and includes the staggering failure to adequately account for revenues and expenditures
which points to serious structural problems the current governor, Alejandro García Padilla, is not addressing, asking instead bondholders to “share the sacrifices.”
Here’s the situation as I see it:
It is not in García Padilla’s interest to improve the economy
García Padilla’s administration relies heavily on a large bureaucracy, and he knows his predecessor was voted out of office for trying to reduce it. Estimates show that the government of Puerto Rico has 160,000 employees too many. That’s enough of a voter base to keep him in office.
If the U.S. refills the ATM, García Padilla will claim credit for it; if the U.S. doesn’t, he has someone to blame.
And don’t forget that García Padilla and other commonwealth supporters lost miserably during the last plebiscite, when statehood won by approx. 60%. For as long as Puerto Rico remains in a financial swamp, García Padilla knows the question of statehood will be dismissed with “And They Want to Be a State?”
(Or as Ed Koch put it, “The People have spoken … and they must be punished.”)
Again, it is not in García Padilla’s interest to improve the economy.
A Puerto Rican default should not surprise anyone. According to Carlos Colón de Armas, acting dean of the School of Business Administration at the University of Puerto Rico, for eight years from 2005 through 2012, government expenses exceeded revenues on average by approximately $1 billion annually. The dean told me by telephone that total commonwealth debt is now around $73 billion and in 2013 it was 101% of the island’s gross national product (GNP) up from 57% in June 2001. (Although gross domestic product is the most widely accepted measure of an economy’s size, it reflects the profits of large multinational corporations booked for tax purposes in Puerto Rico but not retained in the local economy. Therefore, GNP, a measure of what is produced by locals, is a more accurate tool to assess the economy.)
Unlike Luis Fortuño, the previous governor, current governor Alejandro García Padilla
increased expenses by almost $600 million in his first budget. While he is now cutting spending, the cuts are mostly from that increase, according to Mr. Colón de Armas. Some $500 million-$800 million in fat—from subsidies to special interests to funding for political parties—remains untouched in the $9.6 billion budget.
Fortuño lost by 12,000 votes since García Padilla (known as Agapito) promised the moon and the stars.
Romney’s Hispanic Steering Committee leadership is comprised of former Secretary of Commerce Carlos Gutierrez; former Puerto Rico Attorney General Jose Fuentes; and former Administrator of the Small Business Administration (SBA) Hector Barreto.
Interestingly enough, other potential vice-presidential selections are also included – along with Rubio, Romney also named Puerto Rico Governor Luis Fortuno, New Mexico Governor Susana Martinez, and Nevada Governor Brian Sandoval as Honorary co-chairs to the steering committee.
Rubio’s been a Senator since 2011. Likewise, Martinez and Sandoval have only been governor since 2011; so Fortuño is the most experienced.
However, of the four, I think Fortuño is the least likely to get the VP spot. For starters, it would take weeks to educate the public at large on the fact that Puerto Ricans are American citizens from birth, and, who needs yet another “natural born citizen” diversion at this point?
Javier Manjarres notes that Romney himself told him in 2010 that he would love to see a Romney/Rubio ticket.
Mr. Fortuño says that he expects Washington to give him a carve-out for LNG tankers, but he doesn’t have it yet. He also says that a large part of the environmentalist push-back is political, suggesting to me that he ought to be more worried than he is. This kind of politics needs to preserve the status quo of the welfare state. And that implies blocking Mr. Fortuño’s development agenda no matter what it means to the poor.
Read the whole article.
Fortuño has made great progress, as he explained in this 2011 Reason interview,
Puerto Rico is now the second-most competitive economy in our hemisphere Latin America. [Correction: Puerto Rico is the second in Latin America, after Chile; fourth in our Hemisphere, after US, Canada and Chile, according to the 2010-11 Global Competitiveness Report, page 15.]
A huge problem, however, is the Puerto Rican mentality of dependence on the government: government jobs, Medicaid, unemployment benefits, welfare, Social Security, name it, the average Puerto Rican looks first to any of those and rarely, if ever, to self-employment or entrepreneurship, even when thousands of Dominicans and Haitians come to the island illegally to work off-the-books on their own.
As I was watching the film Runaway Slavelast week, I kept thinking that Puerto Rico, in order to flourish, must get off the welfare state plantation.
He’s young, dynamic, and well-spoken. As a Republican vice presidential nominee, he could help with Latino voters in 2012.
And he’s not Marco Rubio.
His name is Luis Fortuño, and he’s part of a rising generation of Republicans pushing pro-growth, small-government agendas. Like many of these men and women, Mr. Fortuño is a governor. What makes him striking is that he’s governor of an American territory, Puerto Rico, rather than an American state.
“I’m flattered,” says Mr. Fortuño when a reporter pitches the vice presidency to him. “But what I’ve done in Puerto Rico hasn’t been about my own re-election or advancement. It been about doing what I think is right.”
Spend any time with Mr. Fortuño, and you will learn that high on his list of doing what’s right is ensuring government lives within its means. When he was elected governor in 2008, one out of three Puerto Ricans were working for the government. When he was sworn in, there wasn’t enough money to meet the payroll. In response, Mr. Fortuño cut spending and 20,000 government workers, provoking angry protests.
