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Drowning in Debt, Puerto Rico Votes for Statehood

Drowning in Debt, Puerto Rico Votes for Statehood

“Eight out of 10 voters went to the beach, went to the river, went to go eat, went to go hang out, went to church, but they sure didn’t go out to vote”

https://www.youtube.com/watch?v=scKIh9_rmt0

Sunday, Puerto Ricans headed to the polls to cast their votes for statehood.

97% voted to make Puerto Rico the fifty-first state. But that overwhelming support is hindered by the fact that only 23% of the eligible population actually voted.

According to many reports, the desire for statehood may hinge more on the small territories out of control debt than any patriotic compulsion.

From NBC:

The island’s governor, Ricardo Rosselló from the New Progressive Party (PNP in Spanish), along with his government, had been pushing for a “yes” for statehood as the best way to grapple with Puerto Rico’s crippling $73 billion debt.

But the island’s other two main political parties had pushed for a boycott of the plebiscite, and it showed in the turnout numbers. About 1.3 percent voted for the current commonwealth status and about 1.5 percent voted for independence.

The president of the Popular Democratic Party, (PPD in Spanish), which favors the current commonwealth status, said after the vote that “statehood-ers shot themselves in the foot.”

“Eight out of 10 voters went to the beach, went to the river, went to go eat, went to go hang out, went to church, but they sure didn’t go out to vote,” said PPD president Héctor Ferrer at a San Juan press conference. “Gov. Rosselló is now going to go to Washington and say this (statehood) is what people wanted. But we’re going too to say no, that’s not true and the numbers speak for themselves.”

Puerto Rico recently, “declared a form of bankruptcy” reports the New York Times:

But this time, the vote came a few weeks after Puerto Rico declared a form of bankruptcy in the face of $74 billion in debt and $49 billion in pension obligations it cannot pay. More than 150 public schools are being closed as a mass exodus of Puerto Ricans head for the mainland and those who remain brace for huge cuts to public services. Decisions are now in the hands of a bankruptcy judge.

Voters said that Puerto Rico needed the United States now more than ever.

“If there’s an earthquake in Puerto Rico, who is going to send the help? The Americans! This is their land!” said Gladys Martínez Cruz, 73, a retired tax clerk in San Juan’s Barrio Obrero neighborhood. “We need someone who is going to support us, send us money. There’s a lot of hunger in Puerto Rico, even with the help we get.”

Many Puerto Ricans, like Ms. Martínez, live off food stamps, public housing vouchers or other federal programs and worry that a change in political status could affect that aid. A huge publicity campaign warned voters that their citizenship could be at risk.

Bankruptcy and debt write-off would have reaching implications beyond Puerto Rico. Some 40% of state-side municipal bonds “have exposure to Puerto Rico debt” reports Forbes:

10-years of economic stagnation has taken its toll on Puerto Rico. Unemployment is skyrocketing, infrastructure is degrading, and the exodus away from the island is accelerating. Structural reforms that will stabilize the financial crisis in the short-term, and revitalize the economy in the long-term, are necessary. Such reforms will benefit the rest of the country as well.

Perhaps most obviously, these reforms will benefit the rest of the country because many Americans have directly invested in the bonds that Puerto Rico is currently unable to repay, or their pensions have invested in these bonds on their behalf. According to an analysis by USA Today based on Morningstar data, 40 percent of “municipal bond funds still have exposure to Puerto Rico debt”.

Therefore, any defaults or write downs on Puerto Rico’s $74 billion in outstanding debt will be a zero-sum game. Puerto Rico will gain debt relief, but savers and retirees in the rest of the country will be poorer.

It is imperative to keep this perspective during Puerto Rico’s debt renegotiations to ensure that Puerto Rico’s need for immediate debt relief is appropriately balanced with the need to minimize the losses on the territory’s current debt holders.

While debt renegotiations are necessary in the short-term, only economic growth can permanently fix Puerto Rico’s fiscal crisis. Economic growth does not simply occur because politicians wish it to be so. Instead, politicians must implement the right policies that empowers individuals, small businesses, and large companies (e.g. the private sector) to invest and grow the economy.

