I'm with Trump on this: If he can wipe off millions of debt why can't PR

[bendog]

seems only fair. And I have some credit card balances I don't like too. Who are these people who try to control what our president wants to do? No one elected THEM.

White House walks back Trump's Puerto Rico comments as Wall Street reels

 

[Siete]

that old fart can't wipe his own ass much less debt.

big hero mouth - look at me .. no more, no less.

he had to make geraldo goo his shorts while there was a camera and microphone present.

 

[ColonelAngus]

PR is corrupt as fuck.

Liberals and criminals bankrupted an island with over $2 billion/ year in tourism revenue.

 

[bendog]

seems only fair. And I have some credit card balances I don't like too. Who are these people who try to control what our president wants to do? No one elected THEM.

White House walks back Trump's Puerto Rico comments as Wall Street reels

What a surprise. You ought to try selling your Obamaphone, that may be worth a couple of bucks.

But Obama didn''t say PR's debt would be "wiped out?" And he wasn't even an American!

 

[ScienceRocks]

Both texas and Florida owe more debt. I guess they should be included.

 

[Dont Taz Me Bro]

This thread is not about Obamaphones. Get back on topic

 

[ColonelAngus]

Both texas and Florida owe more debt. I guess they should be included.

Derp

 

[Siete]

This thread is not about Obamaphones. Get back on topic

Trump lying, and his handlers covering for him ?

Roger that.

 

[TheDude]

He's simply being realistic about repayment of the debt, which will never occur. Judging by how poorly managed PR is, I'd like to see them released as a territory. Near as I can tell, they're no value to the US.

 

[ColonelAngus]

Puerto Rico is a banana republic. Straight up.

THEY HAVE A POPULATION OF 3 MILLION, AND ANNUAL TOURISM REVENUE OF $ 2 billion....that's just tourism.

$70 billion of debt...for 3 million people?

What can't liberals STOP SPENDING THEIR MUNICIPALITIES INTO OBLIVION?

Debt being 2/3 of your GDP is BAD.

read up on this shit, you stupid fucking Progs:

Puerto Rican government-debt crisis - Wikipedia

After decades of mismanagement, the government's outstanding debt pile exceeds $70 billion (not counting an additional $50 billion in pension obligations). These debts increased the government's debt-to-GDP ratio to about 68%, which forced it to cut spending, increase tax revenue, and spark economic growth so that its obligations could be better funded. Despite these drastic measures, projections are bleak[needs copy edit] as the Puerto Rican economy's health is precarious and aggravated by social distrust and unpleasantness.[c]

On August 3, 2015, Puerto Rico defaulted on a $58 million bond payment to the Public Finance Corporation, a subsidiary of the Government Development Bank, while other financial obligations were met.[3]


.
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Ahhhh....liberalism at its finest.

Progs absolutely suck at math.

 

[ColonelAngus]

Why did Obama allow Puerto Rico to get into such bad financial shape?

He is racist against Puerto Ricans.

 

[TheDude]

Puerto Rico is a banana republic. Straight up.

THEY HAVE A POPULATION OF 3 MILLION, AND ANNUAL TOURISM REVENUE OF $ 2 billion....that's just tourism.

$70 billion of debt...for 3 million people?

What can't liberals STOP SPENDING THEIR MUNICIPALITIES INTO OBLIVION?

Debt being 2/3 of your GDP is BAD.

read up on this shit, you stupid fucking Progs:

Puerto Rican government-debt crisis - Wikipedia

After decades of mismanagement, the government's outstanding debt pile exceeds $70 billion (not counting an additional $50 billion in pension obligations). These debts increased the government's debt-to-GDP ratio to about 68%, which forced it to cut spending, increase tax revenue, and spark economic growth so that its obligations could be better funded. Despite these drastic measures, projections are bleak[needs copy edit] as the Puerto Rican economy's health is precarious and aggravated by social distrust and unpleasantness.[c]

On August 3, 2015, Puerto Rico defaulted on a $58 million bond payment to the Public Finance Corporation, a subsidiary of the Government Development Bank, while other financial obligations were met.[3]


.
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.
.
Ahhhh....liberalism at its finest.

Progs absolutely suck at math.

