Make Puerto Rico a state...

Why Washington should finally make Puerto Rico a state

As the hurricanes have made clear, all of America has a stake in the island's success.

By CESAR CONDA and ALBERTO MARTINEZ

Weeks after Hurricane Maria struck Puerto Rico, the island remains in crisis. Eighty three percent of people in Puerto Rico don’t have power and thirty five percent don’t have access to clean water. The death toll currently stands at 48 but is likely to keep rising in the coming weeks.

Washington has responded to this crisis with billions in immediate disaster assistance, helping the cash-strapped island afford its basic expenses after tax revenue has all but dried up. This financial commitment isn’t going to end anytime soon: Experts suggest the final cost could exceed $100 billion.

Given the staggering sums of money involved, the recent hurricanes have made clear more than ever that the United States has a direct stake in Puerto Rico’s success, ensuring that the island has a robust economy and can withstand future hurricanes or other emergencies. As long as Puerto Rico remains vulnerable, the U.S.—and American taxpayers—will ultimately be on the hook when the next storm inevitably strikes. An economically strong Puerto Rico is thus critical to the mainland United States.

But sustainable social and economic success hinges on something Washington has long denied the island territory: statehood. Admission to the union has long been given lip service by both political parties, but short-term political interests always delayed congressional action. As policymakers help Puerto Rico recover from Maria, they will examine ways to best use billions of federal dollars to fortify the island’s infrastructure and rebuild its economy. Statehood should be at the top of those discussions.

The case for statehood for Puerto Rico—at least on policy and moral grounds—has always been solid. The island became a territory 118 years ago, and Congress established local self- government in 1952, launching a 65-yearfailed experiment in autonomy without democratic accountability. As a territory Puerto Rico does not participate in the national economy on an equal footing or level playing field with the states, nor can it compete equally in the international markets. Territorial status is constitutionally temporary and typically does not lead to economic self-sufficiency.

Even before the hurricanes, Puerto Rico’s debt reached an astronomical $72 billion and its economy has effectively been in recession for the last 10 years, causing an exodus of young people from the island. While liberal policies worsened Puerto Rico’s economic problems, second-class citizenship treatment and competitive disadvantages inherent in territorial status created hurdles for individuals and businesses alike not found in states.

For instance, Puerto Rico was given the unique ability to offer triple-tax exempt bonds, which weren’t subject to federal, state or municipal taxes, making the island an attractive spot for investment. But Congress phased out the law over 10 years, starting in 1996. Closing these tax loopholes, combined with the military base closures, precipitated Puerto Rico’s recent economic troubles. Without voting representation in Congress or electoral votes for the presidency, Puerto Rico had no voice in those changes.

Washington discriminates against the island in myriad other ways too. Working residents of Puerto Rico must have three or more children to qualify for the refundable portion of the Child Tax Credit, while workers on the mainland must only have one or two children. Incredibly, residents of Puerto Rico pay more than $3 billion in federal payroll taxes for Social Security and Medicare, as well as import-export and commodities taxes—but benefits under those and other federal programs are lower than in the states. Puerto Rico also does not have access to the same bankruptcy protections as states, an oversight that became a big problem as the island has struggled under its huge debt levels.

This is blatant political and economic discrimination and it’s long past time that it ended. Statehood would give Puerto Ricans equal rights, duties and opportunities of national and state citizenship, starting with equal political empowerment through voting representation in Congress and the Electoral College. Such a change would benefit the island economically as well: Statehood would mean more reliable rule of law, uniform policies on taxes, trade and commercial regulation and equal footing in national interstate markets, providing certainty and stability essential for private investment. According to the Government Accountability Office, “statehood could eliminate any risk associated with Puerto Rico’s uncertain political status and any related deterrent to business investment.” Indeed, the most recent territories to become states—Hawaii and Alaska—averaged double-digit economic growth for more than a decade after admission.

But as Maria unfortunately showed, statehood wouldn’t just benefit Puerto Rico. It would also benefit the mainland United States. For starters, Washington’s assistance will raise questions about the fiscal responsibility of spending billions of dollars for an island in the midst of a fiscal crisis. Puerto Rico’s substandard energy, transportation, communications, healthcare and other basic infrastructure systems make state-like recovery we see in Texas and Florida unattainable in the territory. In addition, the exodus of people from the island—900,000 people to the states over the last decade alone—could double, putting additional strain on the budgets and healthcare systems of Florida and other states.

Without a strong recovery—both from the hurricanes and from its economic malaise—Washington will be spending money for years to repeatedly prop up and rebuild the island, as thousands of Puerto Rico give up their hopes for statehood and move to the mainland. That’s a bad situation for Puerto Rico—and for the rest of America. Hurricane Maria presents Congress with a duty to choose, as it has 32 times before, whether an undemocratic dependency populated by U.S. citizens or a state with common rights and responsibilities will better strengthen our nation in the 21stcentury. The choice is clear.