Unity with Puerto Rico

Thousands marched in solidarity with Puerto Rico in Washington, D.C. yesterday. The demands of the protestors:

  • Equal treatment with states for Puerto Rico in disaster relief
  • Supplying disaster relief funding sufficient to put Puerto Rico on a path towards prosperity
  • Better monitoring of distribution of resources provided by charities
  • Forgiveness of Puerto Rico’s debt
  • Removal of the Jones Act

Seeing so many people turning out in support of Puerto Rico is satisfying.

We feel the need to point out that Puerto Rico, as a state, would receive equal treatment not only for disaster relief but also for infrastructure funding in general. Equitable Medicaid funding would health with the serious state of medical care in Puerto Rico right now, too, and equal treatment in family tax care credits would help individuals whose homes and jobs were destroyed by the hurricanes.

As is so often the case, the problems identified for Puerto Rico are the result of Puerto Rico’s status as a territory. Coming up with new solutions for problems that would be solved by statehood makes no sense.

Forgiveness of Puerto Rico’s debt

Becoming a state wouldn’t have any obvious effect on Puerto Rico’s debt, but debt forgiveness for Puerto Rico is a possibility.

“We have to look at their whole debt structure,” President Trump said on the subject in an interview. “You know, they owe a lot of money to your friends on Wall Street, and we’re going to have to wipe that out. You can say goodbye to that. I don’t know if it’s Goldman Sachs, but whoever it is, you can wave goodbye to that.”

The White House followed Trump’s remarks with a statement that the best thing for Puerto Rico would be to “go through the normal process” and Mick Mulvaney, director of the Office of Management and Budget said not to “take [President Trump’s comment] word for word.”

It is legally possible, however. Some observers say that some states are watching what happens with Puerto Rico’s debt, hoping that debt forgiveness might set a precedent for states.

Exempting Puerto Rico from the Jones Act

Statehood would not exempt Puerto Rico from the Jones Act.

The Budget Office is not convinced that ending the Jones Act would help Puerto Rico’s economy very much. Puerto Rico imported 80% of its food before the hurricanes struck, even though much of the land is arable — suited to farming. As an island, Puerto Rico has to bring goods in by air or by ship, which is more expensive than truck or train.

But Puerto Rico already has the option of bringing goods in from other countries, if American goods were actually made too costly by the Jones Act. Observers say that Puerto Rico has more opportunity to export goods to the mainland because the Jones Act encourages shipments from the 50 states to Puerto Rico. Puerto Rico can benefit from backhauls — the cheaper rates paid for cargo on a homeward voyage. Without backhauls on Jones Act ships, Puerto Rico would have to compete with foreign shippers.

Puerto Rico cannot wait for statehood to solve the severe problems still remaining two months after Hurricane Maria. But Puerto Rico also cannot wait for those problems to be solved before demanding statehood.

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