The governor stood his ground. Earlier this year, he signed a bill slashing individual and corporate taxes—and he says there’s much more to do. For example, because Puerto Rico is not connected to the U.S. electric grid, it gets 68% of its electricity from oil (against about 1% for the U.S.), making its economy especially vulnerable to high oil prices. Just last week, Mr. Fortuño won a huge victory when the Army Corps of Engineers issued a favorable preliminary ruling on a natural-gas pipeline that would run 92 miles from southern Puerto Rico toward San Juan.
Fortuño is certainly a long-standing Republican member of the RNC, a Conservative whose speech at CPAC last year brought down the house (the people running the CPAC website are linking the wrong video, in case you try, but here’s an amateur video of the event), who worked as Resident Commissioner in Washington, DC from 2005-2009.
He’s also announced that he’ll run for a second term as governor of PR.
The article makes one glaring error, however,
Puerto Ricans have been American citizens since 1971
Puerto Ricans have been born American citizens since 1941.
The Constitution, Article II, Section 1, stipulates,
No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty five Years, and been fourteen Years a Resident within the United States.
Now, here’s the situation: Puerto Rico is a Commonwealth.
Since the Office of Vice-President by definition means its holder is eligible for the Office of President, the discussion in the WSJ comments section focuses on whether Fortuño is eligible. He definitely was born a Citizen of the US, as are all Puerto Ricans born on or after January 13, 1941
All persons born in Puerto Rico on or after January 13, 1941, and subject to the jurisdiction of the United States, are citizens of the United States at birth
All of us who live in the 50 States can, and do, vote in all elections, including for President.
I’ll leave to you the discussion.
The larger issue, though, is, who will the Republicans have in the 2012 ticket?
Among the reforms implemented since 2009, Gov. Fortuno enacted the largest tax cut package in Puerto Rico’s history, which will lower taxes an average 30 percent for businesses and 50 percent for individuals. And after launching one of the most advanced Public-Private-Partnership programs in the country, the Governor announced in June that Puerto Rico will receive $1.436 billion in private infrastructure investment—the largest such investment in any U.S. jurisdiction this year and the first infrastructure P3 in the country since 2006 – to upgrade and manage two of the Island’s major toll roads.
Fortuno took a 10 percent pay cut, required agency heads to take a 5 percent cut, froze all salaries for two fiscal years, reduced political appointments by 30 percent, and got rid of government cell phones and credit cards. Because payroll expenses dominated 70 percent of the budget, government employee ranks were reduced by 23,000 through voluntary and mandatory measures, achieving a $935 million or 17 percent reduction in total payroll.
He also said it’s possible that the original abscess drainage procedure itself could have contaminated the area with cancer cells. Treatment, doctors agreed, would be aggressive radiation and chemotherapy.
“Prostate tumors normally do not cause this kind of abscess,” said Leon Lapco, president of the Venezuelan-American Doctors Association and a surgeon at Mercy Hospital. “I would say it’s his colon, the large intestine. It’s the most likely to cause diverticulitis, perforations and abscesses.”
Chavez has lobbied in recent weeks against what he calls the evils of capitalism, including alcoholism, breast implants and violent television programs.
Since taking office in 1999, he’s preached against supposed capitalist-fueled vices ranging from alcohol to cholesterol, vowed to curb whisky imports and ordered beer trucks off the street.
Responding to the pressure — and opportunity — the cartels have spread out quickly. Five of Central America’s seven countries are now on the United States’ list of 20 “major illicit drug transit or major illicit drug producing countries.” Three of those, Costa Rica, Nicaragua and Honduras, were added just last year.
And, Julie Lopez, can you tell us first, is this a sincere divorce, or a divorce of convenience for the president and the first lady?
Ms. JULIE LOPEZ (Freelance Journalist): Well, both the president and the first lady have said that the reason why they are divorcing is to prevent their case going to the constitutional court because a divorce would make her qualify as a candidate.
An October 2009 cable, signed by Mr. Pascual, reported that Mexican Undersecretary for Governance Geronimo Gutierrez Fernandez lamented that the early phase of the Merida Initiative ($400 million for the drug war approved by Congress in June 2008) did not contain “enough strategic thought.” There was too much focus “on equipment, which they now know is slow to arrive and even slower to be of direct utility,” and not enough focus on institution building.
The cable continues: “[Mr. Gutierrez Fernandez] went on to say, however, that he now realizes there is not even time for the institution building to take hold in the remaining years of the Calderón administration. ‘We have 18 months,’ he said, ‘and if we do not produce a tangible success that is recognizable to the Mexican people, it will be difficult to sustain the confrontation into the next administration.’” And: “He expressed a real concern with ‘losing’ certain regions.”
Mr. Pascual reported that soon after 15 Juárez high school and university students, with no links to the cartels, were massacred in January 2010, Mr. Calderón “created an unprecedented level of engagement by every level of government to address the violence in Juarez.” He also wrote that the U.S. was “well-placed to support efforts to implement new and creative strategies.” The 2010 drug-war death toll in Juarez reached more than 3,000.
In November 2009, Mr. Pascual wrote that Mexico’s security strategy “lacks an effective intelligence apparatus to produce high quality information and targeted operations,” and also that there was resistance to information sharing because some units viewed “local military commands as often penetrated by organized crime.” In another cable Mr. Pascual charged that the Mexican army sat on intelligence that the U.S. gave it in the hunt for drug kingpin Arturo Beltran Leyva, who was later killed by the Mexican navy.