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Island in crisis

After a hurricane and years of overspending, budget-strapped politicians in Puerto Rico are sparring with feds for a big-time bailout

Island in crisis

In San Juan, teachers participate in a one-day strike on March 19 against the Puerto Rican government’s support of some charter schools. (Ricardo Arduengo/AFP/Getty Images)

Strike one: Puerto Rico last May, $123 billion in debt, became the first U.S. state or territory to admit it is essentially bankrupt. Strike two: Hurricane Maria last September ravaged the island. Strike three: Early this month Puerto Rico Gov. Ricardo Rosselló rejected the plan of a federal oversight board appointed to rein in the free-spending tendencies of territorial politicians.

In 2016 Congress passed and President Barack Obama signed into law a bill establishing the oversight board and giving it authority to manage Puerto Rican finances. The board wants the island’s standard $600 Christmas bonuses, regardless of performance, to be optional. It wants pensions greater than $1,000 per month to be reduced by 10 percent. Puerto Rico’s typical vacation, sick leave, and severance benefits now exceed those in the rest of the United States, so the board wants to lower those.

Gov. Rosselló on April 2 played the anti-colonialism card, saying critics of Puerto Rico spending represented a latter-day version of the “dismissive and second-class colonial treatment Puerto Rico has suffered throughout its history as a territory of the United States.” But oversight board chairman José Carrión has said, “It is imperative that Puerto Rico seize this moment to fundamentally reform an economy that has been in a long-term recession.”

Ramon Espinosa/AP

Puerto Rico Gov. Ricardo Rosselló speaks during a Senate Committee on Energy and Natural Resources hearing on hurricane recovery in Washington. (Ramon Espinosa/AP)

Prime victims in the standoff are many of Puerto Rico’s 3 million residents. Several hundred thousand remained without electric power six months after the hurricane. San Juan and other major cities are mostly back to normal, but “normal” includes sporadic outages and constant barriers to entrepreneurial activity. According to the World Bank Group’s “Doing Business” rankings, the United States finishes sixth (out of 190 countries) in “Ease of Doing Business,” but if Puerto Rico were an independent country, it would be only 64th overall, below troubled lands such as Kazakhstan and Kosovo, Mongolia and Montenegro.

Puerto Rico is also 113th in enforcing contracts, 138th in providing construction permits, and 153rd in registering property. According to QE Intelligence, Puerto Rico officials in the first two-thirds of 2017 alone issued 107 questionable consulting contracts. The Puerto Rican government’s budget-reducing steps rarely combat overstaffing. For example, on April 5 the island’s Department of Education announced the closure of 283 public schools starting this summer but stipulated that not a single administrator or teacher would be laid off.

No one wants to see people losing their jobs. The easiest short-term solution would be to send billions of dollars to Puerto Rico to cover its budgetary problems—but the precedent thereby set would lead to great problems elsewhere. If Puerto Rican politicians who have won votes by overspending get away with it, their counterparts in California, Connecticut, Illinois, Massachusetts, New Jersey, New York, and other states will keep running toward the cliff.

SINCE HURRICANE MARIA, two perspectives on rebuilding the Puerto Rican economy have clashed. In a Sept. 29 press conference, one week after Maria pounced, San Juan Mayor Carmen Yulín Cruz Soto told reporters “to send a mayday call all over the world. We are dying here. … What we are going to see is something close to genocide.”

That’s hype, but she has a point: The official death count from the hurricane was only 64, but add the elderly and sick who died of respiratory failure, heart attacks, and pneumonia, and the real death toll is more than 1,000.

Manuel Balce Ceneta/AP

Cruz (Manuel Balce Ceneta/AP)

As some Puerto Ricans demanded more billions in aid, President Donald Trump called Mayor Cruz and other critics “politically motivated ingrates.” He also has a point: Puerto Ricans expect Cruz, a 55-year-old Boston University graduate who majored in political science, to run for governor in 2020. Trump appointees say the dispensing of money without tight controls and governmental reform will lead to enormous waste.

But, to update an ancient saying, “It’s an ill hurricane wind that blows no one any good.” Maria moved the spotlight from official corruption to human suffering. (Hurricane Irma, which skirted Puerto Rico early in September, also did damage, but Maria caused enormous devastation.)

In March, publications ran headlines like these: “6 Months After Hurricane Maria, Puerto Rico Pleads for Help,” “Puerto Rico Still Pleading for Help 6 Months After Maria,” “For One Father and Son in Puerto Rico, Hurricane Maria’s Cloud Has Not Lifted.”

