Dems Unveil Bill to Erase Puerto Rican Debt with Your Tax Dollars

[AuH20]

Such generous people.

1022135776375500800

[Bern]

$15 billion relief fund ÷ 3.337 million Puerto Ricans = $4,495 per resident. I look forward to the IRS giving me a nearly $5k debt forgiveness too.

[spudea]

I want a deal that emancipates Puerto Rico from US control, such as eliminate half their debt and sell the territory to spain or brazil or someone. I want all of our colonies sold off or liberated.

[devil21]

Warren is such a panderer. She better work on her terrible body language if she's going to be an effective liar in a pres run. From TARP Administrator to Banker Hater in 10 years and she still can't fix her 'tells' during interviews.

[timosman]

Warren is such a panderer. She better work on her terrible body language if she's going to be an effective liar in a pres run. From TARP Administrator to Banker Hater in 10 years and she still can't fix her 'tells' during interviews.

Who is this bitch pandering to?:confused:

[aGameOfThrones]

$15 billion relief fund ÷ 3.337 million Puerto Ricans = $4,495 per resident. I look forward to the IRS giving me a nearly $5k debt forgiveness too.

I really dislike that, it makes it seems as we are separate from the USA. Why not Citizens, Americans, US citizens who live in Puerto Rico?
F@ck, I’m like one of those, “use the correct pronouns to describe my identity” when it comes to this.

[Ender]

I really dislike that, it makes it seems as we are separate from the USA. Why not Citizens, Americans, US citizens who live in Puerto Rico?
F@ck, I’m like one of those, “use the correct pronouns to describe my identity” when it comes to this.

Exactly.

As of January, the fed gov had given Texas two waves of payments for Harvey relief, totaling $51 billion.

https://www.click2houston.com/weather/how-much-money-has-federal-government-paid-to-cover-hurricane-damage-

The governor has asked for 61 billion more:


The requests include:

$12 billion for the Galveston County Coastal Spine, part of the larger "Ike Dike," a barrier aimed at protecting coastal areas from hurricane storm surge.
$9 billion for housing assistance in the City of Houston, which would help rebuild 85,000 single and multi-family housing units damaged by Harvey.
$6 billion to buy land, easements, and rights-of-way around Buffalo Bayou and the Addicks and Barker reservoirs.
$2 billion for "coast-wide critical infrastructure protection,” described as flood control and other mitigation projects around critical public infrastructure such as “power plants, communication networks, prison systems, etc.”
$466 million for the Port of Houston to “create resiliency” and harden the Houston Ship Channel.
$115 million to repair 113 county buildings in Harris County.

2 billion has been approved, so far, for Puerto Rico.


https://www.fema.gov/news-release/2018/04/30/2-billion-federal-assistance-approved-puerto-rico-recovery

[devil21]

I really dislike that, it makes it seems as we are separate from the USA. Why not Citizens, Americans, US citizens who live in Puerto Rico?
F@ck, I’m like one of those, “use the correct pronouns to describe my identity” when it comes to this.

Ask the IRS why it matters.

[spudea]

Exactly.

As of January, the fed gov had given Texas two waves of payments for Harvey relief, totaling $51 billion.

https://www.click2houston.com/weather/how-much-money-has-federal-government-paid-to-cover-hurricane-damage-

The governor has asked for 61 billion more:



2 billion has been approved, so far, for Puerto Rico.

Now compare Fed taxes per capita. Just proves Washington doesn't care about Puerto Rico and is also responsible for the decades of mismanagement of the island territory. The sooner Puerto Rico becomes independent or annexed to another country, the better.

[Bern]

I really dislike that, it makes it seems as we are separate from the USA. Why not Citizens, Americans, US citizens who live in Puerto Rico?
F@ck, I’m like one of those, “use the correct pronouns to describe my identity” when it comes to this.

