Puerto Rico is in dire financial straits, yet it continues to spend money, to the audacious tune of $120 million, on mandatory Christmas bonuses for government employees.
The country is drowning in $70 billion dollars of debt, but still had to make this Christmas bonus because of some 1969 law that requires it. Not only that, they have a debt payment due in January that very well may be missed.
The nearly billion dollar debt service payment due in January is just the tip of Puerto Rico’s fiscal problems. Two more payments of a couple hundred million each are due in the spring next year. In July, though, the island territory faces a whooping $2 billion in debt payments.
Puerto Rico Governor Alejandro Padilla admitted flatly that “the debt is not payable.” Puerto Rico has more debt per capita than any American state. It currently has to borrow money simply to pay its bills.
The debt is not payable, according to the Governor, so they must turn to the United States that also has a spending problem, as well has a debt issue. At the time of this article, the debt clock stands at here in the United States! It seems inept for one delinquent and spendthrift government, to turn to the other and ask for a bail-out and restructuring, yet that is what is happening.
Unsurprisingly, the island territory is rattling its tin-cup in Washington. House Minority Leader Rep. Nancy Pelosi has introduced legislation that would temporarily block any legal action by creditors while Congress moved to restructure the island’s debt.
The Obama Administration has floated its own plan to give Puerto Rico access to bankruptcy courts, as a means of slashing its outstanding debts. Obama’s bailout plan would also create an “independent” board to oversee the territory’s fiscal affairs.
Irresponsible leadership, both here and in Puerto Rico, has left both countries in an “unpayable” and unsustainable situation.