Puerto Rico: A Territory Still In Crisis

Puerto Rico’s Recent Debt Recovery Doesn’t Mean The Crisis Is Over


Luquillo Beach

Puerto Rico’s Capitol Building In San Juan

Puerto Rico, “La Isla Del Encanto” or Island of Enchantment” was in deep trouble. The U.S. territory has been accumulating debt for years, starting off in 2006, but things got serious when 2014 came around. Three major credit agencies lost faith in Puerto Rico’s ability to pay back its debts. As a result, they “downgraded several bond issues by Puerto Rico to “junk” status,” which effectively shut off its access to the bond market. The island would be in an economic disaster for years to come, as they had limited ability to borrow or finance to pay off budgetary imbalances. This forced the island to use its savings to pay the debt, which was the start of Puerto Rico’s repressive spending.

Nothing seemed to help. The economy went into a downward spiral, and kept accumulating more and more debt. Puerto Rico peaked at an astonishing $73 billion dollars of debt. The people were about to struggle more than they had when the island first started having economic issues in 2006. Puerto Rico cried for help from the United States, but because of a law Congress passed in 1984, that prohibited the island from filing for bankruptcy protection, the island was going to have to pull itself out of 73 billion dollars of debt, completely on its own, which seemed nearly impossible at the time.

People had given up on the island. Former President Donald Trump had called the island “a place with absolutely no hope”. Even its own former governor, Alejandro García Padilla, stated that the island’s debt was “unpayable’ in 2015.

The debt continued to accumulate, and Puerto Rico didn’t have a plan, until 2016. In 2016, Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) in order to restructure the territory’s debt. This was signed into law by President Barack Obama. Under this new plan, the maximum amount Puerto Rico could borrow a year is $1.15 billion, which is 8 percent of the Commonwealth’s revenues from taxes and other sources.

Fast-forward 8 years later, the island surprisingly proved their former governor wrong. As of 2022, PROMESA had worked. Puerto Rico reduced its debt by an astonishing 80%. Its debt recovery is impressive and is the largest debt reconstruction in U.S. history. The media has been reporting on this debt recovery for months now, and along with the government, has celebrated Puerto Rico’s ability to reduce its debt.

The debt recovery is definitely a step forward, but the crisis is not over. Journalists have been ignoring that there are still issues and are acting as if the debt recovery solved everything. This couldn’t be farther from the truth, and the 3.2 million Americans on the island are still struggling just as much as before, if not more. As of today, 45% of the islands’ population is living below the poverty line. Puerto Rico has a lower median household income than any county in the United States at a measly $22,000 dollars. Some may argue that the cost of living is lower on the island, but it is only 8% lower than the median cost of living in the United States. Meanwhile, the U.S. median household income is $70,000. Median household income in the U.S. is 104% higher than Puerto Rico’s, which doesn’t make up for the 8% less cost of living.

The people are also suffering in other ways since they have limited or unreliable access to necessities such as electricity. Because of their limited ability to spend money through PROMESA, the island could not even sustain its own power company, Puerto Rico Electric Authority, as the company went bankrupt and had to transfer the responsibility to a privately owned company named LUMA energy. As a result of LUMA, the island suffers from constant blackouts known as “apagones” to natives, due to LUMA trying to save money, and using cheap fixes for the grid. “Puerto Rico’s infrastructure is no better today than it was before María. In fact, it’s even worse. While Fiona was a much smaller storm than María, the hurricane revealed just how vulnerable the island remains,” according to an article in  Vox.

Hurricanes in Puerto Rico have been yearly occurrences, yet the island’s electric infrastructure is still not prepared for even the smallest of hurricanes, as proven by category one Hurricane Fiona which swept across the island this September. Fiona put parts of the island without power for an entire month. 2017’s category 5 Hurricane Maria left parts of the island without power for an entire 11 months, which is considered the largest blackout in U.S. history.

Punte Moscoso In San Juan

The unreliable electric grid puts Puerto Rico in a vicious cycle, where yearly hurricanes leave Puerto Ricans without power for sometimes months due to the lazy and delayed fixes from LUMA. Puerto Rican governor Pedro Pierluisi told the New York Times that the extended power failure significantly contributed to some 3,000 people dying after Hurricane Maria. Some people in hospitals and people in homes heavily rely on power, for ventilators, oxygen, and other life-supporting machines. These people are still at risk even 6 years after Maria due to the unreliable infrastructure.