Don't get mad at me. From the Intercept article:
... The bill addresses that by creating a $15 billion taxpayer-funded compensation fund to benefit Puerto Rican creditors like residents, local businesses and banks, and union and public pension plans, as long as it is taken up within three years of enactment. ...

So, in actuality, the math I presented above is actually way too generous. That fund isn't going to be giving free money to every Puerto Rican resident. Most of it is going to large business, banks and pension funds. Still, must be nice getting that free money. I thought govco might have learned a lesson about bailouts after the Tea Party backlash from the TARP era. Guess not.

[ThePaleoLibertarian]

I really dislike that, it makes it seems as we are separate from the USA. Why not Citizens, Americans, US citizens who live in Puerto Rico?
F@ck, I’m like one of those, “use the correct pronouns to describe my identity” when it comes to this.
Because despite whatever ridiculous legal status they might have, Puerto Ricans are not Americans. They are a foreign culture and state that has legal citizenship.

[phill4paul]

They are going to have to do better than that. The last I heard the progressive P.R. government had ran them into $60 billion in debt before the hurricane hit.

[dean.engelhardt]

Exactly.

As of January, the fed gov had given Texas two waves of payments for Harvey relief, totaling $51 billion.

https://www.click2houston.com/weather/how-much-money-has-federal-government-paid-to-cover-hurricane-damage-

The governor has asked for 61 billion more:



2 billion has been approved, so far, for Puerto Rico.

:eek: The feds throw around billions like I do pennies.

[AuH20]

Who is this bitch pandering to?:confused:

Fat Cat Creditors and the poor widdle Puerto Ricans who are being terrorized by the imaginary White Devil.

[oyarde]

Sanders & Warren are the white devil .:radioactive::bigpoo:

[juleswin]

Fat Cat Creditors and the poor widdle Puerto Ricans who are being terrorized by the imaginary White Devil.

If I ever run out of race card to play, I am definitely coming to u cos your deck must be stacked. Damn.

[Ender]

Now compare Fed taxes per capita. Just proves Washington doesn't care about Puerto Rico and is also responsible for the decades of mismanagement of the island territory. The sooner Puerto Rico becomes independent or annexed to another country, the better.

Oh, I agree 1000%.

(Don't faint.) :cool:

[aGameOfThrones]

Because despite whatever ridiculous legal status they might have, Puerto Ricans are not Americans. They are a foreign culture and state that has legal citizenship.

How foreign is it?

[Ender]

Because despite whatever ridiculous legal status they might have, Puerto Ricans are not Americans. They are a foreign culture and state that has legal citizenship.

Ehhhh..... how about some REAL history?


In February 1898, Puerto Ricans had a lot to celebrate. After centuries of Spanish colonial rule, they had just become an independent part of Spain, complete with a Constitution and voting rights. But within only a few years, the U.S. would throw all that asunder, paving the way for Puerto Rico’s nonvoting territory status today.

It all started with the Spanish-American War, which began in the spring of 1898, when Puerto Rico was a Spanish territory. The U.S. invaded Puerto Rico not only because it was a Spanish territory, but also due to its interests in developing a sugar market there, says Lillian Guerra, a history professor at the University of Florida.

“When the Americans arrived, General [Nelson] Miles issued, very famously, a decree manifesto in which he promised to protect the life, liberty, and happiness of Puerto Ricans, and their property,” she says. “A lot of Puerto Ricans who were poor, who were working-class, who were peasants, took this as an invitation to side with the Americans in what was still a war against Spain.”

To support the U.S., Puerto Ricans began to attack Spanish-owned businesses and property. But “to their great shock and awe,” Guerra says the Americans did not keep their promises after they won the war, when Spain ceded Puerto Rico to the U.S. in the Treaty of Paris. The U.S. ignored the new, democratically-elected local parliament of Puerto Rico in favor of creating its own colonial system.

