Save Puerto Rico by Setting the Island Free

There’s an old saying about raising children that “healthy birds fly away from the nest.” Applying this concept to territories of the United States, it may be time to consider setting a timetable for Puerto Rican independence as part of any effort by federal policymakers to help the beleaguered island regain its financial health.

Puerto Rico is the largest of the United States’ territories in terms of size and population. It’s also one of the largest headaches currently facing policymakers. That’s because the Caribbean island located 1,000 miles southeast of Miami is mired in a debt crisis thanks to a long-slumping economy — an economy hindered by counterproductive federal policies and its own fiscal incompetence.

Puerto Rico’s debt obligations have reached $72 billion (roughly equal to the size of its entire economy), and thanks to lavish benefits given to government employees over the decades, it faces more than $40 billion in unfunded liabilities. The island defaulted on $400 million in debt service payments at the beginning of May, and the prospects of it making good on another $1.9 billion in early July look bleak unless it works out agreements with creditors or the federal government gets directly involved.

At this point, there’s little doubt that the latter will happen. The big question is how that involvement should be structured. Fortunately, a direct infusion of taxpayer-financed federal aid is unlikely now, though there appears to be sufficient support for legislation that would create an independent financial control board to tackle the mess. There’s a genuine concern, however, that such legislation could lead to a trampling of bondholders’ rights and provide an incentive to other states in our union — with their own growing debt problems — to hold out for help from the federal government. Other critics argue that Washington should focus on removing federal regulations that impede the island’s economic growth and force the Puerto Rican government to confront decades of fiscal profligacy.

To be sure, policymakers could help the island by exempting it from the federal minimum wage —which helped foster the island’s high unemployment rate — and the federal Jones Act, which requires shippers to use costly U.S. flagged ships that result in Puerto Rican consumers paying artificially higher prices for goods.

But the issue of Puerto Rico’s status as a territory of the United States should also be included in the discussion. Although it may be unlikely to happen, any legislation addressing the territory’s financial plight should come with a provision laying out a time-frame for the orderly granting of Puerto Rican independence. The idea sounds crazy, but it shouldn’t.

Puerto Rico didn’t become a territory of the United States until it, Guam, and the Philippines were obtained from Spain under the Treaty of Paris in 1898, which ended the Spanish-American War. Prior to that, Puerto Rico was under Spanish control for centuries. And before that, it was populated by indigenous peoples. American-occupied Cuba, which was relinquished by Spain, was allowed to declare formal independencefrom the United States in 1902 with conditions (that’s why there’s still an American military base in Guantanamo Bay). While Guam remains a U.S. territory (and should also be freed), the Philippines formally obtained its independence back in 1946.

The point is that the United States’ ownership of Puerto Rico is, historically speaking, relatively new and occurred during a period when the western imperial powers were still fighting over the colonial spoils. Yes, in subsequent decades, the Puerto Rican people received greater control over its internal affairs, and today a person born on the island automatically becomes a U.S. citizen. But the fact is that Puerto Rico owes its status to the United States’ lamentable turn toward global territorial expansion.

And what has this territorial expansion brought us? Over 100 years later, the United States’ federal government finds itself with a virtual military empire that, when all related costs like veterans’ benefits are factored in, soaks taxpayers close to $800 billion a year. That’s a lot of money to effectively subsidize the defense needs of wealthy allies and exert control over foreign populations for the ostensible purpose of “spreading democracy.” And not coincidentally, the tentacles of the federal government can be found in virtually every aspect of our lives. After all, federal involvement in everything from education to the federal highway system has been justified on dubious “national security” grounds.

So, while raising the question of Puerto Rican independence might seem quaint, its prominent place in the news is at least an occasion to recognize that big government abroad and big government at home are two sides of the same coin. Relinquishing control of Puerto Rico would be a significant step toward a badly needed downsizing of the federal government.