? No one put a gun to the their heads in order to make them borrow money.
Government"s" are the most irresponsible borrowers of all borrowers.
8
The lesson is clear: anyone who buys the bonds of a state or municipality to fund generous and expensive pensions for its workers will eventually be wiped out for their benefit, even if contracts and constitutional provisions have long said bondholders will come first.
36
@Amanda Right? This send a clear message to me to not buy municipal bonds in states with high debt loads, and I suspect it will have the same effect for other investors as well. That'll make it more expensive for those states to borrow if the market responds collectively in that way
7
@Amanda If you fund the pensions based on actuarial calculations, no specific problem. Kentucky has done a lot to shore up their pension system. If only ERISA had been applicable to government pensions.
1
Compliments of the Who:
"I'll tip my hat to the new constitution
Take a bow for the new revolution
Smile and grin at the change all around
Pick up my guitar and play
Just like yesterday
Then I'll get on my knees and pray
We don't get fooled again
Don't get fooled again
No, no!
Meet the new boss
Same as the old boss"
17
@Ernest Montague
I didn't see anything in this article about a change of government in PR. Did I miss that?
1
This article talks about bondholders feeling the pain. How they are losing money, even though PR constitution says debt payment is number one priority.
There is no talk off cutting expenses. Not dealing with corruption, controls, rampant tax incentives, etc...
If the causes of the problem are not addressed, there will be a relapse.
37
42% of their debt is pensions.
The reason for this is the government is the largest employer in the island.
If your government is the largest corporation in the land, and the country is behind by 129B, it's pretty obvious that the fault lies with that large entity, government, and their largest mistake, becoming the one employer in the land.
The leader/CEO/Governor of that corporation/government is a Progressive by the way. Watch them carefully, for this is what a Progressive government looks like.
Maybe we should just give them Independence?
They could benefit from finding their own way in the world. Having them as a ... what is PR? whatever it is, it is not working out for any one.
40
@AutumnLeaf I wish PR would just choose already. They can be a state if they want, or be independent. But I hate that the federal government somehow gets blamed for their indecision. If they'd just vote to be a state, they'd have two senators who could direct investment and capital to the island.
2
@Greg
PR can't "choose." That is a fallacy that has long been promoted both on the island and the mainland. The US Congress is the only one who can determine PR's future status. Read Supreme Court cases on the matter.
And as a political matter, does anyone think that the voice of the people of PR would actually be respected in this matter? Do you think that if tomorrow the people of PR voted 79% for statehood that Trump and the Republicans would honor that? Racist motivations aside, Puerto Rico would likely vote Dem in national elections and have more electoral votes than multiple mid-western states combined. You think Mitch McConnell is going to green light that? Please.
9
Bondholders (ordinary savers) will get a cut, unless they are too big to fail banks and financial institutions in which case they will get bailed out. Pension funds and will lose money on their bond holdings in addition to their own cuts, which would invariably increase through share the pain propaganda.
2
Then there was that additional issue of local labor unions not wanting to transport emergency goods unless they would get more money—remember that? Puerto Rico and the US just need an ultimatum: Statehood or go your own way! China would just love to park a naval group there, so it looks like Statehood, “51”, a big party, real debt restructuring, etc, etc, etc.
6
@William Perrigo Wholeheartedly agree. I almost wish Congress could strongarm them into choosing, but I accept that this could cause a Brexit like situation.
1
Are all of the bankers, lawyers and consultants who worked on this taking similar haircuts on their fees? I think this whole situation has been incredibly profitable for all of them - every major law firm in NY is involved in this in some way, billing at their usual exorbitant rates. Hopefully they will take some of their profits and spend some tourist money in PR.
17
As a born and raised Puerto Rican, I understand that a reduction in debt is urgently needed. Years of irresponsible fiscal policy and corruption led to this problem.
That being said, the levels of debt are so massive for a small economy, that the burdens this plan will impose in the already heavily impacted middle class will increase the exodus of people to the mainland.
It's simple math, if more working class people leave the island, the less tax revenue that's to be collected. This does not look good for my beloved island.
24
The only solution is to have the federal government assume 50% of Puerto Rico's debt and immediately grant full independence to Puerto Rico.
9
@Hayekian von Mises
well, if you believe in democracy, the Puerto Ricans DO NOT WANT independence. There have been 4 or 5 times the question has been put to ballot. Statehood, Remain Commonwealth Status, and independence. Each time independence has received less that 5% of the vote.
(and to be clear it should be noted that the Commonwealth camp is really "Remain Commonwealth BUT WITH BIG CHANGES"
3
@chimanimani: Statehood is a political impossibility and Commonwealth status is akin to slavery. The US should immediately grant full and unfettered independence to all of its "possessions."
For one state to possess another is anathema to justice and archaic to 21st century morality.
Free Puerto Rico! Free American Samoa! Free Guam! Free Northern Marianas! Free Virgin Islands!
11
@Hayekian von Mises
Why should I pay for PRs corruption and mismanagement?
24
Puerto Rico will never get out from under unless and until it is permanently exempted from the Jones Act. The Jones Act prevents foreign-flagged ships from carrying cargo between the contiguous U.S. and certain non-contiguous parts of the U.S., including Puerto Rico. Such restrictions increase the costs of everything the island of Puerto Rico must import. The US Virgin Islands is exempt, Puerto Rico should also be exempt.
52
@CCC You sound like a pro-statehood person. There is no silver bullet to solve the islands many issues.
3
I disagree completely. PR has always wanted its cake and ability to eat it too. They want the benefit of the USG but pay no taxes (but they always accept those great highways funded by mainland US taxpayers). It’s been a financial disaster for some years and the Jones Act only affects the margins. You kicked out the US Navy decades ago and then complained about the lost revenue. You aren’t much of a tourist destination because, after all, it’s Puerto Rico. Ever seen cars drive 5 wide on the grass of the highway in the US? No, well it’s a daily commute in PR.
17
@CCC
The Jones Act may increase prices but it doesn't cause their corruption.
14
From the Puerto Rico Constitution, Article IV:
Section 8. In case the available revenues including surplus for any fiscal year are insufficient to meet the appropriations made for that year, interest on the public debt and amortization thereof shall first be paid, and other disbursements shall thereafter be made in accordance with the order of priorities established by law.
By breaking its constitutional obligation, PR guarantees that it will pay sky-high interest rates on any future borrowing--if it can even find lenders willing to trust the commonwealth's phony covenants.
17
@Troglotia DuBoeuf . The Puerto Rico Constitution could have been written by Joe Biden.
4