With the westward expansion of the 19th century, the U.S. established “incorporated territories” that could and did become formal American states—like the Colorado Territory. But in 1901, a series of legal opinions known as the Insular Cases argued that Puerto Rico and other territories ceded by the Spanish were full of “alien races” who couldn’t understand “Anglo-Saxon principles.” Therefore, the Constitution did not apply to them, and Puerto Rico became an “unincorporated territory” with no path forward to statehood.

In addition, the U.S. disrupted Puerto Rico’s coffee industry, implementing a sugar economy and creating massive poverty among the population. “Within the first 10 years of the U.S. occupation of Puerto Rico, U.S. sugar interests had pretty much taken over, and the Puerto Rican coffee class has been displaced entirely,” Guerra explains.

Puerto Ricans were outraged after the war. Instead of becoming citizens, Puerto Ricans were in limbo. “They didn’t even have a passport; they didn’t have any legal standing in the U.S. system until 1917.”

That year, Puerto Ricans became U.S. citizens under the Jones-Shafroth act—this way the U.S. could deploy them as troops during World War I (similar to how the Emancipation Proclamation legalized the Union’s use of black troops). The federal government believed that white people weren’t suited to fight in tropical climates because they didn’t have immunity to the diseases found there. Instead, the U.S. sent Puerto Rican “immunes,” as they were called, to defend the Panama Canal.

Although they were now U.S. citizens, Puerto Ricans could not vote for president or elect voting senators or representatives to the U.S. Congress. In fact, they still can’t.

Since 1901, Puerto Ricans have only been able to elect a nonvoting “resident commissioner of Puerto Rico” to the U.S. House of Representatives. Like the United States’ other territories of Guam, Northern Mariana Islands, the U.S. Virgin Islands, and American Samoa, as well as the U.S. capital of Washington, D.C., Puerto Ricans have no real representation in Congress. And unlike D.C., which gained the right to vote for president with the 23rd Amendment in 1961, none of the American citizens in these territories can vote for the president of their country.

“They have a voice in Congress who has no vote, not even on legislation related to Puerto Rico,” Guerra says. “So the result of that is that nobody cares about Puerto Rico, and its government is basically only in control of local financial matters and the distribution of aid that comes from the federal government as well as its own tax base.”

During the 20th century, various Puerto Ricans have sought to win complete independence for their islands from the United States. However, Guerra says that the federal government quashed these attempts through overt censorship and the repeated jailing of revolutionary leaders, like the independence movement leader Pedro Albizu Campo who was jailed in 1936 for organizing Puerto Rican workers.

“It’s still a country that is dominated by U.S. investors,” Guerra says. “And you should know that most U.S. companies pay virtually no taxes to the Puerto Rican state.” This combined with the local government’s massive corruption has created an economic crisis. In September 2017, these economic problems worsened with the devastating impact of Hurricane Maria, which will require extensive rebuilding.

Is there any hope for Puerto Rico becoming a state in the future? After all, the reason they’re not is because more than a century ago, a judge said that Puerto Ricans were too racially inferior to be a part of the U.S. legal system. Today, Justice Sonia Sotomayor, whose parents were born in Puerto Rico, sits on the highest court of law in the United States—the Supreme Court.

Just a few months before Hurricane Maria, Puerto Ricans actually voted in favor of a referendum for statehood. But unfortunately, it doesn’t matter how many Puerto Ricans vote for it. The only people who can incorporate the islands into a state are the voting members of Congress.

“It’s very unlikely that statehood will ever happen, at least not in our lifetimes, unless something in the political culture of the U.S. Congress shifts radically to suddenly embrace Latin Americans, Latinos, and Puerto Ricans,” she says. “And I don’t think we’re going that direction.”

https://www.history.com/news/puerto-ricos-complicated-history-with-the-united-states

[ThePaleoLibertarian]

Ehhhh..... how about some REAL history?



https://www.history.com/news/puerto-ricos-complicated-history-with-the-united-states

Except that what I said has nothing at all to do with their history and everything to do with the nature of the Puerto Rican culture and people. I probably shouldn't have said "state", but instead "nation", which is an ancient concept, separate from its modern usage. The American nation-state governs Puerto Rico, but the two societies are very different nations (again, as per the ancient definition of the word).

