...Until I couldn't.
Known as the "Island of Enchantment," Puerto Rico is located in the Caribbean Sea, where it meets the Atlantic Ocean. It's neither a country or a state, but a commonwealth that the United States called dibs on in the late 1800s, holding the most confusing political status. It competes separately in the Olympics, yet the US Postal Service considers shipments to Puerto Rico domestic while UPS and FedEx label it as international. It has its own flag, national anthem, cultural background, and official language (unlike the United States). Yet, calling a Puerto Rican phone number falls under a domestic call, their education system must follow United State Standards, and they use the US Dollar as the currency. Even the internet can't make up its mind since sites like Netflix, Pandora, and Hulu all have different policies on whether users in Puerto Rico can access the content.Today, these are the least of Puerto Rico's concerns as they hold $70 billion in debt. More than likely you probably didn't even know nor are concerned for the future of Puerto Rico and its citizens because how could it possibly affect you, right? Well, in one way or another it does and in order to understand it we must retrace the steps to the beginning.
How did Puerto Rico gain citizenship?
Let's take a trip down memory lane to 1912 when Woodrow Wilson campaigned a promise to ensure full U.S. citizenship for Puerto Ricans after the Puerto Rican Union Party led a revolt against the Foraker Act, which categorized Puerto Ricans as U.S Nationals that were not entitled to full civil or constitutional rights. After the completion of the Panama Canal and the start of the First World War, Puerto Rico's value increased as it was crucial for the U.S to protect the Panama Canal and needed more men to serve in the war. As a result, the Wilson administration enacted the Jones Act of 1917 which gave Puerto Ricans U.S. citizenship. Even though Puerto Ricans were given the right to govern themselves, this act states that the U.S. has control over mail services, immigration, defense, fiscal, and economic matters. Over decades, this act has required that all goods shipped between two U.S. locations be transported on a U.S. built and crewed ship making it extremely expensive to import and export goods.
Why is Puerto Rico in debt?
The Jones Act also granted a tax exemption for interest on Puerto Rican bonds. Unlike state bonds, the exemption was universal, meaning residents of all 50 states of the U.S. could invest in Puerto Rican bonds and not pay taxes on the interest they earn. Puerto Rico issued bonds to cover budget shortfalls, and investors snapped them up because these generous tax breaks, specifically Section 936 which allowed tax exemption on corporate income earned on the island. This law drove a LOT of business to the island. The U.S. government claims the purpose of the law was to create more jobs and encourage companies to establish in Puerto Rico, instead of "overseas". But starting in 1996, Congress ended tax breaks one by one until 2006 when American firms shut down their operations and left just as quickly as they had arrived. Shout-out to Congress for using the pullout method! And then Puerto Rico’s economy went into a recession and has been ever since.
Is it really THAT bad?
More than 150 schools have shut down on the island. Over 250,000 jobs have been lost. Every year, more and more families move to the U.S. mainland leaving the elder generations behind which means less people work and in turn less taxes are paid leading to cuts on public services. To make matters worse, hospitals aren't able to afford electricity and shut down midday. Puerto Rico, at 11.5%, has U.S. highest sales tax. Cost of living is rising, and services are being shut down. Yes, it is THAT bad.
This is bad, but why should I care?
While presidential candidates give attention to the Latino community to gain votes, American wallets are hurting. Over 150 mutual funds have 5% or more of their portfolios invested in Puerto Rican bonds, meaning millions of Americans have a material portion of their savings tied up in government debt that may not be payable.
Is there a solution?
Not yet. Puerto Rico has been pushing to file for bankruptcy under Chapter 9. Puerto Rico, since 1933, had the ability to do this until Congress took away the privilege in 1984. There is no evidence nor explanation to why it was amended under the Bankruptcy Amendments and Federal Judgeship Act of 1984. Different options have been proposed, but no action has been taken.
What is the point?
It's 2016 and 3.5 million American citizens are living through this crisis. Same Americans that have contributed to the U.S. military, NASA, MLB, Broadway among many others. It's time for Congress to take responsibility for the actions its taken throughout decades. Action to provide relief to the financial instability and unjust ways of living Puerto Rico is facing. Without action, there is no future for Puerto Rico. Because of Puerto Rico's status as territory, the entity able to make a difference is the U.S. government. At the end of the day, this crisis is a product of financial mismanagement, Wall Street complicity, and good intentions gone awry. Stop the blame and pointing fingers, rather find a way for Puerto Rico to progress. Whether is the ability to file for bankruptcy or taking action to talk about statehood. Something MUST BE DONE.... Where are the leaders that are courageous enough to do the right thing?
"Salimos de un pozo, donde ya no queda agua...Salimos de un pueblo, que en silencio se le ama..."
