Representative Explains Territory Status is Reason for Puerto Rico’s Poor Economy

Puerto Rico’s budgetary problems and worsening economy has been the focus of a great deal of national and international news media attention since the end of August.  The coverage was prompted by a precipitous drop in the value of its Commonwealth bonds, which are widely held throughout the United States.

Bond buyers and reporters have speculated on whether the territory would default on its excessive debt.

Puerto Rico’s economy has been ailing for many years: After narrowing for a couple of decades, the gap between incomes in the Commonwealth and incomes in the States has grown for a third of a century.  The economy has been in recession for all but a year of the past seven and a half years, and the growth during that year rarely exceeded 1% in any one month.  Only two-fifths of working age Puerto Ricans are in the workforce, compared with three fifths in the States.  Even with this the unemployment rate is 14.7% while it is 7% in the States. The unemployment and related problems are driving more Puerto Ricans to the mainland and increasing crime in the Commonwealth.

On December 4th, Puerto Rico’s representative to the Federal government, Pedro Pierluisi explained the root cause of the problem in an address to the U.S. House of Representatives.

“It pains me to read media accounts of the island’s troubles,” he began “especially because I know that my constituents are just as capable and industrious as their fellow citizens in any other U.S. jurisdiction.”

Indeed, Puerto Rico’s labor force had been recognized as a factor that increases the territory’s competitiveness. Still, as Pierluisi pointed out, “Puerto Rico’s economic performance and, by extension, quality of life … has been far worse than any State according to every indicator, including unemployment, average household income, and the ratio of government debt to economic production.”

As the past four decades have seen many changes in the administration of the insular government, Pierluisi pointed out, it doesn’t follow that the policies of the various governors are at fault.

Pierluisi explained that “the territory’s economic problems are structural — traceable, ultimately, to its muddled political status,” quoting an editorial in The Washington Post.

He continued:

As long as Puerto Rico remains a territory, deprived of equal treatment under critical federal spending and tax credit programs, forced to borrow heavily to make up the difference, and lacking the ability to vote for the president and members of Congress who make our national laws, the island will be in a position merely to manage, rather than to surmount, its economic problems. This is the only reasonable conclusion to draw from decades of empirical evidence.

A majority of my constituents understand this, which is why they voted to reject territory status in a referendum held one year ago. The Obama administration recognizes this as well, which is why it proposed the first federally-sponsored status vote in Puerto Rico’s history to resolve the issue once and for all. And, finally, Members of Congress from both parties comprehend this, which is why 125 of them have co-sponsored legislation I introduced that provides for an up-or-down vote in Puerto Rico on the territory’s admission as a state and outlines the steps the federal government will take if a majority of voters favor admission.

“There are many reasons to oppose Puerto Rico’s territory status,” Pierluisi continued.  It “is unequal, undemocratic and un-American… Those who refuse to acknowledge this fundamental truth for ideological reasons are doing a great disservice to the people of Puerto Rico. They are on the wrong side of history.”

Read the full text of the speech.

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