The Associated Press, for example, reported movingly from the Barrio Maná neighborhood of Corozal, a plantain farming town high in Puerto Rico’s central mountains: “World War II veteran Antonio Morales, 93, sleeps in a single-story concrete home with no running water, its floor covered with dozens of gallon jugs and plastic buckets of water that his nurse uses to bathe him. ‘Barrio Maná is not even on the government’s radar,’ said Morales’ 61-year-old daughter-in-law, Maria Perez, her eyes filled with tears. ‘Practically no one has shown up here.’”

Not until the 21st paragraph of the 28-paragraph story, though, would readers learn that “the U.S. Environmental Protection Agency said it is awaiting permission from FEMA to install the generator [in Barrio Maná], but FEMA said it has not received a request from the administration of Gov. Ricardo Rosselló. Meanwhile, Corozal town officials did not return calls for comment.”

Not until paragraph 25 would readers see an important statistic: “97 percent of water customers do have service.”

Paragraph 26 mentioned news that readers could use: “The Power Authority also is facing allegations of corruption and mismanagement. On Monday, the U.S. House Committee on Natural Resources demanded documents related to any investigations into the allegations, including that crews accepted bribes to restore power first to strip clubs and that some restored power to their own homes ahead of the island’s largest public hospital and main international airport.”

GDA via AP

Financial oversight board chairman José Carrión (GDA via AP)

BEFORE MARIA, PREPA—the Puerto Rican government’s electric power authority—was already more than $9 billion in debt, even though it had so underinvested that its power plants had a median age of 44 years, compared with an average age para afuera (“over there,” in the continental U.S.) of 18 years. Consultants from Synapse Energy Economics wrote, “It is difficult to overstate the level of disrepair or operational neglect at PREPA’s generation facilities.”

After the storm, many demanded that PREPA receive more money quickly. The problem, though, is that putting the electrical system back into its pre-Maria condition is not a fix and is hard to do since so much of the equipment is antiquated: Repair crews often cannot take what other utilities are using and plug it in. Rosselló has agreed with the oversight board’s plan to privatize PREPA and begin using state-of-the-art technology, but the need to turn on the lights for Puerto Ricans in isolated communities is great—and that might mean patches rather than progress.

The overstaffed and underachieving public school system is another focus of attention. The number of students has shrunk by 45 percent since 2004, as Puerto Ricans have fewer children and many young families have moved to Orlando and other cities para afuera. Meanwhile, the number of teachers has grown by 10 percent, and an educational bureaucracy consumes big chunks of the public school system’s $2.5 billion budget.

On March 3, I watched 100 teachers take turns circling around a plaza in Puerto Rico’s capitol complex. The teachers oppose public charter schools and also vouchers that would allow parents to choose a public or private school for their children. Those schools would be able to pay teachers less, trim benefits, and require better performance.

The teachers are suspicious of government plans, and perhaps for good reason. Last August, journalist Ethan Barton reported that Puerto Rico had closed some public schools and announced a savings of $7 million, but officials gave $11 million to public relations and lobbying firms. Half of that went to companies connected to government officials.

College professors and students oppose the oversight board’s proposal that the University of Puerto Rico increase its tuition costs for residents per credit hour from $57 to $157. But even the increased rate would be much lower than typical rates on the mainland: Florida State’s standard rate, for example, is $435 per credit hour for residents (and $1,445 for nonresidents).

THE REASONS WHY Puerto Rico is in such a financial fix go back decades and include poor financial decisions by New Deal ideologue Rexford Tugwell when he gained island authority. More recently, though, Puerto Ricans should blame their own politicians for running a taxation system that benefits their buddies, tolerating a thriving business in illegal drugs, enabling welfare payments larger than starting salaries for the unskilled, and mandating time-and-a-half pay when someone works more than eight hours in a day. (Para afuera, overtime only kicks in when it’s more than 40 hours in a week.)

For more on those factors, see WORLD’s Dec. 26, 2015, cover story. What I particularly noticed on this trip, though, was the beauty of the land and the pride of the people, evident in the abundance of statues memorializing centuries of Puerto Rican leaders. Who wouldn’t want to have more time off to enjoy the wonderful climate (except during hurricane season)? But should others pay for that?

The stories that stick with me emphasize resilience in the face of post-hurricane adversity. Some Puerto Ricans have lived for months with tarps instead of roofs overhead. Some have washed clothes in streams as their grandmothers did. Every isolated town had tales of neighbors with bottles of water sharing them with neighbors who had no water but two lanterns, one of which transferred hands.

