President Trump & Puerto Rico

March 27, 2019

Dear President Trump:

It has been reported that you don’t want to see any additional federal aid directed to Puerto Rico.

The government debt crisis in Puerto Rico started in 1973 when the government began to operate on a deficit budget (i.e. spend more than what it collected). To cover the annual budget shortfall, the government issued bonds.

The impact of that decision had long range impacts, beginning with reduced capital spending resulting in deferred maintenance of public sector infrastructure (roads, bridges, public utilities, hospitals, electric power grid, ports, airports, etc.).

The practice of deficit spending in Puerto Rico continued for 4 decades!

In 2014 three major credit agencies downgraded several bonds issued by Puerto Rican government entities to “junk status” after the government was unable to demonstrate that it would be able to pay its debt from sustainable current cash flows. That action precluded Puerto Rico from access to the public debt markets, and forced them into the shadowy world of hedge funds and high-yield debt issuers.

I think you are punishing Gov. Ricardo Rosselló — and the people of Puerto Rico — for a situation which they inherited.

Meanwhile, there is a long-term lesson to be learned from the current Puerto Rico situation.

Fiscal responsibility requires discipline. In times of economic expansion, all eyes should be on reducing debt without creating abrupt changes in revenues or spending.
 
No responsible government should plan to operate on a deficit budget during times of economic expansion (prosperity).
 
The real job of our federal government is at a strategic level — looking into the future to create and support programs and policies which will help support a positive foundation for future Americans at the state and local base.
 
President Trump: I believe your fiscal priorities need to be revisited and carefully evaluated through an honest and open strategic filter.
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