Puerto Rico should never be made into a state. Better to give them billions in subsidy to become independent than integrate them as the 51st member of the union,

[aGameOfThrones]

Except that what I said has nothing at all to do with their history and everything to do with the nature of the Puerto Rican culture and people. I probably shouldn't have said "state", but instead "nation", which is an ancient concept, separate from its modern usage. The American nation-state governs Puerto Rico, but the two societies are very different nations (again, as per the ancient definition of the word).

Puerto Rico should never be made into a state. Better to give them billions in subsidy to become independent than integrate them as the 51st member of the union,


Why?

[acptulsa]

Why?

Because he fancies himself a Jet and he's afraid of Sharks?

[kpitcher]

If they just plant some crops then they'd get billions from the Department of Ag bailouts

[Zippyjuan]

40% ($30 billion) of their $73 billion debt is held by people in Puerto Rico. Who owns the rest? https://money.cnn.com/2017/09/27/investing/puerto-rico-debt-who-owns-trump/index.html


President Trump pointed out Puerto Rico's "massive debt" problems on Monday. Puerto Rico, Trump tweeted, owes "billions of dollars" to "Wall Street and the banks, which, sadly, must be dealt with."

In reality, most of that money is owed to everyday investors. Less than 25% of Puerto Rican debt is held by hedge funds, according to estimates by Cate Long, founder of research firm Puerto Rico Clearinghouse.

The rest of the debt is owned by individuals and mutual funds that are held by mom-and-pop investors.

"For the most part, Main Street America owns this debt," Long said. "It's not as though these are vultures circling around the island."

[phill4paul]

40% ($30 billion) of their $73 billion debt is held by people in Puerto Rico. Who owns the rest? https://money.cnn.com/2017/09/27/investing/puerto-rico-debt-who-owns-trump/index.html

So they, the people, DO owe billions in debt. Thanks for clarifying.

One word: PROMESA.

[Zippyjuan]

So they, the people, DO owe billions in debt. Thanks for clarifying.

One word: PROMESA.

In the same sense as you owing for the US government debt if you want to put it that way.

[phill4paul]

In the same sense as you owing for the US government debt if you want to put it that way.

So the Fed/Gov should bail me out?

[ThePaleoLibertarian]

Why?
Because, despite my crush on her, President Ocasio-Cortez isn't something I want to see happen. Puerto Rico becoming a state guarantees leftist governments until the union once again splits apart. Don't be surprised if there's a movement to make PR a state after the whole Maria situation finally resolves. These people know exactly what they're doing.

[phill4paul]

Because, despite my crush on her, President Ocasio-Cortez isn't something I want to see happen. Puerto Rico becoming a state guarantees leftist governments until the union once again splits apart. Don't be surprised if there's a movement to make PR a state after the whole Maria situation finally resolves. These people know exactly what they're doing.

Only another 3.3 million communists added to the vote! Who wouldn't be for that?

[aGameOfThrones]

Because, despite my crush on her, President Ocasio-Cortez isn't something I want to see happen. Puerto Rico becoming a state guarantees leftist governments until the union once again splits apart. Don't be surprised if there's a movement to make PR a state after the whole Maria situation finally resolves. These people know exactly what they're doing.

She’s from New York, not Puerto Rico. Illegal aliens and their anchors will and do more harm to guarantee leftist governments. The apportioned representatives from sanctuary states and cities is far more worrisome than PR being admitted to the Union. They say that PR might have 2 Dem Senators, but it might have 1 of each, the electoral votes will be far less than California.

[aGameOfThrones]

Only another 3.3 million communists added to the vote! Who wouldn't be for that?

