Governor Contradicts President, Self on Economics of Statehood

Governor Garcia Padilla (“commonwealth” party) last week surprisingly told an interviewer that statehood would not affect the territory’s economy.

Later, however, he argued that it “would destroy the economy,” the position he has taken before.

Both assertions contradict the view of President Obama’s Task Force on Puerto Rico’s Status and the chairman of the U.S. Senate’s Committee on Finance, who formerly chaired its committee on the status of territories, among many others.

“Poverty or wealth is not a common denominator of statehood. To say that economic conditions depend upon statehood is nonsense, a political grandstanding argument,” Garcia Padilla contended.

Later, though, he claimed that a Federal report “says that statehood would destroy the economy of Puerto Rico … because companies would leave.”

In fact, the report, by Congress’ Government Accountability Office, made no conclusion about statehood’s impact on Puerto Rico’s economy. It quoted Congress’ Joint Committee on Taxation as guessing that some companies avoiding Federal taxes by keeping income in territorial subsidiaries might close the operations. The report also, however, noted factors that would be benefits to the insular economy.

The benefits include up to $9 billion a year from equal treatment with the existing States in Federal program laws and new private investment encouraged by the security and increased consideration of Puerto Rico becoming a permanent and full part of the United States.

The President’s Task Force on Puerto Rico’s Status noted that “many” people it had consulted “argued that uncertainty about status is holding Puerto Rico back in economic areas.”

In a report embraced by Obama, the Task Force itself concluded that “identifying the most effective means of assisting the Puerto Rican economy depends on resolving the ultimate question of status … In short, the long-term economic well-being of Puerto Rico would be dramatically improved by an early decision on the status question.”

The Task Force identified two basic options for resolving the status issue: statehood and nationhood, the latter of which it noted could be in an association with the U.S. that either nation could end or fully separate from the U.S.

It pointed out that Puerto Rico would remain in its current territory status under any possible “Commonwealth” proposal and the status would not be permanent.

Similarly, U.S. Senate Finance Committee Chairman Ron Wyden (D-Oregon) while chairman of the committee that handles territory status matters, including statehood, last year began a hearing of the Committee on Energy and Natural Resources, by saying that “Puerto Rico faces huge economic … challenges. Per capita income is stuck at about half that of the poorest U.S. State … The lack of resolution of Puerto Rico’s status … contributes to” this.

Wyden continued, “for Puerto Rico to meet its economic and social challenges and to achieve its full potential … Puerto Rico must either exercise full self-government as a sovereign nation, or achieve equality among the States of the Union.”

Garcia has claimed that the territory’s economy is better than people believe, and did so again last week. “We must change the perception of the people,” he argued.

Puerto Rico’s economy has lagged that of the States for four decades and has been in recession for seven and a half of the last eight and a half years. The territory, with an income level a third that of the States as a whole after 116 years in territory status, has lost 22.4% of its jobs since April 2006.

The economic failure of the Commonwealth has caused millions of Puerto Ricans to vote for personal statehood by moving to a State for a better life. There are now more than 4.9 million people of Puerto Rican origin in the States compared with less than 3.4 million in Puerto Rico.

The economy has worsened since the “commonwealth” party took control of Puerto Rico’s government at the beginning of 2013, according to statistics of the Commonwealth and Federal governments and private economists. The Puerto Rico Government Development Bank’s Economic Activity Index has fallen about 5.3% over the 20 months.

So many Puerto Ricans are now making the choice of the greater opportunities and benefits in a State than in a territory that the territory’s population shrank between 2000 and 2010, and the rate of decline has accelerated since. Nearly 1,000 Puerto Ricans a week have recently trading in territory status for statehood.

The Governor asserted that “As you begin to reverse the trend” [of worsening economic and social problems] “it is expected that migration will be reduced.” Prominent Puerto Rican economist Joaquin Villamil projected two weeks ago that the insular economy would not return to its 2006 level until 2022.

In a plebiscite held along with its November 2012 elections, Puerto Ricans rejected the current territory status by 54% despite Garcia’s support for the option and choose statehood by 61.2% among the alternatives.

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