It is not the fault of the lenders that Puerto Rico decided to borrow more than it could comfortably pay.
That tends to happen when you elect incompetent and corrupt government. That isn't the GOP's fault.
Let's blame those brown people, everyone knows they have corrupt politicians. Heck, surely some of them managed to shift PR's wealth into their own pockets. Or maybe they went wild spending on unnecessary infrastructure... oh wait, can't be that. Should we look for crony capitalism like the way Bush paid his cronies to rebuild Iraq?
Just where is all that borrowed wasted money?
Puerto Rico's crisis: How did it get so bad?
Yes, there was some government overspending but why was that? Was everyone getting tax breaks?
2. The U.S. Congress changed the lawSo what happened 10 years ago? Congress is partly to blame for the mess. The island used to be a tax haven for some big businesses such as the pharmaceutical industry. It was cheaper to make drugs on the island than anywhere else in America because companies didn't have to pay federal tax on the Puerto Rican operations.
But in the mid-1990s, Congress began rolling back the special tax exemptions for businesses operating in Puerto Rico. The tax breaks phased out and fully ended in 2006.
Puerto Rico's economy tanked after this happened, and it has yet to recover. Many good private sector jobs were lost and tax revenues dropped. The economy has shrunk almost every year since.
On top of that, the Merchant Marine Act of 1920 mandates that only U.S. vessels can take goods between Puerto Rico and the U.S. mainland. This increases prices on the island and makes goods produced in Puerto Rico less competitive than those coming from cheaper Caribbean nations that send goods on their own ships.
PR has no Senators, no Congresspersons. Sounds like a convenient place to target legislation without affecting one's voter base.
Then there was this, after PR was allowed to issue bonds, then Congress tanked PR's economic base, Congress also did this:
4. Congress stripped Puerto Rico of its bankruptcy rightsAnother major drawback for Puerto Rico is that it doesn't have access to the same bankruptcy laws that states do. So-called Chapter 9 bankruptcy was created after the Great Depression to allow cities, towns and other municipalities to address severe debt problems under a workout process overseen by the courts. Detroit is the most famous Chapter 9 bankruptcy case so far.
Puerto Rico used to have Chapter 9 bankruptcy rights, but the island lost them in the 1980s when Congress revisited this part of the bankruptcy code. The Obama administration and the governor of Puerto Rico argue that it was an unfair decision and that Congress should give the island Chapter 9 rights again. So far, the Republican-controlled Congress is largely against it.
We can bail out Wall St, but those brown people, they're lazy and corrupt, it's clearly their own fault.
Here's a more recent article that adds a bit more to the picture.
So let's see. The Congress votes in tax breaks for pharmaceutical companies operating in PR. Then they vote those out about the same time as the 2008 economic collapse brought on by the financial companies getting greedy and over-extended. (Wait what? Overextended debt.... )
Prior to that:
Puerto Rico has been able to borrow money without a lot of raised eyebrows thanks to -- once again -- a US tax break. Unlike US states, Congress lets Puerto Rico issue debt that’s tax free. This made the island’s debt really attractive to investors, who lent their money for way longer than they might have otherwise....
Puerto Rico’s debt is mostly in the hands of private investors (think: hedge funds, mutual funds, individuals), who are now caught holding the $74 billion bag. And unlike Greece, whose economic issues put the whole eurozone at risk, the US economy doesn’t have a huge overall stake in Puerto Rico’s problems.
Nice for Trump, he can kick the PR dog and not many in the mainland will be affected. Plus, it's just brown people, everyone knows they're lazy and corrupt.
