Puerto Rico is insolvent
By Fred Vitale
Puerto Rico, a colony of the United States, had its bonds dropped to junk status in early February by all three ratings agencies. The U.S. colony of 3.6 million people of color is entering its eighth year of recession with official unemployment at 14.7 percent. The amount of debt that bankers claim against the island is over $70 billion. The newly-elected Governor Alejandro Garcia Padilla is cutting government jobs, which comprise 20 percent of the total workforce. He has raised taxes on most consumer items and small businesses, and increased water rates by 40 percent.
Puerto Rico cannot declare bankruptcy, neither can states on the mainland — there’s no provision to do so in federal bankruptcy laws. However, it can default. The Puerto Rican Constitution guarantees bond payments before pensions, and along with a triple tax break, Puerto Rico has been exploited in a thousand different ways by U.S. multinational corporations and Wall Street bankers.
The major teachers’ unions launched a 48-hour work stoppage Jan. 14-15 to protest efforts by the government to balance the budget by cutting teachers’ wages and slashing teachers’ pensions. Unlike previous strikes, the strike had the full support of the generally conservative school administrators.
The Puerto Rican Supreme Court postponed implementation of the new legislation until later in February.
For more information, visit criticalmoment.org