In the town of Coamo (population 40,000), where Hurricane Maria cracked wooden poles and snapped power lines, 60-year-old homemaker Carmita Rivera called a meeting at her home and told the 50 people who came, “Enough is enough.” Her neighbors laid a 300-pound wooden electric post atop two logs and tipped it into a freshly dug 5-foot hole. They pulled power lines out of the undergrowth and dug holes for wooden posts under the supervision of a PREPA official, who made sure the high-voltage lines were off-limits.

Carlos Giusti/AP

Workers install a new post to return electricity to a home in Coamo four months after Hurricane Maria. (Carlos Giusti/AP)

One of the Coamo beneficiaries was 78-year-old Antonia Pagan, who said she had lost most of her fingernails while washing clothes in the river and had often bumped into things in the dark: She has lost her right eye to glaucoma. When she had power once again, she hugged the volunteer workers, cried, and used a blender to make an apple-strawberry-banana-grape smoothie for her son.

A similar story came out of the western mountain town of San Sebastián, where a group of municipal workers, retired company workers, and volunteers restored power to nearly 2,000 homes. In that town they did it over the objections of PREPA, which filed complaints with police and the U.S. Occupational Safety and Health Administration.

Christian groups provided help in all 78 of Puerto Rico’s municipalities. Vivian Maldonado of Cáritas de Puerto Rico, the Catholic Church’s charity arm, said the six dioceses on the island had provided more than 1 million pounds of food and basic necessities and given more than $1 million in food vouchers. Southern Baptists, Calvary Chapel, and other groups were all active, as Puerto Rico’s growing Protestant churches became centers for water distribution and emergency lodging.

Some Puerto Ricans, though, were not ready to volunteer. Police officers often worked long hours last fall in the wake of Maria, but they demanded overtime pay. When they didn’t get it, early this year 2,700 of the island’s 13,000 officers didn’t show up on a typical day: They claimed illness and received paid sick leave. (The usual number of police no-shows is 550.)

Carlos Giusti/AP

Puerto Ricans protest pension cuts. (Carlos Giusti/AP)

Puerto Rico Police Chief Michelle Hernández (recently resigned) spoke of “an inordinate amount of absences,” but instead of calling on everyone to make sacrifices, Gov. Rosselló said he would give each police officer a $1,500 pay raise. Some have suggested that Puerto Rico’s government sell its high-priced assets. One small example: The Old San Juan harbor displays many beautiful structures painted in Easter egg colors, but the Department of Housing occupies a big, ugly building on prime land fronting the waves. Given Puerto Rico’s proud history, losing even awful buildings might be as unpopular as reducing salaries and pensions.

PUERTO RICO has faced other crises in the 525 years since Columbus set foot on the island in 1493. The Dutch, French, and English all coveted Puerto Rico—its name means “rich port”—so Spanish overlords built walls 15 feet thick around the old city and made all visitors come through the Puerta de San Juan (San Juan Gate). New arrivals from Europe normally walked through the gate and up a hill, heading to the San Juan Cathedral—now 450 years old—to thank God for preserving them through a long voyage.

Juan Luis Martinez/GDA via AP

Puerto Ricans protest labor reform. (Juan Luis Martinez/GDA via AP)

The gate is still there, still painted red, a more appropriate color than ever given the red ink on government budgets. Officials placed above the gate a Latin inscription, Benedictus qui venit in nomine domini (Blessed is he who comes in the name of the Lord). That’s worth remembering, as is the story of one Spaniard who came through the gate: Ponce de León. His corpse is interred in the cathedral. He never did find a Fountain of Youth: If Puerto Rico places its hope on a magic fountain in Washington or anywhere else, its poor people will probably continue to suffer. And if Puerto Rico gets a bailout, politicians in debt-ridden states will demand the same. 

—The Associated Press contributed to this report

Marvin Olasky

Marvin Olasky

Marvin is editor in chief of WORLD and dean of World Journalism Institute. He joined WORLD in 1992 and has also been a university professor and provost. He has written more than 20 books, including Reforming Journalism. Marvin resides with his wife, Susan, in Austin, Texas. Follow him on Twitter @MarvinOlasky.


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  • charles jandecka
    Posted: Fri, 04/13/2018 08:12 pm

    Robbed of their indepenence when coal dust blew up the USS Maine, and not sabtagers as Uncle Sam purported, the peoples became content sucking on America's teat while their leaders became fat-cats off the cream. These parasitic island people, unwilling to kill for their freedom, should have been cut adrift decades ago!!

  •  Brendan Bossard's picture
    Brendan Bossard
    Posted: Sun, 04/15/2018 08:00 pm

    Charles, my wife is Puerto Rican.  I have visited Puerto Rico several times.  The people are not parasites.  In their view, we sucked them dry.  They may have good reason for thinking this.  Please tone your rhetoric down next time, okay?