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The Time Is Now: Critical Actions to Save Puerto Rico

By: Frank Worley-Lopez - Jun 13, 2014, 12:11 pm

Español The United States of America and its Caribbean territory Puerto Rico face imminent economic ruin. It is impossible to say how long we have left; it could be weeks, months, maybe even years, but it is as certain as the next sunrise that it will occur if we do not take action soon. It is likely that Puerto Rico will lead the way, which will contribute greatly to the financial collapse of the US economy, since it will leave the municipal bond market in disarray and undermine faith in other municipal bond holdings.

Yet the territory and its federal masters face nearly identical problems: excessive debt, bureaucratic mismanagement, political malfeasance, and a public too absorbed by which celebrity isn’t wearing panties this week to care. The distortions of a Marxist media establishment don’t help either.

Like Paul Revere riding through the streets of Lexington and Concord to alert the colonists of the impending arrival of the British forces, those of us who have taken the red pill and seen the lights in the church tower must make our ride and shout at the top of our lungs. Only this time, we shout about the impending collapse of the great republic and offer solutions for the minutemen and governments to follow to avoid the impending disaster.

I have said it before and will keep saying it as long as I have breath to do so, we are in an existential crisis. We must start acting like it. It is time for fast and critical action to save Puerto Rico and the United States.

Focused solely on Puerto Rico in the short and medium term, the following critical actions do not address crime or education or the environment. They certainly do not focus on emotional-detraction issues like smoking, obesity, drug use, or sex offenders. These focus only on the economic part of our crisis. These are the actions that must be taken to save Puerto Rico from a purely fiscal standpoint.

The critical actions are:

  • Cut the state government by no less than one third, and if possible by up to one half of its current size. Puerto Rico’s government employs nearly 300,000 people at all levels, nearly one in every three employed Puerto Ricans work for the government. This isn’t about cutting salaries; it is about closing agencies and removing employees permanently.In cutting government, a simple determination of need should be assessed. What are the primary and base functions of government like police, fire, and infrastructure? Keep those. And what is not a primary government function? Those agencies can and should be eliminated in their entirety or contracted out. Even some of the primary functions like infrastructure could be and should be contracted out, especially after completing action number 2.
  • Amend the Puerto Rico constitution to eliminate all unions in public service and primary services and make Puerto Rico a right-to-work jurisdiction where membership in a union or other organization cannot be a prerequisite for work. I would apply this to the bar and medical associations as well.Make it clear in that amendment that acquired rights (derechos adqueridos) acquired by legislation can be amended or repealed by future legislation. This is actually a legal sticking point in some pension reform. Changing this element of the constitution will give the legislature great and desperately needed flexibility in how to fix things.
  • Eliminate all subsidies, all deductions on taxes, and all anti-business laws and regulations; bring government intervention to its absolute minimum. I would prefer to switch from a graduated income tax to a flat tax but if the graduated tax remains, then all deductions should be eliminated. The result is that only those with earnings outside of salaried or wage positions would have to file tax returns thus lowering the need for personal income tax auditors at the Treasury Department. More people you could lay off. The business environment must be molded to rebuild the islands economy.
  • Update infrastructure with zero cost. Find a major international electricity company that is willing to build a nuclear-power plant at no upfront cost to the government. The plant must be of sufficient size to cover all baseline power needs for the island. This would lower the cost of electricity and water and make it easier to stay in business.There may be money left over after cut backs to invest in infrastructure, but I would recommend that aside from advancing debt service to reduce the size of the debt, the money should only be invested in whatever is needed to bring new business to the island even if that means buying property, developing office space and even as much as paying the electric and water bills of new businesses. You must do anything and everything to bring new business to the island.
  • Require those on government assistance to provide service hours to their local governments to help make up the shortfall after the severe cutbacks. They can perform necessary but not emergency tasks like cleaning roadways and buildings, and this will create a new understanding of how reality works.
  • Make it unlawful for government employees to strike, and make it automatic that any who do strike lose their jobs immediately with no right of appeal. Those who organize those strikes should be treated as criminals with minimum sentences above 10 years in prison. At least for the duration of the crisis or five years, it should also be a crime to interfere with any critical infrastructure construction or operations (like the construction of the nuclear power plant) with similar sentences. Throw in hard labor as part of the punishment.
  • Cut taxes. Cut income and corporate taxes by 50 percent, and eliminate any and all business-to-business taxes. Leave the point-of-sale tax in place. This should increase consumer and business spending, spur hiring, and get the economy moving in the right direction.

Above all, treat the crisis as a crisis and stop pretending it will go away and someone down the line will fix it. It is ours to fix now. The great irony is that these solutions, along with ending the minimum wage altogether, could also solve US debt problems.

The same collapse that is awaiting Puerto Rico is awaiting the United States as well. If something is not done soon, we will be the people future generations will read about and ask, “how did they let it come to this?” History will not forgive us for failing to prevent this collapse from occurring, because the collapse of the United States will mean the collapse of the free world.