Congress will soon take up the question of whether to grant the U.S. territory Puerto Rico a combination of bailouts and bankruptcy to address their current economic and financial crisis. The Commonwealth is burdened with more than $70 billion in debt after decades of corruption and mismanagement of their government and financial systems. The government of Puerto Rico is asking Congress for the bankruptcy protection under Chapter 9, and that request is finding support among most of those who supported the “too big to fail” bank bailouts, TARP, and the gigantic stimulus bills to address the financial crisis in the U.S. during what was called “the Great Recession.”
Wealthy investor and far-left political activist George Soros has weighed on this issue as well, siding firmly with his support for bailout and bankruptcy for Puerto Rico. Mr. Soros tweeted, “In debt-ridden Puerto Rico, cuts to vital services are affecting many of the most vulnerable there. Trib.al/XsLoa3k”
The article linked via the tweet by Mr. Soros is published by Open Society Foundations, which he created and bankrolls, titled “The Human Cost of Puerto Rico’s Limbo.” The article decribes how terrible day-to-day life in the Commonwealth is and only bankruptcy and bailout it claims can do anything to remedy the problems. Consistent with the liberal/left/progressive ideology espoused by Mr. Soros and supporters of bankruptcy for Puerto Rico, nothing is mentioned about any responsibility the government and leaders of the Commonwealth bear in the current condition of life there or the current crisis. The article says nothing about government and financial reforms will do so much to not only remedy the root causes of the current crisis, but bring about strong economic grown and prosperity for the citizens of Puerto Rico.
George’s son, Alexander Soros, agrees. In an op-ed article he wrote for the Miami Herald last year, the younger Soros has called for the kind of bailout and bankruptcy applied in the U.S. city of Detroit. Comparing the plight of Puerto Rico to Detroit might be appropriate at some levels, given that Detroit was once the most prosperous city in America and has since been decimated politically and economically by more than 60 years of being ruled by liberal Democrat politicians who have taxed and regulated most of the economic life out of that city. Clearly Puerto Rico, like Detroit, needs economic growth that can only come about with strong governmental and financial reforms that will enable prosperity.
The Center for a New Economy, also a Soros-funded organization, also supports bankruptcy for Puerto Rico. Their report supporting bankruptcy lists no fewer thabn 18 government entities that have done their share to rack up the Commonwealth’s $70 billion in public debt. Part of the problem is having such a high degree of their economy (mis)managed by their numerous, gigantic state-run enterprises. Corruption and cronyism services to function as a hidden tax and almost makes economic growth and prosperity nearly impossible. Puerto Rico is unlikely to experience economic prosperity without reforming, and likely privatizing, most of their ineffecient and corrupt state-run enterprises.
There is certainly another way forward for the Commonwealth of Puerto Rico, aside from having their stagnant and innefficient economy enabled and rewarded with bailouts and bankruptcy. The Commonwealth can pursue strong finanicial and government reforms including lower taxes and regulations on business that will encourage the kind of investment in the private sector needed to grow Puerto Rico’s economy. It is only through reforms and economic growth that the Commonwealth will ever enjoy a prosperous future.