Is statehood a way out of Puerto Rico’s fiscal crisis?

Demonstrators in San Juan last June protest against creditors trying to take control of the island nation's assets. (CNS photo/Thais Llorca, EPA) Demonstrators in San Juan last June protest against creditors trying to take control of the island nation's assets. (CNS photo/Thais Llorca, EPA)

An especially loud alarm went off this month when Puerto Rico, under the guidance of a financial oversight board set up by Congress, officially declared a form of bankruptcy on May 3, the first time a U.S. state or territory has done so.

These days the “island of enchantment,” as Puerto Rico is popularly known, is a tale of woe—and a new woe is seemingly added every day. On May 10 the Natural Resources Defense Council reported almost every drop of Puerto Rico’s drinking water violates U.S. safety standards.

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Add that to Puerto Rico’s crushing $123 billion debt and pension crisis, which has wrecked the U.S. commonwealth’s economy and sent unemployment and poverty through the roof. The financial crisis has devastated public services from electricity to hospitals to schools and fueled a murder rate four times that of the United States.

“Puerto Rico’s problem is that it’s an island of U.S. citizens who don’t have citizens’ rights—to vote in U.S. elections or have voting representatives in Congress.”

It is little wonder a tenth of Puerto Rico’s 3.4 million people, who are U.S. citizens, have bolted their Caribbean home for the U.S. mainland in recent years.

The fault lies with Puerto Rico’s shamelessly prodigal history of government spending but also with Washington’s equally shameless neglect of the U.S. territory. But Puerto Rico’s new governor, Ricardo Rosselló, feels certain he knows how to make Puerto Rico enchanting again: Declare it the 51st U.S. state.

“Puerto Rico’s problem is that it’s an island of U.S. citizens who don’t have citizens’ rights—to vote in U.S. elections or have voting representatives in Congress,” Mr. Rosselló told me during a recent visit to Miami.

Statehood would obviously change that. So when he took office in January, Mr. Rosselló called for a referendum in Puerto Rico on whether to become a U.S. state or an independent country. That vote will be held on June 11.

Perhaps nervous that Puerto Ricans might actually raise the statehood flag—they may have done so in the last such referendum in 2012, but the results were largely ignored because the process was so muddled—the Trump administration has made sure voters can also choose to keep the current commonwealth status. (Another option is “free association,” meaning independence that would still keep the island politically associated with the United States in certain ways.)

The referendum is non-binding. Should statehood win, nothing compels the United States to make Puerto Rico the next Hawaii. Mr. Rosselló says he is confident the United States will honor the island’s will. Still, since Republicans currently control every square inch of Washington—and fear Puerto Ricans would be mostly Democratic voters—achieving statehood will require political muscle Puerto Rico does not possess.

Unless, that is, you factor in Puerto Ricans living in the United States, who also tend to favor statehood. Mainland Puerto Ricans outnumber island Puerto Ricans, and they can vote in U.S. elections and are doing so in greater numbers—especially in Florida, where a burgeoning and increasingly organized Puerto Rican population of more than 1 million wants to rival the city’s Cubans for palanca, or Latino political leverage.

They took a big step in last year’s election when Darren Soto, an Orlando Democrat, became Florida’s first Puerto Rican member of Congress.

That reflected Puerto Rican growth in Central Florida, where two-thirds of the state’s boricuas (Puerto Ricans) reside. In more Cuban-dominant South Florida, meanwhile, a Puerto Rican was elected to the state legislature for the first time in half a century. (The winner, Miami Democrat Robert Asencio, defeated a Cuban Republican.)

Florida’s Puerto Ricans are also a potentially effective statehood lobby because they may have a deeper stake in Puerto Rico: Whereas only 30 percent of Puerto Ricans in the traditional enclave of New York are island-born today, 70 percent of Florida’s boricuas are.

 

“There is that connection to the island,” says Natascha Otero-Santiago, South Florida chair of the National Puerto Rican Agenda. “When you have that, you want to be more of a watchdog.”

Like Mr. Rosselló, Ms. Otero-Santiago and other advocates of statehood are convinced the change in status will help Puerto Rico avoid future financial disasters—or at least afford it conventional U.S. bankruptcy protection, which it currently cannot have—mainly by breaking its colonial status and giving it more unfettered access to the U.S. and global economies. It would also make Washington pay more attention to the island.

President Trump recently tweeted he would not allow any U.S. taxpayer “bailout” for Puerto Rico. But after June 11, he may have to deal with Puerto Rico’s demand for a new way out.

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Thomas Farrelly
6 months ago

If there is some reason to believe that statehood would solve Puerto Rico's problems, this article doesn't reveal it. What would actually change, other than making Puerto Ricans subject to US Federal Income tax, which they currently do not pay? Two Senators and some Representatives might be able to influence some legislation, but this would hardly solve the new state's horrendous financial and other problems.

Tom Fields
6 months ago

Puerto Rico is bankrupt because of poor management---too much spending---e.g. pensions---and too little revenue. They need to be put on a ten year program of austerity---then---let's talk

Jemma Soto
6 months ago

That's a small understanding of why PR is broke. The fact that the US government won't allow Puerto Rico to keep their trade revenue is a bigger deal than the one you mentioned.

Tom Fields
6 months ago

Puerto Rico is bankrupt because of poor management---too much spending---e.g. pensions---and too little revenue. They need to be put on a ten year program of austerity---then---let's talk

JOE BLISS
6 months ago

Learn your history. citizens of Puerto Rico have had many opportunities to obtain state hood and voted against it. Citizenship includes financial responsibility. Instead of blaming us for their for their problems look to the people of the island for causing this problem. I hope and pray that they can find a way get beyond these financial problems.

Jemma Soto
6 months ago

The USA is a big reason why the economy is falling in Puerto Rico, let's get real. This nationalistic argument is getting nowhere. And there needs to be iron-tight plan, including stong leadership, in order for island Puerto Ricans to vote for independence. It's not just an easy breezy process.

John Walton
6 months ago

Puerto Rico has a tremendous opportunity for a new beginning, but Puerto Rico must stop viewing itself as a victim. Look to Singapore and Chile for examples of how to remedy your economy.

Jemma Soto
6 months ago

Try not trivializing things. Condescending attitudes about victimization is repugnant at best. The islands people have been victimized throughout history, by the hands of both spain and the USA. However, there's always an optimism, a sense of hope with the people that outsiders like yourself seem to overlook. Yes, Puerto Rico does have an opportunity to bounce back. But perhaps without American policies.

Richard Bell
6 months ago

"Ms. Otero-Santiago and other advocates of statehood are convinced the change in status will help Puerto Rico avoid future financial disasters—or at least afford it conventional U.S. bankruptcy protection, which it currently cannot have—mainly by breaking its colonial status and giving it more unfettered access to the U.S. and global economies. It would also make Washington pay more attention to the island."
Advocates of independence are convinced that will have exactly the same kinds of effects (except for conventional U.S. bankruptcy protection).

Thomas Farrelly
6 months ago

States can NOT declare bankruptcy. Illinois would be an eager applicant if it could.

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