That’s kinda harsh.

[phill4paul]

That’s kinda harsh.

Tough love.

[Ender]

Only another 3.3 million communists added to the vote! Who wouldn't be for that?

Dude- read my post above-

Puerto Rico is in the financial state it is in because of the take-over & mercantilism of the US.

[phill4paul]

Dude- read my post above-

Puerto Rico is in the financial state it is in because of the take-over & mercantilism of the US.

I'm aware of the history. That doesn't excuse the graft and corruption that the people allowed their government to perpetrate. To the tune of $70 billion dollars. It might shock everyone here that P.R. has gotten $15 billion in relief. Did you know that they get $21 billion annually in welfare aid? More than Nevada, more than New Hampshire, more than Maine, Nebraska and Montana. More than Wyoming, Alaska and Delaware. And these folks don't even pay Fed. Income tax. What a great gig.

https://www.census.gov/prod/2011pubs/cffr-10.pdf

[Ender]

I'm aware of the history. That doesn't excuse the graft and corruption that the people allowed their government to perpetrate. To the tune of $70 billion dollars. It might shock everyone here that P.R. has gotten $15 billion in relief. Did you know that they get $21 billion annually in welfare aid? More than Nevada, more than New Hampshire, more than Maine, Nebraska and Montana. More than Wyoming, Alaska and Delaware. And these folks don't even pay Fed. Income tax. What a great gig.

https://www.census.gov/prod/2011pubs/cffr-10.pdf

They also don't get any taxes from the Big Corps that run the sugar and other industries in their country- they have been put in poverty with purpose.

[TheCount]

She’s from New York, not Puerto Rico.

To ThePaleoLibertarian, they're both from the same place: Hispanlandia.

[aGameOfThrones]

I'm aware of the history. That doesn't excuse the graft and corruption that the people allowed their government to perpetrate. To the tune of $70 billion dollars. It might shock everyone here that P.R. has gotten $15 billion in relief. Did you know that they get $21 billion annually in welfare aid? More than Nevada, more than New Hampshire, more than Maine, Nebraska and Montana. More than Wyoming, Alaska and Delaware. And these folks don't even pay Fed. Income tax. What a great gig.

https://www.census.gov/prod/2011pubs/cffr-10.pdf


Which would be worst; the current tariffs or the fed income tax for PR?

[ThePaleoLibertarian]

She’s from New York, not Puerto Rico. Illegal aliens and their anchors will and do more harm to guarantee leftist governments. The apportioned representatives from sanctuary states and cities is far more worrisome than PR being admitted to the Union. They say that PR might have 2 Dem Senators, but it might have 1 of each, the electoral votes will be far less than California.
I know where she's from, I'm saying she will appeal to Puerto Rican voters, should they be given the franchise. It might not even be her, she might crash and burn pretty soon from the looks of it. The more "brown" America gets, the more leftist it will be, whether through immigration or Puerto Rican statehood or both.

I don't disagree that illegal immigration is worse, but you might as well hand the Dems several electoral votes if PR becomes a state. Republicans will never win again, no matter who the candidate is. And it's not like illegal immigrants are going anywhere yet, so it would be doubly shitty.

[aGameOfThrones]

I know where she's from, I'm saying she will appeal to Puerto Rican voters, should they be given the franchise. It might not even be her, she might crash and burn pretty soon from the looks of it. The more "brown" America gets, the more leftist it will be, whether through immigration or Puerto Rican statehood or both.

I don't disagree that illegal immigration is worse, but you might as well hand the Dems several electoral votes if PR becomes a state. Republicans will never win again, no matter who the candidate is. And it's not like illegal immigrants are going anywhere yet, so it would be doubly $#@!ty.

The current PR non voting rep is a Republican. Crazy eyes Cortez might appeal to nuyoricans, but island Puerto Ricans probably not. The majority of Americans in PR don’t identify as brown and If they did I don’t think would matter.

