The Problem with Puerto Rico
What an interesting time to spring a thing like this on us -- with the problems of Greece and the concern it’s causing the rest of the world -- now Puerto Rico?
Democratic Governor Alejandro Garcia Padilla has calmly announced that Puerto Rico’s staggering debt of $72 billion (USD) is simply “not payable.” While the island’s economy is in recession, the unemployment rate is hovering around the 12% mark, water has been rationed, and financial institutions have rightly refused to lend any more cash to its profligate government, Puerto Rico is increasingly looking more and more like Greece. It would seem that the United States is now being tested much in the same way the European Union is being tested across the Atlantic. And with a predominantly Republican Congress offset by a Democratic president, this spells trouble on the road ahead.
Even if the U.S. does have bankruptcy laws, much of Congress is going to be opposed to using them in this case. Chapter 9 has been used involving various municipalities across the United States such as Detroit and Orange County, California, but there is no bankruptcy code written for entire states (or territories). Only Capitol Hill could change the law, and even if it does, bankruptcy cannot solve Puerto Rico’s troubles.
The problem Puerto Rico is facing is by no means a shock -- just one of those many issues plaguing our nation that has simmered for almost a decade under the radar and under the nose of Obama’s incompetent administration. Puerto Rico is an example of what happens when a government’s interests become more about itself than the people it supposedly represent.
With over $3 trillion owed by states, the handling of Puerto Rico’s default will set a precedent more consequential than Obergefell. Allowing the sort of government to spend excessively (putting a lot of that money into the pensions of its employees), all the while expecting the debt incurred to one day just up and disappear is simply not feasible. Taking a cue from the Greek debt tragedy (also caused by excessive spending on social benefits), our government should be firm in its resolve to show that this kind of fiscally irresponsible attitude simply cannot be tolerated.
Governor Padilla has been brazen enough to say in an interview on Telemundo that those politicians who are “passive” about allowing Puerto Rico to declare bankruptcy should be more careful. He went on to say, “Those who want the support of Puerto Ricans must help Puerto Rico now, not later . . . Puerto Ricans decide the elections in Florida. That’s very important.” Essentially, he ludicrously implied that Puerto Ricans thereby decide the presidential election of the United States.
That’s a lot of chutzpah and hubris coming from a governor most Americans have never heard of. Padilla’s argument therefore boils down to: if you want to win the White House, help me. But what’s to be expected of someone who governs so impractically, even incompetently that it allows its state to become the most indebted place in the United States.
Of course what Governor Padilla said was a challenge to Washington. Politicians on either side of the aisle know the world is watching and the future strength of America’s economy depends in part on the decision Washington makes now in how they handle the self-inflicted mess that Puerto Rico is roiled in.
But with 2016 almost upon us, what do the presidential hopefuls think?
Jeb Bush takes a soft, liberal stance on the issue, endorsing bankruptcy. He also wants to make Puerto Rico the 51st state -- literally. But is this really an example of compassionate conservatism or just a play for the Latino vote?
Senator Marco Rubio has not yet taken a stance on the issue. He is supposedly ‘reviewing’ the situation and looking for the “right approach” to addressing the problem without hurting the American taxpayer. Essentially, he wants to help Puerto Rico without alienating the tea party.
Likewise, Hillary Clinton is torn between divergent interests and has not publicly offered a solution. She needs to woo Hispanic and Puerto Rican voters while at the same time not alienating her deep pocketed Wall Street supporters, some of whom are concerned about her recent push farther to the left -- as she has inevitably been compelled to by her outspoken Democratic competitors Martin O’Malley and Bernie Sanders.
Ted Cruz, Lindsey Graham, and Rand Paul all have yet to address the issue.
However, to get a clearer glimpse of how the GOP line-up of presidential candidates will tackle this game changing issue, look no further than the Koch brothers, who have repeatedly vowed to spend upwards of $1 billion on the 2016 presidential election. They are staunchly opposed to Chapter 9, seeing it as an unthinkable government handout, and propose instead an independent agency, a board that would control the management of Puerto Rico’s debt and put them back on the straight and narrow financially.
As expected, President Obama is only interested in his personal legacy. He should be well aware that setting Puerto Rico on the path to bankruptcy without restrictions and oversight would mean endorsing a corrupt system that has spent years making ruinous financial decisions. But seeing how our commander-in-chief embarked on the same kind of irresponsible fiscal policies (think ObamaCare), Puerto Rico will probably be forgiven for its transgressions, no matter the harsh rhetoric of the White House. One can only hope that the GOP will place itself on the right side of the debate and convince the American people that there ain't no such thing as a free lunch.