Prescott Valley Correspondent-Puerto Rico should not become the 51st state for a number of reasons. Puerto Rico currently owes $74 billion to creditors that hold its tax-exempt bonds along with $40 billion in unfunded pension liabilities. Bankruptcy proceedings are currently underway.
Puerto Rico’s difficulties have been occurring over a period of time and are the results of years of government spending increasingly more than it took in taxes. American states are required to formulate and produce balanced budgets on a yearly basis, but Puerto Rican leaders did not and have not done this and have taken advantage of the island’s non-state status.
Puerto Rico has issued debt over the years, and it has reached record highs over the last ten years when the total went from over $43 billion in the mid 2000s to over $70 billion by 2014, plus the unfunded pension liabilities of over $40 billion.
In early June of 2017, the governor of Puerto Rico, Ricardo Rossello, held a referendum with a turnout of 23 percent of its citizens. The voting results were 97 percent to make Puerto Rico a state. The governor made it clear that the United States government could no longer ignore the voices of Puerto Rican citizens. Rossello indicated that Washington, D.C. should now respond to Puerto Rico’s “legitimate right to self-determination” that was exercised through the recent vote.
The problem with the governor’s declaration is that statehood within the borders of the United States is something that the federal government decides, not Puerto Rico, but the difficulties are more complicated than imagined as Puerto Rico’s defaults on its debts are implicated with American investors.
Bond funds associated with Puerto Rican debt are replete with problems as there are American citizens who have invested their life savings and retirement money in Puerto Rican bonds, so the defaults on debt are looking to become an American problem as well.
Puerto Rico was once a tax escape for many big businesses, particularly with the pharmaceutical industry as it was less expensive to manufacture prescription drugs in Puerto Rico than it was anywhere within the United States. The drug companies and others did not have to pay federal taxes on their island operations. These tax laws changed in the 1990s, as Congress rolled backed tax exemptions for businesses operating in Puerto Rico and fully phased them out and ended it all by 2006.
The tax roll backs tanked the Puerto Rican economy, and it has not recovered. Private sector jobs were lost, tax revenues dropped and the economy continued to tumble, which has caused residents to leave the island in record numbers. Jobs in Puerto Rico are harder and harder to find and the unemployment rate has skyrocketed. Highly skilled workers and professionals have also left for other jobs and higher pay in America.
Commerce in Puerto Rico has also been lost as well through a 1920s act that only allows American ships to take goods between Puerto Rico and the United States mainland, which only increases island prices and makes Puerto Rican goods less competitive with other island nations that have their own transport ships.
These same kinds of financial failings are occurring in other American held territories and possessions. The Virgin Islands, Northern Marianas and Guam are experiencing situations similar to Puerto Rico’s. The New York Times has reported that the Virgin Islands alone owe $6.5 billion to its creditors and investor pension holders.
Puerto Rico’s dilemma is one that is replicating itself around the world. Those fleeing Puerto Rico have seen the handwriting on the wall, and those who have remained and recently voted for statehood are looking for a bailout through the United States.
The island will have to go through total reorganization and establish budgetary compliance or they will be no more than they already are. There is no room for statehood at this point until there is new leadership in Puerto Rico, laws are changed, commerce is reintroduced, and the creditors and the investors assured of payment.
Puerto Rico is grasping at straws concerning statehood and needs to come to the realization that drastic measures need to be instituted for recovery. No statehood giveaway or federal funding can be considered with the current situation in Puerto Rico.
Owatonna, MN Correspondent-Puerto Ricans recently voted in favor of statehood in what has become a semi-regular referendum. Unfortunately, only twenty-three percent of eligible voters cast ballots, so despite the pro-statehood side winning by a landslide (97% in favor), the vote was meaningless.
Many have cited Puerto Rico’s crushing debt as the best reason to become a state. Doing so makes them eligible for all sorts of federal aid. The downside is, citizens would have to pay federal income taxes if Puerto Rico were to become a state. No doubt, many Puerto Ricans consider paying for the privilege of becoming a state a losing proposition, despite the federal aid money that might alleviate their debt load and other problems.
From the US government’s standpoint, granting statehood to the economic disaster that Puerto Rico has become would be folly of the highest order. With some $20 Trillion of debt already on the books, it doesn’t make sense to annex an entity that will only worsen the debt load. Puerto Rico’s high unemployment rate and rapid loss of citizens to the mainland would also add to the federal obligations and put further strain on financial resources.
Before any territory is even considered for statehood, it should first clean up its financial act and demonstrate it will not be a burden on federal government money and services. After that, a substantial majority of all eligible voters (say 60%, including those who don’t vote) must approve an application for statehood. Only then should Congress debate and decide on granting statehood to Puerto Rico.
Gastonia, NC Correspondent– I have a unique perspective on the Puerto Rico question, since I just returned from my honeymoon on the island.
*pause while you congratulate me and ask where to send gifts*
Being a curious sort, I struck up conversations with a wide range of locals while I was in P.R., from the taxi driver who delivered us from the airport to croupiers and dealers in the casino to chefs, servers and busboys. While they had different opinions on the U.S. presidential situation, the health care debate and various other topics, they were in complete unison when it came to their desire for their home to become the 51st state.
Yes, there are economic issues in Puerto Rico, a lot of which have been caused by the U.S. keeping the island in limbo while U.S. companies game the system for every dollar they can squeeze. However, you won’t find a more patriotic, loyal, hardworking bunch than the island’s residents. Most of them knew at least as much about U.S. history as I did, and had well-informed arguments to make about current issues before the country.
Beyond that: Do you know what one of the most sought-after foodstuffs is on the entire island? The hamburger! If you make a great hamburger, Puerto Ricans will beat a path to your door. There’s a chain there called Buns that is similar to Five Guys in menu and concept, but a good 50% better. Even the Italian restaurants have at least one hamburger on the menu!
We cannot let this nation of hard working, burger loving, friendly folks slide into economic collapse while keeping them in territorial limbo. Give them the statehood they’ve so richly earned and add another star onto the flag. Or just wait until Texas decides to secede again and swap the spots around.