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Developing Econ 101: Puerto Rico

As of May, Puerto Rico carries almost $74 billion in public-sector debts Yep. $74 BILLION. How did PR get so far into the red!? Was it lots of unnecessary Amazon purchases and extravagant vacations?

Not quite. Welcome to Developing Econ 101: The Debt Cycle:

  • In the 1960's the US gave tax breaks to companies operating in Puerto Rico, and as a result, PR's economy became dependent on foreign corporations.
  • Between 1996 and 2006 Congress phased out the tax breaks and corporations started leaving the island, sparking a major recession.
  • Faced with few options, Puerto Rico began borrowing money to keep basic services, pensions, and infrastructure intact.
  • With no new investments or money coming in, Puerto Rico was forced to file for bankruptcy in May of 2017.
  • Now PR is facing a different kind of crisis - an expensive humanitarian one - without any money in their coffers.

*Yes, Puerto Rico is a US territory, which means Trump is still president there too.