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OPINION

Why Puerto Rico Shouldn’t Become America’s 51st State

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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AP Photo/David Goldman

Democrats have a new chance to cement their slim majority in the U.S. Senate. As with the 2020 election, the 2022 midterms proved Republicans incapable of rallying to carpe diem. Against historical standards, the Senate remained in Democrat control and the House barely turned over to Republicans by a 221-211 majority.

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Once again, spineless Republicans brought a knife to a gun fight with H.R. 8383 that admits Puerto Rico (PR) as America’s 51st state, giving the island a habitual legislative advantage. PR is an American unincorporated territory and among five sub-national administrative divisions overseen by the federal government of the United States. This American territory differs from the fifty U.S. states and tribal reservations since it is not a sovereign entity.

The bill was brought before the House on December 15, 2022, with 20 Republicans defecting to the Democrat dark side. Thirteen Republican House members voted in favor of Puerto Rico statehood and 7 spineless Republicans entering “No Votes.” There were no Democrat defections and the bill did not go to the Senate for a vote before the new year, but bet on its recurrence. Sadly, when the Senate votes in 2023, RINO Mitch McConnell and his merry band of spineless Senators can’t, as Dominick Sansome argues, be depended upon to vote against Puerto Rican statehood. I list four reasons why we and our Republican representatives in Congress should reject this privative arranged marriage. 

Puerto Rican Indifference

PR became a territory of the United States in 1898, as a result of the Spanish American War, remaining patently ambivalent about becoming a state. More often than not, its voters have either ignored or given thumbs down to American statehood. As Daniel Greenfield states: ”In the 2020 referendum, 52% of Puerto Ricans voted to become a state and 47% voted against it, yet, only 23% of Puerto Rican voters actually voted.” This wasn’t the first vote for statehood. Three months before Hurricane Maria, the ruling PNP party held a plebiscite about making PR statehood; 95% of voters supported statehood, while only 1.3% voted for the status quo; most importantly less than a quarter of PR’s electorate actually bothered to vote.

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PR’s Governmental Character

Persistent governmental corruption, lax borrowing policies, and poor decision-making seem ingrained in the Puerto Rican government sensibility.

PR offers the United States persistent governmental corruption, lax borrowing policies, rampant fiscal mismanagement, structural problems, a 520-year-old history of making poor decisions and a national identity crisis that existed long before Hurricane Maria. PR also experienced unsustainable indebtedness and deindustrialization between 1975 and 2014 that continues.

America has served as the world’s beacon for entrepreneurship for more than 160 years and PR and its citizens are a poor fit with our American model of government and spirit. Bosma and Kelley’s 2016-19 “Global entrepreneurship monitor” ranks PR dead last in entrepreneurship among all Latin America countries—more than 32 points below Uruguay!

There are myriad other reasons why America should not allow Democrats to change PR’s status to our 51st state. PR citizens seldom pay income tax, and tax collectors have a long history of being easily bribed. Forbes wonders why PR’s program offering tax-free interest and dividends with no long-term capital gains tax due on investment appreciation to attract new residents has failed. One reason is government illegitimacy that continues given that that the 2022 U.S. Census reveals there are now 9.6 million people who identify themselves as Puerto Rican who have permanently fled the Island and moved to the mainland United States for better economic opportunities and living conditions.

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In 2016 the 114th US Congress enacted the PR Oversight, Management and Economic Stability Act (PROMESA), concluding: “PR, a territory of the United States, borders on full scale economic collapse. The Island’s state-run economy is hopelessly inefficient. The government has amassed over $118 billion in debt in the form of bonds and unfunded pension liabilities. They have failed to produce audited financial statements for two years...the government is incapable to fulfilling basic services to its citizens as quality of life worsens...default[ing] on portions of its debt including millions on May 2, 2016. On July 1, the Island is likely to default on an additional $2 billion…” Since then, things have only worsened.

Botching Economic Opportunities

In the 1980’s, PR was briefly boosted, allowing it to become the go-to place for American offshoring. High tech, pharmaceuticals and light manufacturing set up shop on the island given its favorable tax rates. When tax law changes were made in the late 1990s, U.S. firms operating under Section 936H of the Internal Revenue Code, fled back to our mainland because of the island’s rising cost of labor and other Island disadvantageous inputs. This decampment together with phasing out tax incentives for American companies made investment in PR unappealing. The complete phase out of Section 936H in 2006 marked the start of the Island’s ongoing economic depression.

PR is now $123 billion in debt with unemployment running 11.5 percent, compared to 3.7% in the U.S. mainland. A 2022 Brookings Analysis of PR’s debt circumstances concluded that Puerto Rican bonds are not currently rated by any of the major credit rating agencies, making it difficult for the Commonwealth to borrow on public markets.

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Erosion of the Puerto Rican Tax Base

Over the last two decades PR has seen a significant erosion in its tax base. Manufacturers left the Island when tax incentives were taken away and much of PR continues embracing its underground economy. Economists estimate that a third of all goods and services (more than $21B) is produced off the books. With its habitually high unemployment rate, many Island residents make ends meet chiripeando—living off multiple sources of unreported income—what William Baumol termed in the Journal of Political Economy “destructive entrepreneurialism.” As tax expert Laura Merling stated in 2018, “PR is also in the midst of a fiscal crisis and saddled with unpayable debt. PR’s attempts at declaring bankruptcy and receiving some sort of reprieve from its creditors started in 2015, with an attempt by its government to pass its own bankruptcy laws. However, the US Supreme Court struck down that law and instructed the U.S. Congress to legislate the bankruptcy process for the island.”

Our Democrat Congress has historically mismanaged America’s economy, adding PR’s inferior and corrupt irons to our fire will bring us even worse fiscal problems. The only thing Puerto Rican statehood offers America is a more solid Democrat voting bloc in the Senate and House, making it even more Leftist.

Democrats and their MSM flunkies rigged the Senate through COVID election law changes and intend adding two senators. Why should America push this mariage blanc? PR mostly offers America financial and political problems we can’t afford.

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