There’s plenty of speculation about why Puerto Rico is not a state. One of the most popular reasons used to be that Puerto Rico hadn’t yet made up her mind what she wanted. With four status votes in this century and every one with a majority of statehood votes, that claim won’t hold water. Another popular tale is that Puerto Rico would be a blue state, so Republicans won’t allow it. With a Republican governor (one of many) and bilateral support in Washington, that story also is unconvincing. Here’s a new one we’ve been asked: “Is Puerto Rico’s debt the reason it’s not a state?”
Let’s examine the question.
Is Puerto Rico in debt?
In the past ten years, Puerto Rico’s debt has shrunk by 58%. The current total is $31 billion. Nearly half of this is local debt, held by people and organizations on the Island. Much of the remainder is in litigation. Using this number, that works out to $9,867 per capita in debt.
Connecticut, by comparison, carries $26,187 per capita. Every one of the 50 states has some debt, and Puerto Rico is nowhere near the top in either total debt or debt per person. However, the debt is high compared with Puerto Rico’s revenue. So yes, Puerto Rico is still in debt.
Have previous territories had debt when they became states?
That’s a resounding YES. Texas, for example, had about $10 million in debt when it became a state in 1850. That would be about $428,100,000 in today’s currency — far more than Puerto Rico’s. Texas was not a territory before becoming a state, but the principle is the same: their debt did not prevent their admission as a state.
Florida not only was in debt when they became a state, but had repudiated its debts and refused to pay them just a few years before statehood. Michigan celebrated statehood by going deeply into debt to improve infrastructure and then defaulting on those debts. These two states are examples, and not the only ones. Several territories, including Texas, got help from the federal government to deal with their debts when they joined the Union.
Other territories stipulated that they would pay off their debts and not expect the nation to take them over, as the Puerto Rico Status Act did.
Debt has not only been common among territories which have already become states, it hasn’t even been an issue when it comes to admission. It has been, like water rights and details of constitutions, just been something that gets worked out when a new state is admitted.
Would Puerto Rico’s debt become a national problem?
As previous territories admitted as states have shown, the solutions to a new state’s debt varies. Texas ceded some land to the federal government to help pay off some of their debt, and they paid off more over time on their own. Some states managed their debt on their own and didn’t receive federal assistance earmarked for the debts service. Nearly every new state has some arrangement in their paperwork.
But there’s another point to be made: Puerto Rico belongs to the United States. Texas was an independent nation before becoming a state. Puerto Rico is not. Puerto Rico has no sovereignty and no other nation besides the United States has any responsibility for Puerto Rico. Becoming a state would not increase U.S. responsibility for Puerto Rico beyond where it currently stands.
Would statehood help with debt?
Every single territory which has become a state is more prosperous as a state than it was as a territory. This change was seen very quickly in most cases. There is no reason to think that this would not be true of Puerto Rico. Given a level playing field, Puerto Rico can expect to become more prosperous — just as every single state now is more prosperous than Puerto Rico.
Obviously, increased prosperity will help with debt.
Debt is not a bar to statehood. Statehood is a solution to debt.
Remind your representatives of this fact.
No responses yet