There are some 1,700 miles of land and sea separating Hartford from San Juan, Puerto Rico, making it tempting for Connecticut’s residents to ignore the Caribbean island’s desperate economic crisis. A word to the wise: resist the temptation. The ripple effects of the island’s recent failure to pay part of its $72 billion in debt will have a negative impact not only on the island’s residents but also on the millions of Americans in the states whose investments hold Puerto Rican municipal bonds, including thousands of Connecticut investors and retirees. Whether you live in Bridgeport or Bayamón, helping Puerto Rico emerge from the worst financial crisis in more than a century should matter to everyone in Connecticut. As Senator Chris Murphy explained during a recent press conference calling for a more robust federal response to the island’s economic meltdown, “as Puerto Rico rises, Connecticut rises. As Puerto Rico falls, Connecticut falls.”
The reasons behind the island’s current economic woes are complex, with blame to go around: poor budget practices, federal funding shortfalls, predatory lending by financial institutions, the Great Recession, demographic changes draining the tax base, and the complicated and oft unjust relationship between the United States and Puerto Rico, to count just a few. Nonetheless, the situation on the island has reached rock bottom and only decisive action from Congress and President Obama will help turn Puerto Rico around. Sadly, most in Washington are not taking this crisis seriously enough.
Thankfully, Senator Richard Blumenthal along with Senator Charles Schumer of New York have introduced a bill to address this crisis. The “Puerto Rico Chapter 9 Uniformity Act,” if enacted into law, would tackle one of the major obstacles toward Puerto Rico’s recovery, namely its inability to avail itself of the bankruptcy protections to which municipalities in the U.S. have access. What’s more, the bill, which is co-sponsored by Senator Murphy, allows Puerto Rico to reform its economy in an orderly manner that avoids increased risks for all Americans. As Senator Blumenthal pointed out in introducing the legislation, “Creditors, investors, ordinary citizens, all will be harmed if the Congress fails to act. This measure is not a bailout – involving not a dime of federal funds. It enables an orderly, rational restructuring of debt, instead of a financial free for all and potential free fall.”
Beyond allowing Puerto Rico to avail itself of bankruptcy laws, there are other things that Congress and the White House can and should do to aid the island including investing federal funds on the island for health, clean energy and other urgent needs, as well as eliminating economically-handicapping policies like the well-documented Jones Act shipping requirements that have unreasonably cost the island billions.
Of course, there are other reasons to fix Puerto Rico’s economy beyond the bottom line for investors and pension holders. There are long and significant ties between the island and Connecticut. In the mid-20th century, thousands of Puerto Ricans came to places such as Windsor to work in the state’s important shade leaf tobacco industry. They are integral parts of communities across Connecticut. Today, more than 250,000 Puerto Ricans call Connecticut home. In no other state do Puerto Ricans account for as large a share of total state population as they do in Connecticut. And Hartford and Bridgeport rank among the top ten cities in the United States in total Puerto Rican population. These historical linkages mean that as the crisis in Puerto Rico sharpens, the impact will be felt in the Puerto Rican communities of the state. Puerto Rican families in Connecticut, already struggling to recover from the worst years of the Great Recession, will be forced to provide financial support to their families on the island, compromising their own economic security.
Putting Puerto Rico on solid economic footing won’t be easy and won’t happen quickly. But taking a hands-off approach to the island’s current crisis won’t work. Puerto Ricans need our help and the U.S. has a practical and moral obligation to say, ¡Presente!
The Hispanic Federation is the nation’s premier Latino non-profit membership organization.