They're CORRUPT AS FUCK and it's on the tax-payer's dime. Someone needs to get in there and clean house.

 

[BluesLegend]

Over $50 billion in public employee pension debt, wow..........shocker. /sarcasm /eyeroll /holy corruption batman

 

[Timmy]

Puerto Rico is a banana republic. Straight up.

THEY HAVE A POPULATION OF 3 MILLION, AND ANNUAL TOURISM REVENUE OF $ 2 billion....that's just tourism.

$70 billion of debt...for 3 million people?

What can't liberals STOP SPENDING THEIR MUNICIPALITIES INTO OBLIVION?

Debt being 2/3 of your GDP is BAD.

read up on this shit, you stupid fucking Progs:

Puerto Rican government-debt crisis - Wikipedia

After decades of mismanagement, the government's outstanding debt pile exceeds $70 billion (not counting an additional $50 billion in pension obligations). These debts increased the government's debt-to-GDP ratio to about 68%, which forced it to cut spending, increase tax revenue, and spark economic growth so that its obligations could be better funded. Despite these drastic measures, projections are bleak[needs copy edit] as the Puerto Rican economy's health is precarious and aggravated by social distrust and unpleasantness.[c]

On August 3, 2015, Puerto Rico defaulted on a $58 million bond payment to the Public Finance Corporation, a subsidiary of the Government Development Bank, while other financial obligations were met.[3]


.
.
.
.
Ahhhh....liberalism at its finest.

Progs absolutely suck at math.

Ever hear of the jones act? PR has been bought n sold to special interest big biz shipping.

 

[ColonelAngus]

It's funny how progs always talk about raising taxed, but never reducing spending.

 

[Frankeneinstein]

Both texas and Florida owe more debt. I guess they should be included.

Yeeaaaaaaaaah AMERICA!!!!! sic rottie

 

[ColonelAngus]

Obama could have addresses this.

He did not because he is racist against Puerto Ricans.

Now, stupid fucking Progs want to blame TRUMP for the issues in Puerto Rico since 2006?

Progs always say that DEBT does not matter.....because they are fucking morons.

Debt can CRUSH an economy.....LIKE IN FUCKING PUERTO RICO.

 

[ColonelAngus]

Here are all of the causes for the PUERTO RICO DEBT CRISIS......TRUMP IS NOT MENTIONED ONCE.

Puerto Rican government-debt crisis - Wikipedia


Causes[edit]
Cessation of federal subsidies[edit]
For much of the 20th century Puerto Rico was subject to favorable tax laws from the US federal government, which essentially acted to subsidize the island's economy. In 1996, US President Bill Clinton signed legislation phasing out important parts of the favorable federal tax code over a ten-year period ending in 2006.[14][15] The end of the subsidies led to companies fleeing the island which itself subsequently led to tax shortfalls. At first, the Puerto Rican government tried to make up for the shortfall by issuing bonds. The government was able to issue an unusually large number of bonds, due to dubious underwriting from financial institutions such as Spain's Santander Bank, UBS, and Citigroup.[16][17][18] Eventually the debt burden became so great that the island was unable to pay interest on the bonds it had issued.

Mismanagement and disparity[edit]
Some newspapers, such as El Vocero, have stated that the main problem is local government inefficiency rather than lack of funds.[m][n] As an example, the Department of Treasury of Puerto Rico is incapable of collecting 44% of the Puerto Rico Sales and Use Tax (or about $900 million), did not match what taxpayers reported to the department with the income reported by the taxpayer's employer through Form W-2s, and did not collect payments owed to the department by taxpayers that submitted tax returns without their corresponding payments.[o][21][22] The treasury department also tends to publish its comprehensive annual financial reports (CAFRs) late, sometimes 15 months after a fiscal year ends, while the government as a whole constantly fails to comply with its continuing disclosure obligations on a timely basis.[23][p] Furthermore, the government's accounting, payroll and fiscal oversight information systems and processes also have deficiencies that significantly affect its ability to forecast expenditures.[q]

Similarly, salaries for government employees tend to be quite disparate when compared to the private sector and other positions within the government itself. For example, a public teacher's base salary starts at $24,000 while a legislative advisor starts at $74,000. The government has also been unable to set up a system based on meritocracy, with many employees, particularly executives and administrators, simply lacking the competencies required to perform their jobs.[r]

