This is what happens when socialist programs cannot be sustained anymore: they go bankrupt. Except Puerto Rico cannot file for bankruptcy because they are a commonwealth country. Governor Alejandro Garcia Padilla member of the Popular Democratic Party (PPD) wants to change that. He is demanding the U.S. government allow them to access chapter 9 bankruptcy.
Padilla said:We cannot allow them to force us to choose between paying for our police, our teachers, our nurses, and paying our debt. We have to act now.
Puerto Rico owes $73 billion they cannot pay back. Its debt is already junk grade which is the lowest possible rating.
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Padilla compared their financial situation to Detroit’s but unlike Detroit, Puerto Rico can settle it’s debt with it creditors by itself. They do not like that option though because it would take years.
He said Puerto Rico is in bad shape and they need to use some of the money that would usually go to investors to invest into the economy so it could get back to financial stability.
To make matters worse, a lot of Puerto Rican’s have been leaving the island and going to the mainland U.S. to look for jobs because they are poor and Padilla keeps raising taxes. The U.S. itself is still experiencing a job shortage.This mass exodus is making it even harder for Puerto Rico to pay back its debts because he is losing tax revenue.
The largest provider of goods and services to Puerto Rico is South Florida so their current financial situation is going to have a big impact on Floridians.
When talking about the island’s future, Padilla said:
It will be difficult. The size of this debt prevents us from getting out of the cycle of recession and contraction.