Puerto Rico: Bankruptcy next

The WSJ editorial board proposes Saving Puerto Rico From Itself. The price for bankruptcy: A review board that can overrule local politicians. Here’s a snapshot of the rolling disaster:

Employment laws, such as mandatory 15 days of paid vacation, and stringent job protections provide disincentives to hire. Generous welfare, housing, food stamp and health benefits discourage work. Nearly half of island residents are on Medicaid. A household can rake in 50% more in
government assistance than the take-home monthly minimum wage. Federal strictures such as the $7.25 minimum wage, welfare eligibility rules and the 1920 Jones Act, which requires that goods transported between U.S. ports be shipped on vessels built and manned by Americans, are also growth killers.

The overriding problem is mal-governance, which creditors have enabled by financing patronage politics and bloated government payrolls. The commonwealth has 40% fewer students but 10% more teachers than a decade ago. Territory government still constitutes a quarter of the island’s workforce. Recent government reforms such as shifting workers to defined-contribution pensions and increasing the retirement age haven’t stanched the red ink. Over the next five years general fund spending is on path to grow by 20%, resulting in a cumulative $28 billion deficit.

After mentioning some nonsense on “repurposed ObamaCare funds” (what funds?), the WSJ, as mentioned above, proposes a financial review board:

a muscular financial review board modeled on (but with more power than) New York City’s of the 1970s. The board needs the power to reject budgets, contracts and new borrowing, audit government agencies and cut spending. Ideally, the board would be jointly appointed by Congress and the White House with ex officio members from the Puerto Rican government to mute protests of a federal takeover.

Good luck with that; the current Commonwealth is structured to preserve itself through fostering dependence on the government.