Puerto Rico’s Fiscal Crisis is America’s Colonial Crisis

Puerto Rico

My heart's devotion

Let it sink back in the ocean

Always the hurricanes blowing

Always the population growing

– Anita opens the song “America” in West Side Story (1961) –

Puerto Rico’s fiscal perils are currently in the news, playing off of the debt crisis of Greece and forcing a comparison between the two. With over $72 billion dollars of debt, Puerto Rico finds itself financially vulnerable, since it is neither a sovereign nation nor a state of the U.S., making comparisons with Greece or even Detroit somewhat misleading.

With an over-$600 million debt payment due on July 1st, many informed observers believe Puerto Rico is on the verge of defaulting. For an island with a poverty rate approaching 50 percent, a public debt that amounts to over $20,000 per inhabitant (more than its median income of $19,518) and nearly 95 percent of its economic output (compared to only 2.4 percent for the 50 states combined) is, well, quite unsustainable. 

In April, U.S. Treasury Secretary Jacob Lew let officials in Puerto Rico know that the United States would not be bailing them out, a move reminiscent of President Gerald Ford’s response to New York City’s 1975 fiscal crisis, which the Daily News summed up on its front page as “Ford To City: Drop Dead!”

While most of the attention in Puerto Rico’s case focuses on technical issues relating to the solvency of municipal bonds and austerity measures, the history of U.S. policies that have resulted in more than three and a half million Puerto Ricans being treated as second class citizens goes largely ignored. Puerto Rico, which is consistently shortchanged in the federal budget, is currently facing looming Medicare cuts while the states receive increases—and this in spite of the fact that the people of Puerto Rico have carried the full load of payroll taxes for the program! With a poverty rate of 45 percent (more than double that of Mississippi), Puerto Rico has had serious long-term economic problems that, like its current massive public debt, have been historically papered over. 

Ever since the United States took Puerto Rico from Spain in 1898, the island has existed in a political twilight zone, mired in an endless and unproductive debate over its political status. Today, its future lies utterly in the hands of what everyone will agree is a dysfunctional United States Congress.

Although the people of Puerto Rico have been U.S. citizens since 1917, they do not have the right to vote for the U.S. President and are only represented in Congress by a single, non-voting member. In addition, bankruptcy laws available to U.S. citizens are not available to Puerto Rican residents.

In the now classic play and film, West Side Story more than fifty years ago, the recurring migrant disagreement about the virtues of the home country versus their new life in the United States two of its major Puerto Rican characters, Anita and Bernardo, still resonates today. As one reads the news coverage of Puerto Rico’s current fiscal crisis, it leads one to wonder if the United States will be letting Puerto Rico “sink back in the ocean.” But there is an interesting difference from the situation they were debating musically half a century ago: Puerto Rico’s population has been growing but not within its own borders. Instead the size of the stateside Puerto Rican population is increasing well beyond that of the Island. Will this growing Puerto Rican diaspora, now a majority of the total Puerto Rican population become the key to keeping the territory afloat, playing the role of the leading Puerto Rican character Maria uniting the two gangs, the White Jets and the Puerto Rican Sharks standing in today for the United States and Puerto Rico, in a common cause of survival?

In April, the National Institute for Latino Policy (NiLP) conducted a survey of 345 Latino thought leaders throughout the United States. Among other things, the survey asked what the U.S. response to Puerto Rico’s fiscal crisis should be. Close to two-thirds (65.4 percent) of stateside Puerto Rican respondents thought the United States should assist Puerto Rico with bankruptcy protections and financial assistance. Just 14.3 percent supported total inaction on the part of the United States, and only 5.1 percent supported a full U.S. takeover of Puerto Rico’s finances. However, with only pluralities of the other Latino thought leaders surveyed also agreed that the United States should assist Puerto Rico, there appears to be much work to be done to mobilize the over Latino population around this issue, not to mention the general public.

The Puerto Rican diaspora has many political assets that can assist and have done so numerous times in the past. There are four Puerto Rican voting members of Congress (two from New York and one each from Illinois and Idaho), numerous other elected officials at the local and state levels, and even an Associate Justice of the United States Supreme Court. They are not only largely concentrated in the influential Washington, DC to Boston corridor but also a major presence in the increasingly important battleground state of Florida as the 2016 U.S. Presidential election looms. 

The colonial paradox here is that Puerto Rico’s fiscal crisis has forced a mass migration to Florida in ways that leverage its potential impact in Presidential elections.

The American colonial bureaucracy cites its lack of authority to intervene.  In the meantime, the hedge fund vultures are circling Puerto Rico, sensing a fiscal death spiral they can feed off and caring little about the consequences for nearly four million residents as they manipulate a financial system largely devoid of any social conscience.

The big question is whether this potential Puerto Rican diaspora political firepower can be mobilized effectively. There is, for example, a bill before Congress that would place Puerto Rico under U.S. bankruptcy laws on a limited basis that would cover about two-thirds of its current debt. However, while there is a consensus in Puerto Rico across party lines supporting this measure, it is not getting much traction in Washington (so much for Puerto Rican “self-determination”!). There are those who, in fact, feel that it does not go far enough.

The reality is that there is a need for a more comprehensive approach by the United States to address Puerto Rico’s serious fiscal crisis. Besides more comprehensive Congressional action, the White House and its Treasury Department need to become more proactive and creative, all a long-shot given the existing party gridlock that exists.

A large part of the problem is the lack of recognition Puerto Rico gets from the American public, which translates into what some refer to as “selective inattention” by the federal government. The federal courts’ characterization of Puerto Rico as “foreign in a domestic sense” nicely sums up its uniquely American colonial dilemma. The current thinking is that it might just be up to the Puerto Rican diaspora in the United States, now numbering more than 4.6 million, to move the needle on resolving Puerto Rico’s fiscal crisis. Can the stateside Puerto Rican run Gordon Gekko out of Puerto Rico’s Milla de Oro, a one-mile stretch in San Juan also known as the “Wall Street of the Caribbean”?

The bottom line is that Puerto Rico is the United States’ largest colony that it decided to take by force 117 years ago and has since treated like a resented orphan it has consistently undernourished politically and economically. Puerto Rico’s current fiscal crisis is, in this sense, really a crisis of American colonial policies. Will the United States accept responsibility for the negative consequences of its imperialist past? The irony would be if it is the Puerto Rican diaspora that finally makes the United States’ accountable on this issue.

Angelo Falcón is President of the National Institute for Latino Policy (NiLP). For more information, visit, www.latinopolicy.,org.