The Road to Perdition & Insolvency
By Franklin D. López
Secretary General for National Affairs
¡Igualdad, Futuro Seguro!
Puerto Rico is sailing through uncharted waters in a very serious and dire economic situation! Unfortunately, neither the local territorial government or the private sector are addressing the real fundamental issues: the imposition of $ 1.6 billions dollars in new taxes and the massive emigration and its direct effect to the island’s economic foundation.
Simple logic tells you, that if you have a market of 3.7 million people and 1.25 million (the part of the population that is well educated and consumes 50%) emigrate to the lower 48 states, territorial tax revenues will be reduced significantly, causing an economic catastrophe and collapse. That is happening in Puerto Rico, promoted by the barrage of 54 new taxes and tariffs, increases in the utilities (water and electricity are the most expensive in the United States) and the anti-American and separatist rhetoric of the present territorial administration. These taxes and tariffs have a recessionary effect that will shrink economic growth in 2014 to a negative 0.8%. The U.S. Census estimated that Puerto Rico’s population will drop to 1950 levels of 2.2 million. Last Wednesday, the local paper El Nuevo Día revealed in a poll that 33% of the total population of Puerto Rico ( 1,250,000 people) expressed that they “most likely will emigrate to the United States”.
According to the U.S. Census of 2010, Puerto Rico has 262,000 empty housing dwellings. The Puerto Rico Bank Association said that 50,000 units are in 90 days or more in arrears and 17,000 units are in foreclosure. The government has not factored in the catastrophic effect over the tax collection base in their forecast. The Popular Democratic Party (PPD) controlled government has shown in their track record of tax collections focecast that they have been off target in every single year. If your market shrinks by the effects of massive emigration combined with a shrinking economy, you have the perfect recipe for insolvency and collapse.
Just think, what would happen to the local industries, businesses, banks, small businesses, shopping centers, etc if those who said that they “most likely will emigrate” actually do?
The Treasury Department and the White House have said that “Puerto Rico’s economic problems are directly affected by the its present status”. If President Obama really believes in his Lexington Doctrine of “nation building first”, then he must pursue a hands on policy in resolving Puerto Rico’s status.
What would be the best status for Puerto Rico?
In another poll, 93% of American citizens in Puerto Rico said, that if the Island is granted independence or some sort of sovereign status they will emigrate to the U.S. That means that the Island will have a population smaller than 300,000 and it will cost the U.S. tax payers twice as much in providing services to the emigrated population. Under this scenario, Puerto Rico’s government is in a path of secure insolvency.
Puerto Rico pays more Federal taxes than 6 states of the Union and more than 272,000 Americans citizens from Puerto Rico have served the Nation’s call to defend liberty and freedom abroad that is denied to them in the territory. The United States must end its segregationist and discriminatory policy on the American citizens living on the Island.
The only choice is statehood! Statehood will attract badly needed population to the Island. The one million plus who have left Puerto Rico from 2001-2013 will most like return. Besides that, Puerto Rico could be the catalytic agent to bringing back the $ 7 trillion dollars a year Latin American markets to America’s sphere of influence. This is a defining moment for Puerto Rico as well as the United States.
“It is always the right time to do the right thing”
-Dr. Martin Luther King.