Sunday Morning Thread – Puerto Rico Goes to the Polls to Vote for a Federal Bailout
Good morning, Spartans. Crazy Uncle Bruno is passed out somewhere in a gutter in a drunken sleep after having a little too much fun this weekend, so you’re stuck with me today.
Puerto Rico heads to the polls today, for what is ostensibly a vote regarding statehood, but is in fact a vote about federal benefits and a federal bailout:
But in some ways, the timing couldn’t be worse. With a political divide on the island, a deepening economic crisis and — critically — a lack of congressional support to become the 51st American state, experts say the vote seems unlikely to result in any real change.
“Now is the worst time and the worst manner to deal with the issue,” said Federico de Jesús, a Puerto Rico native and the former deputy director of the Governor of Puerto Rico’s Washington, D.C., office, under former Gov. Alejandro García Padilla, a member of the Popular Democratic Party who opposes statehood. “All parties agree that the current system needs to be modified, but this is definitely the wrong course of action.”
But the lack of a united voice on statehood from Puerto Rico isn’t the only thing keeping Congress from taking action. The territory’s financial status also is big stumbling block, Barreto said.
“It’s a bizarre idea holding a plebiscite on any issue right now, when literally the island itself is in bankruptcy court,” Barreto said. “The government is spending literally millions on this. One could argue the funds could be better used.”
Puerto Rico also faces a “Medicaid cliff,” and without financial support, hundreds of thousands of its residents could lose health care coverage. The cost of keeping the territory away from the cliff’s edge is about $28.2 billion over the next decade, according to the Congressional Budget Office.
For some, the vote offers the best financial chance for the island, said Meléndez, who is from Puerto Rico and came to the United States in 1978. Puerto Rico owes at least $123 billion in debt and pension payments combined, and since 2007, it has lost 20 percent of its jobs and 10 percent of its total population.
“The sentiment among a large number of people is that it might not be the best time (for the referendum), but it is the best time, because statehood will help solve many of the challenges that Puerto Rico faces,” Meléndez said. “It doesn’t matter if the other party participates; what matters is that a majority vote for statehood, so in their own minds, they legitimize that option.”
The newspaper is very careful not to use the word, but it’s pretty clear that the reason this statehood vote is being pushed by the governing party is because they are looking to force a federal bailout through access to benefits, and that’s just at a minimum – as a newly created state, Puerto Rico would be in a position to then demand a direct federal bailout package from DC, and the politicians in Washington, eager to buy votes, might well consider some level of a bailout.
Puerto Rico needs to either vote for independence so it can make its own laws, or pressure DC to create a more business-friendly environment in the country. A bailout will just go straight to its bondholders and banks to pay down debts, and do nothing at all to improve economic conditions on the island. A bailout, in other words, will turn Puerto Rico into a Caribbean version of Greece.