Puerto Rico’s economic malaise is attributable, in part, to poor economic policies implemented by both Puerto Rico and the federal government. These policies increase the costs of doing business, and create obstacles to working, saving, and investing in the territory.

Only 500,000 some-odd Puerto Ricans participated in Sunday’s referendum vote, which is incredibly low compared to previous elections (from NBC):

Puerto Rico historically has had high turnout in most elections. In the last plebiscite held in 2012, more than 1.9 million people voted, and 800,000 chose statehood. In 1993, nearly 2 million Puerto Ricans voted.

The vote was non-binding and it’s up to Congress to accept or reject the referendum results.

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Comments

I don’t get this, they’ve voted before for statehood, they’ll vote again, it’s a non-story. They don’t get a say in whether or not we admit them. I’m all for just letting them go their own way and jettison that ‘territory’.

Democrats must be salivating over another blue state full of dependents.

    thalesofmiletus in reply to MattMusson. | June 12, 2017 at 1:40 pm

    Moreover, to ship Puerto-Ricans off to purple states: “Forget New York, go to Florida!”

    Thankfully, this is yet another non-starter at this juncture in history.

According to an analysis by USA Today based on Morningstar data, 40 percent of “municipal bond funds still have exposure to Puerto Rico debt”.

40 percent, hm. Anybody want to take a bet that those ‘exposed’ muni funds are mostly in the deepest blue sections of the country, and that a certain unsafe number of Greek bombs… I mean bonds are lurking in their portfolio too?

I suspect that independence is out of the question for the US because an island in such proximity to the US, and so chronically poorly run, could be easily subverted and dominated by a foreign power such as Cuba. Or the Russians! The Russians! Or China. Or maybe Iran or even Saudi Arabia. Anybody with some money. So to keep opportunists out, the US may have to stay in.

Then the choice of territorial status or statehood becomes closely analogous to the runup to the Civil War. The Southern states wanted to add more slave states to the Union, thus increasing the reliably pro-slavery representation in the legislature. So-called “filibustering” expeditions of adventurers tried to foment revolutions on Caribbean islands, the idea being that the revolutionary governments could petition for annexation and statehood. And, being in the geographical area specified by the Missouri Compromise as the realm of slave states, they would of course be admitted as such, and make the country safe for the Peculiar Institution. Now, however, the Dems want to do something analogous to their ancient pro-slavery ways, but this time around to pack the legislature with socialists/fascists/control freaks/”big government” types, rather than pro-slavers.

The only viable option for a non-totalitarian United States is to continue PR’s territorial status essentially unchanged. However, there’s no obvious advantage to declaring Puerto Ricans to be citizens unless there’s a plan to gradually depopulate the island, in which case they would all need to go somewhere. This has been done on much smaller islands, such as Diego Garcia in the Indian Ocean (to make room for a joint US/British air base), or St Kilda, at the outer fringe of the Outer Hebrides.

As usual, nobody actually in the federal government is likely to explain what might be going on.

JackRussellTerrierist | June 12, 2017 at 1:15 pm

NO! We don’t need another parasitic mouth to feed nor more ‘rat electoral votes.

Go away. Drink your rum. Leave us alone. We don’t want you.

Translation: Congressional democrats colluded with Puerto Rico’s leftist governor to gin up a statehood election that nobody wanted in hopes of stuffing 2 more leftists into the US Senate in exchange for $73 billion from the US Tax payers.

Of course, I don’t need any evidence, but Congressional hearings NOW!

We need someone who is going to support us, send us money
**************************************************************
and there’s the real lede

This referendum was interesting. And, the politics involved are GREAT

We have an island which is so deeply in debt that it can not support itself. And, the people of that island are looking at three potential paths; independence, continued territorial status and statehood. Independence would leave the Puerto Ricans totally responsible for their debt. No one, including those supporting independence want that. Territorial status would leave the island with limited fiscal protections. Not a pleasant picture. While statehood gives the island the best chance of gaining US financial rescue. But, few really want to be a US state. So, what to do. Simple, have everyone who does not support statehood stay home and don’t vote. Given the low turnout, and the historical Congressional reservation granting Puerto Rico statehood, the chances of statehood are practically nil. But, the high percentage of the actual voters seemingly desiring statehood [97% of 23% of the population] puts additional pressure on the Federal Government of the US to increase the financial aid that Puerto Rico so desperately needs. And, it allows the pro-independence supporters and territorialists to avoid publicly violating their positions.