Similar to the power grid, PROMESA has also affected Puerto Rico’s ability to fix things like roads and bridges, putting Puerto Rican’s in danger driving on the island. The National Highway Administration has determined that only 17.4% of bridges in Puerto Rico are safe. These bridges pass through highways such as the PR-3 which spans across the island has 5 bridges on the brink of collapse. “The roads are atrocious. There are potholes everywhere, cracking roads. It’s absolutely horrible to drive on, and it’s been like this for years now. it doesn’t seem like they will ever be fixed. Just getting to somewhere like a hospital can be incredibly dangerous” says Native-Born Puerto Rican Joanne Rodriguez.

What has been disappointing is the lack of media attention to these issues. The media and many journalists have been focused on debt recovery, and act as if it solved everything, but we Puerto Ricans know that is far from the truth. This adds to the fact that we Puerto Ricans are ignored by the media to begin with, especially by major media outlets from the United States. It’s as if the journalists have forgotten that we too are Americans. This might partly be due to the limited interest about Puerto Rico for American readers. According to a poll from The Morning Consult that was taken in 2017, nearly half of Americans from the United States do not recognize that Puerto Rico is a U.S. territory with American citizens. Only 54 percent of Americans knew that people born in Puerto Rico, are U.S. citizens. It’s as if Americans are forgetting how closely related the tropical island is to the United States. U.S. federal regulators oversee the island’s businesses, and U.S. laws even dictate the island’s trade policy.

U.S. and Puerto Rican Flag In San Juan

“I’m tired of being asked all the time, things like how I got to the United States and sometimes even if I was legal. From living in Connecticut for over 30 years, I have found that most people I meet here don’t even recognize what Puerto Rico even is when I tell them where I’m from. They think Puerto Rico is some sort of distant country in South America,” said Joanne Rodriguez

Joanne also stressed how she believes things would be different if the island had been more recognized. “I remember when Maria first hit, and it took weeks for the president to even acknowledge that we had just been hit by a Category 5 hurricane. It was one of the largest hurricanes in U.S. history. We needed immediate help, some of us were starving as we watched our president throw us paper towels. We weren’t really recognized, or really cared for at the time, while thousands of us were dying from the Hurricane such as my elderly parents who were stranded. All we could do is watch our President suppress the catastrophe by claiming things like Katrina was worse, instead of helping us,” says Puerto Rican Joanne Rodriguez.

Joanne also stressed that Puerto Rico’s healthcare system needs help from the United States. Medicaid has long been underfunded in Puerto Rico. According to American Progress, Federal Medicaid Assistance Percentage (FMAP) ranges from 50 percent to 83 percent of total Medicaid costs in the states. Puerto Rico, which has more residents on Medicaid than any U.S. state, receives only 55 percent FMAP­ funding. FMAP funding is determined by the federal government by looking at the poverty levels. The higher the poverty, the more people on Medicaid, meaning that the Federal Government provides more FMAP funding. Even though Puerto Rico’s poverty line is two times lower than Mississippi, the poorest state in the U.S., Puerto Rico only receives a measly 55% of FMAP funding. It’s simply unfair to the people on the island. If Puerto Rico’s Medicaid funding were calculated as a state, it would receive the maximum FMAP of 83 percent.

“My mother who was on Medicaid passed away last year, and she suffered from Medicaid having to cut costs, meaning that they wouldn’t provide my mother any toiletry like bedding, pillows, and blankets like hospitals do here in the U.S. The worst part is that there wasn’t any food provided for my mother because she was in an emergency room. Since the hospitals are always so full, it was nearly impossible for my mother to get an actual room, and it took weeks. If I hadn’t been there with my mother to provide her food, the hospital would have let her starve” says Brenda Rodriguez, Joanne’s sister.”

When Joanne was asked if she had hope for more FMAP funding being provided to Puerto Rico, she responded “The United States has ignored the Medicaid issues for years, and it continues to be ignored by the Federal Government. It’s completely unfair. If there is change, people like my mother would finally get the proper care they need in hospitals, but unfortunately, it doesn’t look like the Federal Government is going to take notice anytime soon, and will continue to ignore like they always have.”