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.