Puerto Rico faces fiscal demise and Congress voted on a misguided plan to save the island territory. We’d be better off preparing a plan to save ourselves.
Hold a mirror up to Puerto Rico and you’ll see the United States federal government. Both governing bodies have overspent, blown past budget caps, and offered large parts of their economies up to government control. Both nations are fiscally and morally bankrupt, exorbitant spending and fiscal mismanagement bought at the price of lost opportunity for future generations.
Puerto Rico dove $70 billion into the red. Congress racked up over $19 trillion itself. Puerto Rico blew past its statutory debt limit. Congress raises theirs every few months. Puerto Rico extended government control over much of its economy. Congress and the president are slowly socializing our national economy as well.
Now Congress plans to use the same feckless solutions in Puerto Rico that it applies to its own spending habits. The U.S. federal government has a lot of experience with short-sighted solutions. The only difference from Puerto Rico is that the federal government can print money, and promise money, that it doesn’t have. Then our kids and grandkids get to pay it all back in the future.
The PROMESA Act, already passed by the House, does little to force Puerto Rico into better fiscal habits and lacks meaningful, forward-looking solutions that encourage economic growth. But then, who really expected the federal government to impart fiscal responsibility to the island territory? After all, Congress itself is partly responsible for the disaster happening in Puerto Rico.
Washington egged on the irresponsible decision-making. For decades, Congress used tax subsidies to incentivize foreign investment in Puerto Rico. This worked out well, until Congress ended most of the subsidies last decade. With all the foreign companies investing in Puerto Rico to reap the tax benefits, the island never invested in its own economic development.
Moreover, the U.S. federal government incentivized Puerto Rico to issue debt. Unlike other municipal bonds under U.S. law, Puerto Rican bonds are triple-tax exempt, meaning that federal, state, and local taxes don’t apply. Naturally, Puerto Rican bonds were in demand for American buyers.
But Congress only deserves so much of the blame. The leaders of Puerto Rico signed the checks.
Other civilizations have met similar downfalls when their leadership proved inept and unable to resist the temptation to spend. But our leaders seem to have forgotten this history. Sadly, they also reject the counsel of the present. Just as we see our reflection in Puerto Rico, so can we see it in Greece with their bloated entitlement spending and incapable leadership. The Greeks are painfully realizing that Euros don’t grow on olive trees.
Turns out dollars don’t grow on apple trees either. Yet still American politicians charge ahead towards fiscal calamity.
The U.S. government has over-spent for so long that we are nearly financially bankrupt. And if we continue to saddle our children and grandchildren with debt, we’re morally bankrupt as well. Thanks to out-of-control spending, babies born this year are already responsible for $42,537 of publicly held federal debt. They will face soaring tax rates to pay for mandatory spending and interest on the debt.
A character in Ernest Hemingway’s book The Sun Also Rises was asked how he went bankrupt. He said, “Gradually and then suddenly.” Puerto Rico is at the sudden part. The entire federal government will be there soon if we don’t change course now.
Let’s learn from Puerto Rico, Greece, Germany, Rome, China, Argentina, and other civilizations swallowed up by the sea of fiscal consequences and moral collapse. Congress must return America’s fiscal house back to order, because my children and yours deserve more than lousy job prospects and high taxes.
Ken Buck represents Colorado’s 4th Congressional District. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
