Political Purgatory

With a mere 16 months before the next presidential election, it seems obvious that this missive should be about some politician making headlines due to something he or she said, but Atlas refuses to be part of the unnecessary noise this far from the vote.  Instead, just a quick note about Puerto Rico and its relationship with our Federal Government.   This island is home to roughly 90 percent of people living in unincorporated territories of America, and it is struggling to pay its debt.

A couple of years ago, the leaders of the Caribbean island made it known that paying back debt would be tough to manage.  According to the Economist, the governor announced measures to correct Puerto Rico’s fiscal course; tax increases, spending cuts, and pension reforms were put into place, but it now seems obvious that this was not enough.  The governor now calls the debt “unpayable.”  When debt loads become unmanageable for people and entities, America’s version of capitalism allows debtors to restructure the liability side of their balance sheet, but this is not an option for the island because it does not have the access to federal bankruptcy protections that are made available to the 50 states.

Economically growing their way out of debt could be an option.  Sure.  However, this island fell into a recession 10 years ago from which it has not yet recovered.  Corporations left the port around this time because shields to protect profits from taxes were removed.  In other words, Washington D.C. initially helped put wind in the sails of this economy by implementing the protection and then left Puerto Rico in the doldrums.  Our current congress seems unwilling to help because they are all trying to manage the fires in their own districts and cannot see any self-serving advantages to be gained by coming to the aid of the island where over 3.5 million U.S. citizens lack voting rights.  For now, Puerto Ricans are waiting to find out their fate.  (by C. Cox)