dtucker300 wrote:
Sorry, this was cut off. Puerto Rico's problems are a result of their own doing.
1999 GDP was $38 Billion, 2003 GDP $47.4 Billion.
Revenue 2002: $10.5 Billion;
Taxes: 62.6%
Income tax: 46.5%
Excise tax: 14.1%
Federal Grants: 19.0%
Non-tax revenue: 18.4%
Expenditures: $10.5 Billion
Public debt (outstanding; 1999): $22.7 Billion
Welfare: 22.3%
Education: 22.3%
Foreign Trade (2002-2003): (its dependence on imports)
Imports: 33.8 Billion
Exports: 55.2 Billion
(their Trade Surplus is enough to erase their debt)
Economy
The economy of Puerto Rico is classified as a high-income economy by the World Bank and as the most competitive economy in Latin America by the World Economic Forum but Puerto Rico currently has a public debt of $72.204 billion (equivalent to 103% of GNP), and a government deficit of $2.5 billion. According to the World Bank, gross national income per capita of Puerto Rico in 2013 is $23,830, ranked as 63rd among all sovereign and dependent territories entities in the world.
Puerto Rico experienced a recession from 2006 to 2011, interrupted by 4 quarters of economic growth, and entered into recession again in 2013, following growing fiscal imbalance and the expiration of the IRS Section 936 corporate incentives that the U.S. Internal Revenue Code had applied to Puerto Rico. This IRS section was critical to the economy, as it established tax exemptions for U.S. corporations that settled in Puerto Rico, and allowed their insular subsidiaries to send their earnings to the parent corporation at any time, without paying federal tax on corporate income. Puerto Rico has surprisingly been able to maintain relatively low inflation in the past decade while maintaining a purchasing power parity per capita higher than 80% of the rest of the world.
most of Puerto Rico's economic woes stem from its inability to become self-sufficient and self-sustainable throughout history; its highly politicized public policy which tends to change whenever a political party gains power; as well as its highly inefficient local government which has accrued a public debt equal to 68% of its gross domestic product throughout time.
The heavy debt load of their own creation.
In early 2017, the Puerto Rican government-debt crisis posed serious problems for the government which was saddled with outstanding bond debt that had climbed to $70 billion at a time with a 45 percent poverty rate and 12.4% unemployment that is more than twice the mainland U.S. average. The debt had been increasing during a decade long recession.
The Commonwealth had been defaulting on many debts, including bonds, since 2015. With debt payments due, the governor was facing the risk of a government shutdown and failure to fund the managed health care system. "Without action before April, Puerto Rico's ability to execute contracts for Fiscal Year 2018 with its managed care organizations will be threatened, thereby putting at risk beginning July 1, 2017 the health care of up to 900,000 poor U.S. citizens living in Puerto Rico", according to a letter sent to Congress by the Secretary of the Treasury and the Secretary of Health and Human Services. They also said that "Congress must enact measures recommended by both Republicans and Democrats that fix Puerto Rico's inequitable health care financing structure and promote sustained economic growth."
Initially, the oversight board created under PROMESA called for Puerto Rico's governor Ricardo Rosselló to deliver a fiscal turnaround plan by January 28. Just before that deadline, the control board gave the Commonwealth government until February 28 to present a fiscal plan (including negotiations with creditors for restructuring debt) to solve the problems. A moratorium on lawsuits by debtors was extended to May 31. It is essential for Puerto Rico to reach restructuring deals to avoid a bankruptcy-like process under PROMESA. An internal survey conducted by the Puerto Rican Economists Association revealed that the majority of Puerto Rican economists reject the policy recommendations of the Board and the Rosselló government, with more than 80% of economists arguing in favor of auditing the debt.
In early August 2017, the island's financial oversight board (created by PROMESA) planned to institute two days off without pay per month for government employees, down from the original plan of four days per month; the latter had been expected to achieve $218 million in savings. Governor Rossello rejected this plan as unjustified and unnecessary. Pension reforms were also discussed including a proposal for a 10% reduction in benefits to begin addressing the $50 billion in unfunded pension liabilities.
Public finances
Puerto Rico has an operating budget of about U.S.$9.8 billion with expenses at about $10.4 billion, creating a structural deficit of $775 million (about 7.9% of the budget). The practice of approving budgets with a structural deficit has been done for 19 consecutive years starting in 2000. Throughout those years, including the present time, all budgets contemplated issuing bonds to cover these projected deficits rather than making structural adjustments. This practice increased Puerto Rico's cumulative debt, as the government had already been issuing bonds to balance its actual budget for four decades since 1973.
The consolidated budget is usually thrice the size of the general budget; currently $29B and $9.0B respectively. Almost one out of every four dollars in the consolidated budget comes from U.S. federal subsidies while government-owned corporations compose more than 31% of the consolidated budget.
The local government of Puerto Rico has requested several times to the U.S. Congress to exclude Puerto Rico from the Jones Act restrictions without success. These measures have always received support from all the major local political parties.
Sorry, this was cut off. Puerto Rico's problems a... (
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Don't know about the rest of your post. It sounds very informative. But as for the Jones Act, Trump waived it after the hurricane.