Have you ever been to Puerto Rico? It’s a nice sized island in the eastern Caribbean that is home to some great rum factories, a couple of nice hotels (not a lot though!), and a $73 billion debt that you and I may be forced to pay for them very soon. Why is that? Because Puerto Rico is a US territory. They aren’t a state, but they are ours. That means that if they default on their bad debt, it’s Uncle Sam’s door that the bond holders will be knocking on. And Barack Obama seems ready to oblige. If only congress would help him.
Obama is trying to coddle together a bill that would help Puerto Rico out of their debt crisis. Let’s just put it this way…the debt crisis being faced in Puerto Rico is umpteen times that faced by California, or by Chicago, or by the state of Illinois. It’s worse than when New York City when bankrupt. In fact, it would be the biggest bailout of a territory or a state in US history. And they are in that mess because of corruption in their government, over-spending, and a lack of budgetary discipline. And yes, we technically are on the hook.
So, what the GOP in congress and the Obama administration are trying to do is to put together some sort of bailout board that would basically run the Caribbean island until they can get back on their feet. We won’t bail out Detroit, but Puerto Rico? Yup…in a heartbeat. And besides the “legalistic” aspect, the real reason Obama wants it? He wants their votes. Of course, they don’t get the chance to have electoral votes in presidential elections because the constitution says those votes are given to “states”. Pretty much the same reason Puerto Rico doesn’t have representation in congress. Only states can have representation (although Washington DC has a representative in the US House of Representatives that cannot vote they can sit in on the proceedings). And Obama is trying to make it that Puerto Rico eventually becomes the 51st state, a rather contentious idea on the island. About 54% of the island’s population is dissatisfied with their current form of government, and 61% say they would favor becoming the 51st state in the US. They’ve even designed a flag with 51 stars on it! Unfortunately for Puerto Rico, congress isn’t as welcoming to the idea as the island is. But with Puerto Rico getting 2 senators, 3 representatives, and a few electoral votes as well, the Democrats would relish it. It wouldn’t make a difference in this particular congress, but it may in the future.
So what’s the prognosis of a Puerto Rican bailout? At this moment, it’s on life support. The GOP led congress is balking at the over-spending of the Obama administration and don’t see a way clear to spend an additional $73 billion to take over the bonds. So we wait…and wait…and the debt continues to grow on a sunny island nation.
Carry on world…you’re dismissed!