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July 16, 2015 — A PRenter?

Today, there are a pair of major stories about governments in or near bankruptcy and seeking some sort of debt relief.

Late yesterday, the Greek parliament voted to accept a European-brokered agreement to at last partially reform its banking system. The European Central Bank has responded with several billion dollars worth of loans which will be voted on tomorrow.

That has avoided, for now, a nightmare scenario called the “Grexit,” the dropping of Greece from the European Union and the decoupling of its economy from the Euro.

But close to our shores, there is a second bailout scenario which has ramifications for the economy, our changing culture, and the rights afforded to most Americans.

Puerto Rico is one of five inhabited territories that are part of the United States but whose citizens do not enjoy full representation in Congress and do not vote for the President.

Puerto Rico is also about $72 billion in debt, and it was announced yesterday that the government missed a $93.7 million payment. The governor, Alejandro Garcia Padilla, has said that the government is unable to make a series of debt payments which will be coming due between now and late August.

This looks like a crisis. But it is also an interesting use of soft power.

Unlike Greece, Puerto Rico’s insolvency may have a long-term benefit for itself as well as the other five non-protectorate territories who do not have full voting representation. The reason is that Puerto Rico, having passed a statehood referendum in 2012, is awaiting a second binding plebescite as early as 2016. What better way to galvanize “yes” votes than economic peril?

After all, the big reason for the current economic mess is that the U.S. government has put Puerto Rico in a debt trap. A U.S. territory cannot declare bankruptcy, and several tax benefits afforded the island were revoked in 2006. But if Puerto Rico was to become a state, that would change the dynamic entirely. The State of Puerto Rico would be able to spend its own tax dollars on its own priorities without Congressional oversight. In addition, Puerto Rico would be obligated to collect income taxes, putting citizens in full control of their own economic affairs.

Yes, that would take down some of the take-home pay of the average Puerto Rican, but it would be empowering that an actual revenue stream would be available to the state and local municipalities on the island. It would also, I think, be a call to get political organization on the other five non-voting territories. In other words, we could have 56 states soon.

Which actually would be great; it’s an embarrassment that the U.S. can spent so much money on military might to bring democracy to foreign countries while people in Puerto Rico, Guam, Samoa, the Virgin Islands, Vanuatu, and the District of Columbia don’t have the full rights afforded all Americans.

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