The governor of Puerto Rico, Alejandro García Padilla, has famously declared that,
“No hay dinero para pagar los servicios esenciales y pagar a los acreedores.”
(“There is no money to pay for essential services and to pay the creditors.”)
He never mentions the fact that Puerto Rico has a bloated bureaucracy,
of the 900,000 people who have jobs in Puerto Rico, roughly 300,000 work for government.
Those 300,000 have, for the most part, better benefits than private sector workers, and vastly better than small family-owned businesses: 14 holidays in addition to 30 vacation days plus 18 days of sick pay. I’ve always joked that Puerto Rico has more vacation than France.
There has been very little effort to reduce either the size of the bureaucracy or the benefits, if any.
Jon Perdue, author of The War of All the People, asks, Is Puerto Rico Bankrupt Or Just Unwilling To Reform?
Their [The Government Development Bank and members of the Puerto Rican government] 2015 “Puerto Rico Fiscal and Economic Growth Plan,” put out numbers that claimed that the commonwealth’s debt service represents 40% of the general operating budget. That number was disputed in recent congressional testimony by Carlos Colon De Armas, a professor of finance at the University of Puerto Rico, who put the number closer to 16%, when the consolidated budget numbers and alternate revenues are added in.A 40% debt-service load could almost certainly be grounds for claiming insolvency, whereas debt loads of 20% or less have historically been repaid with relatively painless budget restraint. As Colon De Armas puts it, “Utilizing bankruptcy when the debt service burden is 16% is equivalent to saying that ‘we can pay our debts, but we’d rather not pay them.’ ”
Read the whole thing.