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Who Will Take the Helm of Puerto Rico’s Sinking Ship?

By: Nick Zaiac - @NickZaiac - Dec 15, 2015, 12:43 pm
Amid crisis on all sides, Alejandro García Padilla says he will not seek a second term as governor of Puerto Rico.
Amid crisis on all sides, García Padilla says he will not seek a second term as governor of Puerto Rico. (@ElNuevoDia)

All things must come to an end. Thankfully, that includes Puerto Rican Governor Alejandro García Padilla’s disastrous term in office.

In a press conference on Monday, García announced he would not run for a second term as governor, representing the Popular Democratic Party (PPD). He plans to spend the rest of his term working toward a solution to the ongoing fiscal, economic, and political crises that the territory faces.

This was a widely expected move. The governor’s support has faltered as the island’s troubles have worsened. In late November, Reuters reported that PPD mayors have increasingly abandoned the governor. Realistically, any governor facing a crisis of this magnitude, and not spectacularly succeeding at fixing the problems, would face pressure for a change. García is no different.

So, what’s next? Former Secretary of State David Bernier is seen to be the most likely PPD candidate to replace García, although an unexpected challenger could emerge from the PPD legislature. On the other side, the New Progressive Party (PNP) is currently lead by Resident Commissioner Pedro Pierluisi.

Pierluisi has already announced his candidacy for the governorship, and currently holds the second-most powerful political office in the territory. His speeches before Congress have been full of soundbite lines, almost ready-made for radio and TV ads. He’s clearly positioned to win the PNP nomination.

As such, Pierluisi will likely be the next governor of Puerto Rico. Simply put, parties of deeply unpopular governors amid political, economic, or fiscal crises always lose, especially in places where parties are balanced, as in Puerto Rico. Can we blame the Puerto Rican people for throwing the captains of their sinking ship overboard?

But will it matter which party is in power after the coming election? The fiscal crisis the island faces could dramatically change between now and the time the new governor assumes office. However, the economic crisis will not be over, and the same goes for the island’s political crisis.

If Pierluisi is elected governor, he has made it clear that he plans to hold a referendum on statehood, a necessary measure if the territory is ever to become the nation’s 51st state. Moving toward resolving the political crisis in the territory is one of the few things that the incoming governor can control that would make life measurably better on the island.

Puerto Rico has been a political backwater, marred by decades of failed federal-industrial policy. Its economy has been broken by picking economic winners and losers, subsidizing companies to build in the territory, only to have the subsidies disappear eventually.

Puerto Rico has been used by Congress as a tool to give handouts to favored industries, from sugar producers to pharmaceutical companies to rum distillers. All of this comes back to the fact that the island possesses no state government of its own, and is controlled as a fiefdom of the US Congress, like the relationship between localities and states. The lesser partners have no independent power endowed by the Constitution to control their own policy. Statehood changes that.

The current political status is untenable, and its looming presence is toxic to functioning politics on the island. With parties aligned along political status, there is little competition between parties over public policy. This has left us a legacy of unsound taxes, burdensome regulations, a massive territorial workforce, and unsustainable fiscal transfers to localities.

Statehood would allow parties to refocus on issues that matter to voters beyond political status, especially neglected reforms to the structure of the territory’s vast bureaucracy.

Whatever the result of the fiscal crisis Puerto Rico currently faces, the political and economic crises are not going away. The incoming governor must focus on resolving long-term issues of overregulation and the perennially high cost of doing business. Yet, taking steps toward resolving the question of the territory’s political status once and for all may be the most valuable thing that could be done for the long-term economic prospects of the island.

Businesses care about political certainty, and removing that risk alone would help revive the territory’s ailing economy. The next governor, Pierluisi or otherwise, will have their hands full managing a still-spiraling territory.

But whether it’s resolving the fiscal, economic, or political crisis, or simply taking steps on all three, something must be done to fix the Puerto Rican economy. And that responsibility falls to the governor, full stop.

Nick Zaiac Nick Zaiac

Nick Zaiac is a public-policy researcher in Washington, DC. He also serves as a policy analyst at the Maryland Public Policy Institute. His column, The DC Leviathan focuses on the often-ignored bureaucratic agencies, from the Department of the Interior to the General Services Administration. He has been published in the Baltimore Sun, City AM, CapX, and other outlets. Follow @NickZaiac.