[ThePaleoLibertarian]

The current PR non voting rep is a Republican. Crazy eyes Cortez might appeal to nuyoricans, but island Puerto Ricans probably not. The majority of Americans in PR don’t identify as brown and If they did I don’t think would matter.I'm aware that the Resident Commissioner of PR is (at least on paper relatively conservative. But if they were given the franchise, the Democrats would immediately come in with their promises of goodies and pushing grievance politics. Do you really think they'd let millions of Hispanic voters go to waste? They're very good and gaining control over non-white demographics and never letting go.

[Swordsmyth]

I'm aware that the Resident Commissioner of PR is (at least on paper relatively conservative. But if they were given the franchise, the Democrats would immediately come in with their promises of goodies and pushing grievance politics. Do you really think they'd let millions of Hispanic voters go to waste? They're very good and gaining control over non-white demographics and never letting go.

I think we should consider making PR a state if we can expel several solid blue states at the same time, we would be trading multiple known bads for an unknown.

[devil21]

I think we should consider making PR a state if we can expel several solid blue states at the same time, we would be trading multiple known bads for an unknown.

Puerto Ricans don't identify as American and they generally dislike "mainland gringos". I don't think we need to absorb them. I've never had so many scams attempted against me as when I've visited PR. No thanks, got enough scammers in the existing 50 states already and don't need to add another batch.

[Swordsmyth]

Puerto Ricans don't identify as American and they generally dislike "mainland gringos". I don't think we need to absorb them. I've never had so many scams attempted against me as when I've visited PR. No thanks, got enough scammers in the existing 50 states already and don't need to add another batch.

I said we should consider it, if they don't want it or we decide we don't for some good reason then we should grant them independence instead.

[devil21]

I said we should consider it, if they don't want it or we decide we don't for some good reason then we should grant them independence instead.

Independence, sure. I guess that's a good option now that the IRS isn't based there any more.

[AuH20]

They also don't get any taxes from the Big Corps that run the sugar and other industries in their country- they have been put in poverty with purpose.

True, they haven't been a given fair shake for self-rule, but their society is extremely corrupt.

[aGameOfThrones]

Puerto Ricans don't identify as American and they generally dislike "mainland gringos". I don't think we need to absorb them. I've never had so many scams attempted against me as when I've visited PR. No thanks, got enough scammers in the existing 50 states already and don't need to add another batch.


I identify as American and so do the ones that keep voting for statehood as well the ones that don’t(populares). I do agree that some don’t, but lots of democrats don’t consider themselves Americans, lots of anchor babies don’t consider themselves Americans. There are scammers everywhere, yeah, ok.


If every Citizen living in PR right now were to move to the mainland every single one would gain the full Bill of rights, Representation in Congress and the privilege to Vote in Federal elections. All they would lose is the status of PR.

[Ender]

True, they haven't been a given fair shake for self-rule, but their society is extremely corrupt.

Because of the US of A.

How Socialism Destroyed Puerto Rico, and How Capitalism Can Save It
By Peter Schiff

Euro Pacific Capital

July 16, 2015

While Greece is now dominating the debt default stage, the real tragedy is playing out much closer to home, with the downward spiral of Puerto Rico. As in Greece, the Puerto Rican economy has been destroyed by its participation in an unrealistic monetary system that it does not control and the failure of domestic politicians to confront their own insolvency. But the damage done to the Puerto Rican economy by the United States has been far more debilitating than whatever damage the European Union has inflicted on Greece. In fact, the lessons we should be learning in Puerto Rico, most notably how socialistic labor and tax policies can devastate an economy, should serve as a wake up call to those advocating prescribing the same for the mainland.

