Congress Saves Puerto Rico From Bankruptcy

In a rare show of sanity, Congress did not force Puerto Rico into bankruptcy. Instead it essentially set up a financial control board that will take many economic decisions out of the hands of the locally elected authorities. The seven member board, made up of four Republican appointees and three Democratic ones, will be able to restructure Puerto Rico’s over $70 billion dollars in outstanding debt. The bill was not without controversy as some conservatives labeled it just another bailout while Bernie Sanders gave voice to many Puerto Ricans in calling it the imposition of “colonial masters”. Puerto Rico’s economy is already in pretty desperate shape and its population shrinking as residents flee the island for better paying jobs on the US mainland. So you would think that maintaining the incomes of those who remain might be helpful to stabilize the situation. But since this was a Republican bill, they also rammed through a reduction in the minimum wage and limiting overtime pay. This will just drive even more Puerto Ricans off the island and make recovery even more difficult. There is plenty of blame to go around with Puerto Rico’s debt disaster from financial firms allowing the territory to over-leverage in order to take advantage of the higher rates and tax-exempt status of the island’s bonds to simple local corruption. But it is the citizens and, of course, the workers of Puerto Rico that will bear the brunt of the recovery.