There are 78 municipalities of Puerto Rico, which budget $2.2 billion a year, with mayors' salaries alone costing $4.8 million.[26] Thirty-six of these have a budget deficit, putting 46% of the municipalities in financial stress.[27] Each municipality’s elected legislature, usually including 1,000 to 1,500 members, receive per diems and expense money.[26] Just like the central government, the municipalities would issue debt through the Puerto Rico Municipal Financing Agency to stabilize its finances rather than make adjustments. In total, the combined debt carried by the municipalities of Puerto Rico account for $3.8 billion or about 5.5% of Puerto Rico's outstanding debt.[t]

During the New Deal, appointed Governor Rexford Tugwell created the Puerto Rico Electric Power Authority by nationalizing the island’s private utilities.[12] The state monopoly provides free electricity to local governments, which prompted the Mayor of Aguadilla, Puerto Rico, to build an ice-skating rink.[12] PREPA, which uses oil-fired power plants, has had opaque purchasing practices, and has resisted wind and solar power projects, has a debt of $9 billion.[12]

PREPA has had poor bill collection practices, with FTI Consulting estimating that the utility had improperly given away $420 million of electricity and that the island's governments were $300 million delinquent in payments.[12] In 2012, the Puerto Rico Ports Authority was forced to sell the Luis Muñoz Marín International Airport to private buyers after PREPA threatened to cut off power over unpaid bills.[12] In 2014, the Puerto Rico Energy Commission was established.[12]

Economic depression[edit]
Puerto Rico has been experiencing an economic depression for 12 consecutive years, starting in late 2005 after a series of deficits and the expiration of the section 936 that applied to Puerto Rico of the U.S. Internal Revenue Code. [v]

Tax policy[edit]
A federal statute that contributed to the crisis was the expiration of section 936 of the U.S. Internal Revenue Code, which applied to Puerto Rico.[w] This section was critical for the economy of the island as it established tax exemptions for U.S. corporations that settled in Puerto Rico and allowed its subsidiaries operating in the island to send their earnings to the parent corporation at any time, without paying federal tax on corporate income. The economy of the island was significantly reliant on the additional investment and spending generated by companies taking advantage of this provision, and has been unable to replace that benefit after its loss.[w]

Disparity in federal social funding[edit]
More than 60% of Puerto Rico's population receives Medicare or Medicaid services, with about 40% enrolled in Mi Salud, the Puerto Rican Medicaid program.[30] There is a significant disparity in federal funding for these programs when compared to the 50 states, a situation started by Congress in 1968 when it placed a cap on Medicaid funding for United States territories.[30] This has led to a situation where Puerto Rico might typically receive $373 million in federal funding a year, while, for instance, Mississippi receives $3.6 billion.[30] Not only does this situation lead to an exodus of underpaid health care workers to the mainland, but the disparity has had a major impact on the finances of Puerto Rico.[30]

Triple tax exemption[edit]
Interest income paid to owners of bonds issued by the government of Puerto Rico and its subdivisions is exempt from federal, state, and local taxes (so called "triple tax exemption").[f] Unlike most other US triple tax-exempt bonds, Puerto Rican bonds retain tax exemption regardless of where the bond holder resides in the United States,[e][f][g] a marketing and sales advantage consequent to the restriction typically imposed on municipal bonds with triple tax exemption in which exemptions are available to bond holders that reside within the state or municipal subdivision that issues the bonds. Triple tax-exempt bonds are considered subsidized because bond issuers can offer a lower interest rate to satisfy bond holders; as a result, Puerto Rico can issue more debt.[clarification needed]

Downgrade[edit]
Puerto Rico was effectively downgraded to non-investment grade on February 4, 2014 by Standard & Poor's when it downgraded Puerto Rico's general obligation debt (GO) from BBB- status to BB+, one level below investment grade.[31] The agency cited liquidityconcerns for its downgrade and maintained a negative outlook on its watch.[32] Moody's would follow three days later by downgrading Puerto Rico's GO debt on February 7, 2014 from Baa3 to Ba2, two levels below investment grade.[33] Moody's, however, cited lack of economic growth for its downgrade while assigning a negative outlook to the government's ratings. Fitch Ratings would be the last to downgrade on February 11, 2014 by downgrading Puerto Rico's GO debt from BBB- to BB, two levels below investment grade.[13] Fitch cited both liquidity concerns and lack of economic growth for its downgrade while assigning a negative outlook to the government's ratings.

