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Puerto Rico’s Government Finally Learns Math

By: Frank Worley-Lopez - Apr 22, 2015, 9:15 pm

EspañolIt has been some time now that I have been laying out on this blog what the government of Puerto Rico needs to do to fix its fiscal problems. One of my first and foremost recommendations has been to use math: match revenues with spending.

More specifically, one of the recommendations included in my proposed constitution for a free and independent Puerto Rico is a provision to deny all compensation for legislators if they fail to pass a balanced budget in a given year. Nothing would ensure a balanced budge faster.

News broke this week, that Puerto Rico is finally getting serious about its fiscal problems. The Government Development Bank (GDB) sent a letter to the governor and the heads of each chamber in the legislature, warning that a complete government shutdown could occur in Puerto Rico if things don’t change immediately.

The game is up for Puerto Rico's governor. Better to come out and admit to your mistakes than to continue pleading ignorance. (@MaldonadoUsa)
The game is up for Puerto Rico’s governor. Better to come out and admit to your mistakes than to continue pleading ignorance. (@MaldonadoUsa)

Now, the conspiracy theorist in me says that the letter is just a cover for Governor Alejandro García Padilla to do what he has known for some time he has to do anyway. He must cut the size of government on the order of 30 percent, but during his campaign he promised not to lay anyone off from government jobs, as a way to set himself apart from then-Governor Luis Fortuño.

This is why lying to get elected is a bad idea. Sooner or later, the truth will come out and you will be forced to eat crow.

Governor Padilla, you don’t need cover; the truth is powerful enough. Just say it. Say it openly and say it honestly. Tell it like it is.

If you stand any chance for re-election it will be on integrity, even if you have gotten the first two years of your tenure wrong. Publicly learning from mistakes is a great way to build public trust.

The letter outlines three recommendations.

First, cut spending. Although you might refer to it as adjusted spending, you could also embrace a radical transformation of government structure — something I have also recommended. Be careful with that, though; the United States has learned a hard lesson from “fundamental transformation.” If done right, it could be great for the island.

Second, the GDB recommends approving the governor’s tax-reform plan. Who says the GDB can’t be partisan? There is, however, widespread opposition to the governors imposition of a 16 percent value-added tax, and with good reason. That is a tax that would destroy Puerto Rico.

Finally, they recommend that the next budget “adjust to the fiscal reality.” In other words, they recommend using math.

It is nice to see the government of Puerto Rico finally getting the message. Now we must wait and see if they can implement the needed changes right this time.

Don’t hold your breath.

Edited by Fergus Hodgson.