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Puerto Rico: The Debt Crisis is Here

May 13, 2016
Plain English Version
The Puerto Rican and US flags are seen in the Old Town district in San Juan, Puerto Rico. PAUL J. RICHARDS/AFP/Getty Images

The Puerto Rican and US flags are seen in the Old Town district in San Juan, Puerto Rico. PAUL J. RICHARDS/AFP/Getty Images

Puerto Rico is a Commonwealth, not a state. Puerto Ricans are citizens of the United States. But they cannot vote in the election of the U.S. president.

Puerto Ricans can choose to live in the U.S. any time they want to do so. They are not immigrants. Puerto Ricans living in the U.S. can vote in presidential elections.

Puerto Rico is facing a deep financial crisis. It has run out of money to pay its debts. It has already missed a big payment to creditors. It is facing financial ruin.

States and cities in the U.S. can declare bankruptcy. Thirty years ago, Congress passed a law saying Puerto Rico could not declare bankruptcy.

Leaders in Congress and the administration want to change the law. Then Puerto Rico can restructure its debt. It can manage repayments to creditors. Many Republicans do not want to change the law. They are calling this a “bailout.” In fact, no money would go to Puerto Rico.

Most agree the crisis is the outcome of too much spending.  Spending by the governments, past and present, of Puerto Rico.

The crisis is causing many things to go wrong. Puerto Rican professionals are flocking to the U.S., making economic recovery even harder. Services, such as schools and health care, are suffering. Buses are not running.

Some of the creditors are banks and hedge funds. They want full payment. They oppose the restructuring of the debt of Puerto Rico.

On top of this, the Zika virus is spreading on the island. Hospitals are closing. There is not even enough money for screens to keep out the mosquitos.

The U.S. Secretary of the Treasury toured the island. He saw what is happening in the schools and hospitals. He said what he saw was “heartbreaking.”

Source: The New York Times May 9, 2016

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