Each of these downgrades triggered several acceleration clauses which forced Puerto Rico to repay certain debt instruments within months rather than years.

2015 Forbearance[edit]
On June 28, 2015, Governor García Padilla admitted publicly that, "the debt is not payable", and that, if the government was unable to grow the economy, "we will be in a death spiral".[x][y] Previous to Padilla's admittance, various government instruments had already entered into forbearance agreements with their lenders, but the warning still provoked a drop in Puerto Rican bonds and stocks.[35][36]

Reactions to the crisis[edit]
Local market[edit]
Around $30 billion, or about 42% of Puerto Rico's outstanding debt, is owned by residents of Puerto Rico.

Residents of Puerto Rico and local businesses are the parties most affected by government cuts and increased taxes imposed in order to stabilize the island's finances. Michele Caruso from CNBC reported on January 24, 2014 that, "Taxes and fees went up on nearly everything and everyone. Personal income taxes, corporate taxes, sales taxes, sin taxes, and taxes on insurance premiums were hiked or newly imposed. Retirement age for teachers was raised from as low as 47 to at least 55 for current teachers, and 62 for new teachers."—a significant cost to bear for a country with a purchasing power parity (PPP) per capita of $16,300 and with 41% of its population living below the poverty line.[z][1]

The legislative assembly, together with the governor, also reduced operating deficits, and reformed the public employees', teachers', and judicial pension systems.[aa] They also announced the intent to further reduce appropriations in the current fiscal year by $170 million and budget for balanced operations for the upcoming fiscal year.[ab]

As another countermeasure, the 17th Legislative Assembly of Puerto Rico enacted a bill on March 3, 2014, allowing the Puerto Rico Government Development Bank to issue $3.5 billion in bonds to recover its liquidity. The Governor promptly signed the bill the day after, effectively becoming law as Act 34 of 2014 (Pub.L. 2014-34).[38][39]

U.S. municipal market[edit]
Nearly 70% of U.S.-based municipal bond funds own Puerto Rican bonds or have some kind of exposure to Puerto Rico.[ac] A notable cause for this tendency is the fact that Puerto Rican bonds are triple tax-exempt in all of the states regardless of where the bond holder resides.[f] Despite the expected impact, preemptive measures actually slowed the damage of the downgrade's fallout.[40] When the downgrade began being perceived as imminent, investors were warned that it would affect the municipal market in general and concerns surrounding a worst-case default scenario were already being considered.[41] However, by the end of February 2014, municipal bond funds that relied on specific debt were already experiencing the backlash, leaving portfolio managers with fewer options in the market.[42]Organizations such as First Investors made it clear that they did not intend to invest in Puerto Rico for a prolonged time period, at least until Puerto Rican bonds were restored to investment grade.[42]

Skepticism[edit]
Several experts,[citation needed] including Senator Ángel Rosa, have expressed that Puerto Rico's debt is simply impossible to repay, and have thus recommended that Puerto Rico should instead negotiate payback terms with bond holders.[43] Others, such as economist Joaquin Villamil, have deemed it necessary that Puerto Rico issues debt at least once more to return liquidity to the Puerto Rico Government Development Bank and be henceforth able to repay its debt.

Some, like House Minority Whip Jennifer González, claim the crisis is mere propaganda created so that the incumbent political party can enact, amend, and repeal laws that would otherwise be unable to justify.[ad][ae] Others, such as the President of the Senate of Puerto Rico Eduardo Bhatia, claim the crisis was created by ruthless investors wishing to profit from credit downgrades.[45]

 

[ColonelAngus]

To blame Trump for decades of corruption and mismanagement in the government of Puerto Rico is nothing but political opportunism.

 

[busybee01]

Wall Street needs to face the facts. Puerto Rico is not going to be able to repay this. This is 1 time Trump might be right. Yet in this White House, when Wall Street says jump, they just ask how high.

There are many states, including red states, that have looming pension issues. Puerto Rico will not be alone.