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Chris Wysocki
Caldwell, NJ
The nine most terrifying words in the English language are "I'm from the government and I'm here to help." - Ronald Reagan
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Thursday, 22 October 2015
Got a spare $73 billion lying around? Obama wants US taxpayers to bail out Puerto Rico
Obama wants to use your tax dollars to bail out Puerto Rico, where nobody pays federal income taxes.
With Puerto Rico buried in debt and on course to completely run out of money by the end of the year, the Obama administration is urging Congress to take unprecedented action to help the island, including granting a type of bankruptcy protection unavailable to the nation's 50 states.
The administration said the broader bankruptcy protection, which would be available only to territories but not fiscally pressed states, is needed to help Puerto Rico avert a mushrooming crisis and restructure its $73 billion in debt.
The island will soon "face the unenviable and difficult choice between repaying its debts and maintaining vital public services," the administration said in a statement and 10-page fact sheet released Wednesday evening. "The latest reliable estimates reveal that, without further steps, Puerto Rico will not have the resources to pay for both."
Puerto Rico is the poster child for wasteful government spending, bloated bureaucracy, and inefficient, archaic central planning run amok. Oh, and did I mention that no one on the island pays federal income taxes? That doesn't stop them from claiming tax credits, of course. And so Obama wants us to send more of those down there too.
In addition to urging Congress to offer Puerto Rico the new type of bankruptcy protection, the administration is also recommending that Congress broaden access to the island's Medicaid program, a move that would pump money into its teetering health-care system. It also wants the island workers to have access to a broader array of federal tax credits, including the earned-income tax credit, in an effort to pump up its dismal 40 percent labor force participation rate.
Typical Democrat. Throw more money at people who've already proven they can't wisely use the money they already have. Puerto Rico, like every other liberal progressive shithole in America doesn't have a revenue problem, they have a spending and regulatory problem.
The debt is just the symptom of the problem. The real underlying issue is the Island government's addiction to spending—a habit which produces $6 billion dollar deficits per year and a government centered economic model which leads to stunted growth. To put it into perspective, even if the island completely defaulted on its roughly $3 billion dollar per year debt service payments, this still does not address half of the deficit problem.
This is what scares financial markets and undermines the credibility of the government. This is why there are several other jurisdictions that have much higher debt to GDP ratios than Puerto Rico and still have better credit ratings than the Island.
And as always, the solution is less government.
If we are going to help them, there is a sane way to do it. Dismantle the current government apparatus that is costly and ineffective as a first step. Then, we should simultaneously implement real and strong free market reforms that open up the economy and lead to robust growth and job creation. Finally, a new independent mechanism should be created to manage the debt, based on a collaboration between the government of Puerto Rico and the US, in order to restore investor confidence and allow the island's government to regain access to the financial markets.
None of which involves throwing money down a rathole. Puerto Rico needs tough
love, not bailouts. Let's hope Congress agrees.
Posted at 12:17 by Chris Wysocki
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