Gotta admire the political strategy here.

    rdmdawg in reply to Mac45. | June 12, 2017 at 7:19 pm

    “While statehood gives the island the best chance of gaining US financial rescue. But, few really want to be a US state.”

    Except for every Democrat in the US… And all the Puerto Ricans.

    “Given the low turnout, and the historical Congressional reservation granting Puerto Rico statehood, the chances of statehood are practically nil.”

    You say this as if it were up to the Puerto Ricans to join the Union. It is not, it’s up to us, and we say ‘Hell No!’ Also, screw ‘political strategy’, it’s time us and Puerto Rico went our separate ways, we don’t want to be on the hook for a bailout.

      Mac45 in reply to rdmdawg. | June 12, 2017 at 11:18 pm

      The US Dems might like to see PR as a state. But the majority of the residents of PR are happy with the current status quo. And, the US is not going to impose statehood on an unwilling population.

      While technically it is up to us to decide if PR is granted statehood, it is really up to the members of Congress. And, the Congress is not going to impose statehood on PR, unless a majority of the residents desire that. Also, Congress is not going to grant statehood to PR without careful consideration, because it could open a can of worms by sparking grants of statehood for other territories which could change the make-up of the Senate significantly.

      Please read my posts before commenting. The political strategy is not derived within the US, but is a product of PR politicians. And, it is excellent. By boycotting the referendum, the independence and status quo supporters in PR maintain their positions against statehood, while at the same time allowing the Congress to justifiably withhold a grant of statehood based upon an obvious minority desiring it. And, they gain leverage for a bailout from the US.

        rdmdawg in reply to Mac45. | June 12, 2017 at 11:45 pm

        You do understand that Statehood is a precious gift, and most random places around the world would dearly love to join our union, right? It was granted to Hawaii last as a reward for their contribution to WWII. If you ever travelled to Puerto Rico, you would find overwhelming support for them becoming the 51st state.

          rabidfox in reply to rdmdawg. | June 13, 2017 at 12:47 am

          So why did only 23% actually show up to vote? Doesn’t sound overwhelming to me. And there is something about that 97% number that sets off alarm bells as well.

We already have (at least) three dysfunctional states – California, Illinois, New York. We don’t need another one.

Let them in, balanced by admitting North California as well?

    Subotai Bahadur in reply to windbag. | June 12, 2017 at 5:59 pm

    NO. We only consider it AFTER admitting Northern California, Central Valley California, Eastern Oregon, Eastern Washington, and Upstate New York. After the flag has 55 stars, then we will consider Puerto Rico. However, in the consideration, we will have to also consider the hatred and bile they have spewed at us in the past demanding an end to “colonial” status and the removal of US military installations.

    They expressed their opinion of us. I am just giving them the respect of taking them seriously. They were willing to throw out the largest employer on the island to rid themselves of the yankee imperialists. Obviously, they meant it.

    If they want to be the Eastern Dominican Republic, they are welcome to.

Hmm you wanna be a state ok sort your shit out and then come talk to us .. give them a 5 or 10 year ultimatum

buckeyeminuteman | June 12, 2017 at 7:07 pm

No way can we afford them.

PR is a fabulously beautiful island with profound commitments to art, history, family, education, medicine, fine cuisine, reliable infrastructure and a constant sense of welcome. People need to spend time there before they resort to glib put downs. PR’s financial management suffers from sustained deficit spending funded by tax subsidized bonds that Wall Street kept pumping in, both PR and Wall Street should have said no long ago. It’s kind of like agreeing that Washington should have a balanced budget. Whether it’s Washington or PR, policies that are both fiscally sound and politically difficult are not getting implemented. The Statehood talk just serves to distract people and their leaders from facing difficult choices; it is not a realistic option.

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