Puerto Rico’s economy plummets


MCT Photo

A homeless woman seeks refuge from the sun in San Juan. Accoring to the most recent census, 46.2% of Puerto Ricans live under the poverty line. For comparison, on the American mainland, only 14.8% live under the poverty line.

Claire Lefton, A&E Chief

Although the Great Recession may be over, an American entity is facing a dire financial crisis. The territory of Puerto Rico is about to default billions they can not afford to pay– unless Congress intervenes.

A great deal of Puerto Rico’s problems derive from the fact that it is a territory and not a state. They have none of the control states have; Congress is in charge of everything. This has led to several tax codes being rewritten to keep companies domestic.

In 1996, Congress exempted United States companies from income taxes but did not make a replacement for the revenue that would come from those taxes. In addition, municipal bonds are tax-free and have top pay-back priority, making repaying buyers more important to Puerto Rico than the money going towards government services.

On May 1, hundreds of millions of dollars are due to creditors– hundreds of millions of dollars that Puerto Rico does not have. If they can not find a way to pay this, the territory will hardly (if at all) be able to provide public services. Already, hundreds of schools and hospitals are being closed down.

Unfortunately, little action has been taken to help the Puerto Rican economy thus far. As it is not considered a state, many Americans do not consider it an issue if they are in a dire state. Congress is the only thing that can help, but they keep getting caught in gridlock while trying to come up with solutions.

On “Last Week Tonight”, comedian John Oliver said, “We need to stop treating Puerto Rico like it’s just a tax haven… We have to start treating it like an island of American citizens whose fate is interwoven with ours.”

Currently, the plan being considered would be a financial oversight board over Puerto Rico that would impose financial discipline and mandatory restructuring. While it would not be able to monetarily aid the territory, it is still a step towards progress. However, critics are seeing any aid as a bailout.

Journalist Evan Berquist from the National Review said, “Opponents… have attempted to label it a ‘bailout’ of Puerto Rico. This is a dishonest characterization and could not be further from the truth. The bill commits zero taxpayer dollars to pay back Puerto Rico’s obligations or its creditors.”

While it may not matter much to the typical American, it is important to remember that there are lives at stake: American lives.

Playwright, musician, and Puerto Rican Lin-Manuel Miranda rapped on Last Week Tonight, “Your citizens are suffering: stop the bleeding, stop the loss. Help Puerto Rico– it’s just 100 miles across.”