Congress Approves Taxpayer Bailout of Welfare Island
The chaos that has ensued from the murdering of police officers by radical leftists has provided cover for Congress to devise a plan for taxpayers to bailout Puerto Rico. H.R. 5278 passed in the House by a vote of 297 to 127. The Senate passed the legislation, S. 2328, by a vote of 68 to 30. The overwhelming majority of members of Congress approved a taxpayer bailout for welfare island.
American taxpayers can breathe a sigh of relief knowing that they will continue to enjoy the privilege of funding America’s version of Greece. There is a glaring difference between Greece and Puerto Rico in that Greece’s biggest problem is generous, unfunded pensions for government workers who opt for early retirement, while Puerto Rico’s primary problem is that the greater majority of Puerto Ricans are lifelong welfare recipients.
The labor force participation rate in Puerto Rico is 40.5 percent, which means approximately 2.2 million Puerto Ricans are being funded by American taxpayers. Your representatives in Washington, D.C. provide $20 billion annually to Puerto Rico for Social Security, education, disability claims, government housing, and food stamps. This money is being redistributed to prop up welfare programs and a nation that is $70 billion in debt, with another $40 billion in unfunded pensions. These ugly truths are why Barack Obama signed S. 2328 into law.
The legislation allows Puerto Rico to prolong its dreadful situation, but it will not solve any of the problems plaguing the island. There is nothing in the bill that will heal the wounds caused by decades of socialist policies, but politicians in D.C. will be able to shield their Wall Street donors from massive losses on their municipal bonds.
The greater majority of the $70 billion in debt is in the form of municipal bonds issued by the Puerto Rico government and its various entities and utilities. Wall Street hedge funds and risk-seeking investors bought up the bonds because the debt is tax-exempt for U.S. investors, and they provide higher yields than your average bonds. On May 2, 2016, Puerto Rico failed to pay $370 million on the principal payment of its bond debt, so your representatives in D.C. went into action and passed legislation that sets up an Oversight Board to handle fiscal plans, budgets, and debt payments for Puerto Rico. Congress will choose the members of the Oversight Board so that cronyism will pervade the process.
Congress has granted members of the Oversight Board unlimited power to handle the financial affairs of Puerto Rico. The Oversight Board’s handling of Puerto Rico’s debt has the potential to mutate into another Wall Street bailout. Hedge fund managers make a lot of campaign donations to politicians and political action committees (PAC), and managers like John Paulson have put billions into Puerto Rico, so Paulson and the rest are going to expect the politicians they bought to rescue them from their bad investments.
Puerto Rico is a sinking ship. It suffers from ill-conceived policies foisted on it by D.C. politicians who have used the island as a petri dish for socialism. The politicians and bureaucrats who inhabit D.C. are malignant tumors devouring Puerto Rico and require extraction or welfare island will remain an albatross around the neck of a shrinking American labor force that cannot, and should not have to, fund moochers and shield Wall Street bankers from the consequences of their bad investments.