The Sequestered Colony: If you don’t get it you don’t get it!

By Franklin D. López

Puerto Rico and it’s 3.6 millions American citizens have been sequestered by the benign neglect and ignorance, that usually blinds the decision making process, of the “powers that be” in Washington, D.C.. Our Nation’s history is full of examples of many public policy decisions gone wrong. It seems that logic and prevention abandoned the hot air environment of politician, mixed with eternal bureaucrats whose principal objective of existence is to derailed any action that will strengthen the Nation. We have been witness to the United States intelligence fiascos in Iraq, Afghanistan, Benghazi and Syria. The cost of these failures has been measured in the trillions of dollars, benefiting what President Dwight Eisenhower called in his farewell speech, “the industrial military complex” and in the tens of thousands of American lives and civilians. Not to mentioned the hundreds of thousands of physically and emotionally injured.

Puerto Rico became a United States a possession, not by its free will, but as a result of the United States winning the Spanish-American War (using the Tonkin Bay trick in Havana Bay , blowing up the U.S. Mayne to justify a war). Subsequently, with the intention of inducting the newly conquered archipelago as a state, Congress adopted the Jones Act granting American citizenship to Puerto Ricans. In 1951, the U.S. Congress approved a territorial constitution and with the malicious objective to evade the United Nations crusade to promote self determination on the existing colonies of the time, labeled it “the free associated state!” It was a political status mirage because the U.S. Congress retained its sovereign powers over the territory.

Since the adoption of the territorial constitution in 1952 up the year 2012 more than 2.3 million American citizens from the Island have departed looking for the American Dream in the states of the Union. During the past three years the pace of the massive population exodus to the USA is moving at a yearly rate of 45,000. In fact the U.S. Census has projected that by the year 2050 Puerto Rico will have the same population it had in 1952. Back to the future!

The massive population exodus is due to the fact of building “a fake” political status based on Federal assistance and creating a territorial structure with hollow economic policies easily defeated by globalization, the North American Free Trade Agreement and the creation of economic communities in Europe and many others part of the world. Puerto Rico, “the Show Case of the Americas” is now a broken society with a 73 billion dollars in public debt and $34 billions pension fund structural deficit. The Popular Democratic Party Government, during its first two years in office, has based its “economic recovery plan” on imposing 79 new taxes with the objective of raising $ 3 billion dollars. Today, with insolvency around the corner, the PDP Government will impose a 420% oil tax and an added value tax on consumer products and services of 15% to 23%. This massive tax burden has been labeled “the new tax reform for growth!” The new taxes will generate around $ 1.5 billion dollars in revenues. All of this will add pressure on the mere per capita income creating more economic contraction on a dying economy and fueling the population exodus.

This perfect economic storm has caused the most damaging deflation on real estate of any U.S. state or territory in modern times. The U.S. Census of 2010 revealed that 262,000 housing units in Puerto Rico are empty. The Commissioner of Financial Institutions announced that 77,000 mortgaged housing units are 90 days or more in arrears and 17,000 in foreclosure venues. Real estate values have gone under between 40% to 60%. Despite this, the PDP controlled government is planning to impose a new property tax. Adding that Puerto Rico has the second highest cost of energy of the 50 states of the Union (Hawaii is the first with a cost of 31 cents kilowatt hour but with a per capita yearly income of $65,000 while Puerto Rico is $ 19,000) and the cost of water and sewer services, you have the ideal fuel that will continue to propel the massive population exodus.

There are now close to 5 millions American citizens from Puerto Rico living in the fifty states of the Union. To provide government services to the newly migrated population in the fifty states of the Union cost the U.S. taxpayers twice as much than in Puerto Rico. But wait, there is more! Where are Puerto Ricans American citizens moving? They are in Florida, Texas, North Carolina, Virginia, Maryland, Ohio, Pennsylvania and Georgia. Familiar battleground states! The political history of the presidential and Congressional elections is rich with examples of being decided by narrow margins. Because Puerto Ricans are American citizens by birth they can easily register and vote. The massive population exodus will also contribute in changing the political eco system in battleground states.

But I am not finished. Puerto Rico is on the path to default on its public debt. The insolvency of the Government Development Bank and the Treasury Department is around the corner. The PDP Government has not factored in their revenue projections the extraordinary effect of the educated and consumer oriented population moving out because the Island has become the most expensive cost of living and tax jurisdiction in the Americas. Many analyst in Wall Street do not trust governmental projections and statistics. If Washington continues the policy of benign neglect or waiting for the dying patient to enter into a coma the $3.7 trillions municipal bond market will be adversely affected by the negligence of ignoring the fact that the economic problems of Puerto Rico is the failure of the present territorial status. Passivity is not an option. Two polls done by the Gallup organization revealed that 93% of the archipelago’s population will move to the United States if Puerto Rico becomes an independent or associated republic. The White House and Congress must act now! Therefore, the only path that will guarantee an economic renaissance in Puerto Rico and the home coming of millions that have left is political equality. Just review the Hawaiian experience. If you don’t get it….you don’t get it. It’s Catch 22 time!