The U.S. has bombed the territory of Puerto Rico with five supposedly well-meaning, but economically devastating policies. It has:

1. Exempted the Island’s government debt from all U.S. taxes in the Jones-Shaforth Act.

2. Eliminated U.S. tax breaks for private sector investment with the expiration of section 936 of the U.S. Internal Revenue Code.

3. Required the nation to abide by a restrictive trade arrangement.

4. Made the Island subject to the U.S. minimum wage.

5. Enabled Puerto Rico to offer generous welfare benefits relative to income.

While passage of such politically popular laws seems benign on the surface (and have allowed politicians to claim that their efforts have helped the poorest Puerto Ricans), in reality they have deepened the poverty of the very people the laws were supposedly designed to help. The lessons here are so obvious that only the most ardent supporters of government economic control can fail to comprehend them.

Tax-Free Debt

By exempting U.S. citizens from taxes on interest paid on Puerto Rican sovereign debt, Washington sought to help the Puerto Rican economy by making it easier and cheaper for the Island’s government to borrow from the mainland. As a result, Puerto Rican government bonds became a staple holding of many U.S. municipal bond funds. As with Fannie Mae and Freddie Mac bonds a decade ago, many investors believed that these Puerto Rican bonds had an implied U.S. government guarantee. This meant that the Puerto Rican government could borrow for far less than it could have without such a belief. However, this subsidy did not grow the Puerto Rican economy, but simply the size of the government, which had the perverse effect of stifling private sector growth.

In contrast to the tax-free income earned by Americans who buy Puerto Rican government bonds, those with the bad sense to lend to Puerto Rican businesses were taxed on the interest payments that they received. Businesses could have used the funds for actual capital investment (that could have increased the Island’s productivity), but instead the money flowed to the Government which used it to buy votes with generous public sector benefits that did nothing to grow the Island’s economy or put it in a better position to repay. That problem was left for future taxpayers who no politician seeking votes in the present cared about.

This dynamic is almost identical to what happened in Greece, where low borrowing costs, made possible by the strong euro currency and the implied backstop of the European Central Bank and the more solvent northern European nations, permitted the Greek government to borrow at far lower rates than its strained finances would have otherwise allowed.

Taxing Private Investment

Perversely, as the U.S. government made it easier for the Puerto Rican government to borrow, it made it harder for the private sector to do so. In 2006 the government ended a tax break that exempted corporate profits earned on private sector investment in Puerto Rico from U.S. taxes. As a result, U.S. businesses that had been making investments and hiring workers on the Island pulled up stakes and moved to more tax-friendly jurisdictions. The result was an erosion of the Island’s local tax base, just as more borrowing (made possible by triple tax-free government debt) obligated the remaining Puerto Rican taxpayers to greater future liabilities.

The Jones Act

The Jones Act, a 1920 law designed to protect the U.S. merchant marine from foreign competition, has had a devastating effect on Puerto Rico, and should be used as a cautionary tale to illustrate the dangers of trade barriers. Under the terms of this horrible law, foreign-flagged ships are prevented from carrying cargo between two U.S. ports. According to the law, Puerto Rico counts as a U.S. port. So a container ship bringing goods from China to the U.S. mainland is prevented from stopping in Puerto Rico on the way. Instead, the cargo must be dropped off at a mainland port, then reloaded onto an expensive U.S.-flagged ship, and transported back to Puerto Rico. As a result, shipping costs to and from Puerto Rico are the highest in the Caribbean. This reduces trade between Puerto Rico and the rest of the world. Since a large percentage of the finished goods used by Puerto Ricans are imported, the result is much higher consumer prices and fewer private sector jobs. Even though median incomes in Puerto Rico are just over half that of the poorest U.S. state, thanks to the Jones Act, the cost of living is actually higher than the average state.
The Federal Minimum Wage

In 1938 the Fair Labor Standards Act subjected Puerto Rico to a federal minimum wage, but it was not until 1983 that a 1974 act, which required that the Island match the mainland’s minimum wage, was fully phased in. The current Federal minimum wage of $7.25 per hour is 77% of Puerto Rico’s current median wage of $9.42. In contrast, the Federal minimum is only 43% of the U.S. median wage of almost $17 per hour (Bureau of Labor Statistics (BLS), May 2014). The U.S. minimum wage would have to be more than $13 per hour to match that Puerto Rico proportion. The disparity is greater when comparing minimum wage income to per capita income.

