Protest rallies and marches have rocked Puerto Rico since May Day, when the government closed down 43 agencies, throwing 95,000 people out of work due to a budget shortfall of $738 million. More workers have been added to the unemployment lines as three municipalities have closed down completely and another 12 have laid off workers because they haven’t received monies due them by the central government in San Juan.
Almost half of Puerto Rico’s municipalities get 70 percent or more of their operating expenses from San Juan.
School employees and children have been the most affected by the closings, as the government shut down 1,600 schools two weeks before the end of the academic year. Many have called the shutdowns a crime against children. Some 500,000 students were forced to stay home, cut off from the free breakfast and lunch served at schools.
A popular demand is “Let the rich pay” for the fiscal crisis. Support from different sectors of this Caribbean nation, currently a U.S. colony, rallied around a bill proposed by the Puerto Rican Independence Party (PIP) that would have imposed a 10 percent minimum tax on corporations with profits of $1 million or more. The PIP estimates this would boost tax revenues by $2 billion per year. Opposition from the pro-colonial parties killed the bill.
At the core of the crisis is the colonial status of Puerto Rico. Intransigence on the part of Gov. Anibal Acevedo Vila of the Popular Democratic Party (PPD), which supports the current status of Puerto Rico, and the legislature, which is controlled by the pro-statehood New Progressive Party (PNP), has resulted in a stalemate. They have been battling for two years, unable to agree on a budget. The executive branch and the legislature are arguing and trying to get political advantage over one another by blaming each other over who is at fault for the crisis and what solution to impose. Both the PPD and the PNP favor a sales tax, but are fighting over whether it should be 7 percent, 5.9 percent, 5 percent or 4 percent.
Jesus Delgado, education director of the Puerto Rican Federation of Teachers (FMPR), told the World in a telephone interview that the current administration and the last two governors are to blame for the crisis. “They spent and spent, knowing we were heading into a financial crisis,” he said.
Delgado said that a major cause for the deficit is tax evasion by the large corporations. “They underreport their profits and pay a lower tax,” he said. While he said it is mostly the “foreign multinational corporations,” mostly from the U.S., there are a number of Puerto Rican companies that also underreport. He said this is especially true in the construction business.
The union “adheres to the slogan ‘Let the rich pay’ for the crisis,” he said. “It is unfair to put it on the backs of the Puerto Rican workers. The tax will have a devastating effect on the people of Puerto Rico because it is falling on top of increases in the cost of living.” Delgado listed raises in water rates, electricity, retail prices, tolls, gasoline and other goods. He added that not long ago “it would cost $20 weekly for gasoline. Today it costs from $40 to $50 a week.”
Delgado said, “The sales tax would be devastating for our members on top of other increases. We have families where both husband and wife are teachers or where one is a teacher and the other works in another government agency.”
Delgado said the union has called for a meeting of delegates to discuss the next steps to take in light of a special commission’s report due to be released as the World was going to press. This commission, composed of leaders of the legislative and executive branches of the Puerto Rican government, as well as religious leaders, met in secret. It is supposed to report out a compromise plan.
However, PNP and PPD leaders have said that they would not necessarily follow the commission’s recommendations.
Also at work are the banks and financial institutions, who are manipulating the crisis to their advantage. Moody’s Investor Services downgraded Puerto Rico’s bond status, forcing higher interest payments.
Hector Pesquera, a leader of the Hostos National Independence Movement, noted in a recent article that the Puerto Rican government “has a public debt of $40 billion.” He wrote that the interest payment of $300 million a month on this debt “is the highest in the [Western] Hemisphere” and goes mainly to banks and other financial institutions.
Independence Party Chairman Ruben Berrios criticized the government, saying it was closing down and laying off workers to satisfy the financial institutions which hold Puerto Rican bonds. “This is why the governor has closed down the government, to placate the bondholders, to placate the big corporations, to placate the sacred cows. In doing so, in effect, he is robbing the public employees and the Puerto Rican people.”