Puerto Rico

Despite the damage from back-to-back hurricanes, Puerto Rico seems to be an afterthought to the U.S. government due to its territory status.

As a U.S. territory, rather than state, Puerto Rico is denied the same attention and resources that are given to storm-prone states like Florida, Louisiana, and Texas. Even though 97 percent of its citizens voted for statehood in a non-binding referendum earlier this year, Puerto Rico can’t officially become a state without a vote from Congress. And until the island is granted statehood, Puerto Rico won’t have representation in the U.S. House and Senate that can actually fight in the interests of the island’s residents.

Territories like Puerto Rico, Guam, the Northern Mariana Islands and the U.S. Virgin Islands (St. Croix, St. John, St. Thomas) are largely subjects of the federal government, as they are subjected to legislation passed by the United States government, but lack representatives in Congress. If those territories were granted statehood, the U.S. Senate would suddenly swell by eight more members, and an Island Caucus could help either side pass bills by siding with either the slight Republican majority or Democratic minority. And while territories have always been allowed to vote in primaries, they aren’t allowed to vote in general elections.

Puerto Rico having the full rights of a state would likely make more representatives in Congress — not to mention presidential candidates — more invested in the island’s future. However, due to the territory’s poor financial situation largely as a result of disastrous free trade policies like NAFTA, the island is now effectively a colony under full subjugation to the mainland. The Puerto Rico vs. Sanchez Supreme Court decision all but stripped the island of its last remaining sovereignty, putting the management of its finances in the hands of an independent, non-Puerto Rican body.

The body that will decide the devastated territory’s financial future isn’t that much different when compared to the controversial emergency manager law in Michigan, in which unelected bureaucrats act as viceroys of financially distressed (and predominantly black) cities, and sell off public assets to private interests while punishing residents with cruel austerity measures like cuts to pensions and healthcare. Now, 3.5 million Puerto Ricans will likely have to rebuild their island while also contending with drastic cutbacks to public services.

As author and professor Juan Cole wrote, Puerto Rican debt — which amounts to roughly $70 billion — was accumulated following the passage and implementation of NAFTA, which allowed Mexico to compete equally in the U.S. economy despite having a much lower minimum wage, a different currency, and exemption from paying tariffs to export goods. And in the mid-1990s, then-Speaker of the House Newt Gingrich led the charge on repealing section 936 of the IRS code, which gave businesses tax exemptions for doing business in Puerto Rico. The only thing the territory could do to shore up its economy in the meantime was to borrow money.

If President Trump is serious about helping Puerto Rico recover from the worst natural disaster in its history, forgiving at least $50 billion of their debt (which is less than 10 percent of the record-high military budget that Congress just approved), re-instating section 936, and pushing Congress to vote on Puerto Rican statehood would go a long way. Puerto Rico needs and deserves more than empty words and FEMA trailers.

 

Matthew P. Robbins is a freelance economics contributor covering wages, budgets, and taxes. He lives in Chicago, Illinois with his husband and two cats. 

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