Puerto Rico is a fiscal mess.
It is an island which is both 3rd world and American. It straddles 2 universes. It has a massive, patronage based government employee segment, 1/3 of all workers, and all the taxpayers are leaving for the mainland. Basically Puerto Rico is Detroit in many respects but bigger and with palm trees.
And now Obama wants us to bail out the territory even though everyone knew that Puerto Rico’s government sector was too large and would crash eventually.
A bailout must not happen. The bailouts are over. Puerto Rico didn’t keep its house in order and as such must pay for decades of mistakes. You, me, our children shouldn’t have to pay for the profligate habits of an island which chose to go the 3rd world route instead of the responsible one. It is important that Speaker Ryan understand this.
(From Fox News)
Under U.S. law, cities and towns can file for bankruptcy, but states and territories cannot. Yet, special legislation enacted by Congress in 1984 denied bankruptcy for Puerto Rico’s municipal governments, agencies and bureaus, as well as for the entire Island’s government. Moreover, all of the Island’s government bonds are exempt from U.S. taxation. Counterproductively, these two factors made lending to Puerto Rico’s government at low interest rates intensely attractive for U.S. lenders.
Conservatives and Republicans cannot support a taxpayer bailout of Puerto Rico. That would just reward fiscal profligacy and failure. Such a bailout would become a model for every liberal, overspending city in America to avoid overdue policy reforms and paying back its debt…
…What is needed are structural reforms that would restore rapid economic growth to Puerto Rico’s economy. Instead of disrespecting the rule of law with after the fact bankruptcy, Puerto Rico can collaboratively enter renegotiations with lenders outside of bankruptcy, as it has already been doing. Instead of discouraging essential capital investment on the Island, that would encourage and promote such investment.