The imposition of an insupportably high minimum wage has meant that entry level jobs simply don’t exist in Puerto Rico. Unemployment is over 12% (BLS), and the labor force participation rate is about 43% (as opposed to 63% on the mainland) (The World Bank). A “success” by the Obama administration in raising the Federal minimum to $10 per hour would mean that the minimum wage in Puerto Rico would be higher than the current medium wage. Such a move would result in layoffs on the Island and another step down into the economic pit. I predict that it could bring on a crisis similar to the one created in the last decade in American Samoa when that Island’s economy was devastated by an unsustainable increase in the minimum wage.

It will be interesting to see if our progressive politicians will have enough forethought and mercy to exempt Puerto Rico from minimum wage increases. But to do so would force them to acknowledge the destructive nature of the law, an admission that they would take great pains to avoid.

Welfare

In 2013 median income in Puerto Rico was just over half that of the poorest state in the union (Mississippi) but welfare benefits are very similar. This means that the incentive to forgo public assistance in favor of a job is greatly reduced in Puerto Rico, as a larger percentage of those on public assistance would do better financially by turning down a low paying job. Because of these perverse incentives not to work, fewer than half of working age males are employed and 45% of the Island’s population lived below the federal poverty line (U.S. Census Bureau, American Community Survey Briefs issued Sep. 2014). According to a 2012 report by the New York Federal Reserve Bank, 40% of Island income consists of transfer payments, and 35% of the Island’s residents receive food stamps (Fox News Latino, 3/11/14).

In other words, Puerto Rico’s problems are strikingly similar to those of Greece. Its government spends chronically more than it raises in taxes, its economy is trapped in a regulatory morass, and its economic destiny is largely in the hands of others.

The solutions to Puerto Rico’s problems are simple, but politically toxic for mainland politicians to acknowledge. Puerto Rico must be allowed to declare bankruptcy, the Federal incentive for the Puerto Rican government to borrow money must be eliminated, Puerto Rico must be exempted from both the Jones Act and the Federal Minimum wage, and Federal welfare requirements must be reduced. Puerto Rico already has the huge advantages of being exempt from both the Federal Income Tax and Obamacare, so with a fresh start, free from oppressive debt and federal regulations, capitalism could quickly restore the prosperity socialism destroyed. With the current incentives provided by Acts 20 and 22 (which basically exempt Puerto Rico-sourced income for new arrivals from local as well as federal income tax – see my report on America’s Tax Free Zone) and with some additional local free market labor reforms, in a generation it’s possible that Puerto Ricans could enjoy higher per capita incomes than citizens of any U.S. state.

If Washington really wanted to accelerate the process, it should exempt mainland residents from all income taxes, including the AMT, on Puerto Rico-sourced investment income, including dividends, capital gains, and interest related to capital investment.

https://www.lewrockwell.com/2015/07/peter-schiff/how-socialism-destroyed-puerto-rico/

[Pauls' Revere]

I want a deal that emancipates Puerto Rico from US control, such as eliminate half their debt and sell the territory to spain or brazil or someone. I want all of our colonies sold off or liberated.

[Thumbs up] + rep.

[Occam's Banana]

Because despite whatever ridiculous legal status they might have, Puerto Ricans are not Americans. They are a foreign culture and state that has legal citizenship.

Meh. I figure the same thing can be said about cities with a population of six or more figures ... (including the lily-white ones ...)

Cut 'em all loose. We can trade stuff, but beyond that, everyone should just buzz off and mind their own beeswax.