Own up, Congress: Fix Puerto Rico
Last Sunday, Puerto Rico held a vote intended to define its political status and future. Yet rather than bring clarity, the vote only underscored the deep divisions that have defined the island territory for generations. Only 23 percent of those registered bothered to vote, either out of apathy or protest. With that historically low turnout, 97 percent favored statehood, ensuring the controversy over the referendum — and what it means — will continue to divide Puerto Ricans on the island and U.S. mainland.
What is not in dispute is the fact that the island has endured a financial and humanitarian crisis for years, and that it shows no sign of slowing. The reality facing Puerto Rico and its people is as stark as it is frightening. Schools and hospitals are closing. Essential services are being halted. Massive layoffs are occurring. The vital human capital that sustains the Puerto Rican economy is steadily being lost as thousands of Boricuas flee for the U.S. mainland in search of a better life.
The responsibility for addressing the crisis falls squarely on the U.S. Congress.
Last year, the PROMESA Act passed by Congress was intended to address the growing fiscal crisis. PROMESA was deeply flawed law but necessary if Puerto Rico was to have a mechanism to manage and reduce the $74 billion in debt that devastates the island. PROMESA established what’s known as the Puerto Rico Oversight Board to restructure the island’s debt.
As PROMESA moves forward, it is imperative that the board put a priority on protecting the Puerto Rican people. It can do that by, first and foremost, protecting the pensions and the savings of working families. It must also give the island the ability to deliver essential services to its citizens.
As the debt restructuring is ongoing, it’s up to the U.S. Congress to provide an economic stimulus to infuse aid, create jobs, and to grow small and large businesses.
At the same time, Congress must also attend to the island’s lack of health-care cost-reimbursement parity with the United States. The severe underfunding is one reason why the island is on the brink of collapse. In the past five years, more than 3,000 medical professionals have left Puerto Rico, mainly because of pay disparities. Health care accounts for 20 percent of Puerto Rico’s GDP — $11 billion — and employs approximately 100,000 people. Any collapse would not only jeopardize care for millions of U.S. citizens, but could deliver another staggering blow to Puerto Rico’s economy.
Then there are tax policies that the federal government could also adopt to reinvigorate the island’s economy, such as giving local government the ability to implement an Earned Income Tax Credit.
Puerto Rico, at 40 percent, has the lowest labor-market participation in the United States. That stunts economic growth and undermines economic-reform efforts. Thus, the tax credit would promote employment through incentives for the work that is already available on the mainland.
The federal government could also expand the Child Tax Credit to supplement earnings to lowincome workers in Puerto Rico. Now, residents of Puerto Rico can qualify for the Child Tax Credit only if they have three or more children. That’s in contrast to low-income workers in the states who can obtain benefits with one or more children. The Child Tax Credit should be extended to low-income Puerto Rican parents with no added conditions.
Puerto Rico’s economic crisis has included tens of billions of dollars in outstanding debt and pension obligations, major unemployment, massive austerity measures, a crippling population drain and an imminent healthcare shutdown.
Washington is complicit in Puerto Rico’s crisis, given its unequal treatment of island residents in terms of tax policies, economic investments and health-care funding. Puerto Ricans and Latinos on the mainland look to Washington to take stronger action to assist the millions of American citizens who are on the island.