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Congressional Panel Clears Way for Puerto Rico Bankruptcy
5th Referendum on Statehood


Although Puerto Rico means "Rich Port" in Spanish (Columbus' second voyage), a Congressional oversight board (4 Republicans, 3 Democrats) has opened the door for the Caribbean island nation to declare bankruptcy protection. This "unincorporated" U.S. territory owes creditors $73 billion, easily making it the largest U.S. "municipal" bankruptcy on record. Detroit owed creditors $18 billion in its 2013 bankruptcy.

The U.S. annexed Puerto Rico, Guam and the Philippines after the Spanish-American War of 1898, designating the lands as "unincorporated territories." Puerto Ricans (pop. 3.4 million) are U.S. citizens, although cannot vote in U.S. national elections. Puerto Ricans do not pay federal personal income taxes, but do pay into Social Security.

On June 11, 2017, the islanders for a 5th time held a "nonbinding" referendum on the status of the island. The choices were statehood, independence or keeping the status quo. In the last referendum, 2012, the islanders for the first time voted for statehood. This time, the two main political parties on the island called for a boycott of the referendum. The boycott was effective. Only 23% of the islanders voted this time, but 97% voted in favor of statehood.

Puerto Rico's Popular Democratic Party wants to maintain the current territorial status; the New Progressive Party seeks statehood; and the Puerto Rican Independence Party, as you might expect, wants independence.

Despite the outcome, only Congress can approve a new state.

For a more in depth perspective of the islands financial woes, read Mary Anastasia O'Grady's "Puerto Rico's Broken Promise," Wall Street Journal, May 1

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February 17, 2019, 11:14 pm PST

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