There is a crisis afoot: Puerto Rico’s economy is collapsing. The territory owes about $73 billion in bond debt and $49 billion in unfunded pensions. In May, the Governor of Puerto Rico, Ricardo Rosello, filed for a protection ‘similar’ to bankruptcy hoping to restructure the territory’s massive debt.

However, since filing for the protection, things have only gone downhill.

The territory’s budget has still not been approved by the Federal Oversight Board, it’s attempting to sell its ports to private contractors in order to raise capital, and its power utility (the Puerto Rico Electric Power Authority) just filed for bankruptcy after it was unable to restructure its $9 billion debt.

It is still unclear at this moment how this economic crisis will be solved. But here’s what you need to know about Puerto Rico as it makes its way into the national debate.

How Puerto Rico Got To This point?

Puerto Rico’s economic status has always been in limbo. Its precarious situation as a U.S. territory made it the island with the highest per capita income in the Caribbean.

However, in 1996, President Bill Clinton decided to phase out longstanding tax incentives for companies located on the island, which helped stimulate economic growth for decades. Once the rollback of those exemptions ended in 2006, corporations and jobs left the island and economic growth stagnated while unemployment rose.

This is compounded by two unique aspects of Puerto Rico’s situation as a territory. For one, tax rates are incredibly low–exempt from federal income taxes, residents only need to pay a 4 percent tax on income earned on the island. Additionally, citizens of Puerto Rico are also U.S. citizens, granting them the ability to freely move to the mainland. When it became clear that jobs were no longer coming to Puerto Rico, many residents left the island, depleting workforce and leaving smaller tax base to draw from.

With a lack of tax revenue, Puerto Rico’s government needed revenue to balance its budget. Instead of raising taxes or cutting spending it issued government bonds to raise money for much of the difference. The bonds are incredibly valuable to investors from outside Puerto Rico. Its status as a territory means the bonds are exempt from local, state, and federal taxes. But due to the long recession, the government could not generate enough the revenue to pay the bonds back, and in 2014, its bonds were downgraded to “junk” status.

Furthermore, island’s government is incredibly inefficient. For example, the island’s main power company has accrued a debt worth more than $9 billion, partly by providing free electricity to municipal building and projects that barely generate any profit for the government. For instance, the utility company provided free electricity to an ice-skating rink built in the city of Aguadilla (it’s expensive to keep ice cold in the tropics!).

Falling corporate interest in investing in the island, low tax rates, attractive government bonds, and an inefficient government all led the territory to accumulate a massive debt that it couldn’t escape.

Pension Problems

Not only does Puerto Rico owe billions to its creditors, but it also owes a large sum to its own people in the form of unfunded public pension programs. In addition to Puerto Rico’s bond debt, it has about $49 billion worth of unfunded pension commitments.

Since the 1990s, Puerto Rico has slowly but surely reduced payments to its employee retirement program, to the point where its public pensions became significantly underfunded. Furthermore, the population in Puerto Rico is getting older, with 14.2 percent of its residents above the age of 65. As the local workforce shrinks and the population ages, the territory’s unfunded pension commitments will become an even larger issue.

But the owners of Puerto Rico’s bonds are demanding that they are paid their debts first even if that means further cuts to public programs such as education and healthcare.

Is A Solution Possible?

The situation is dire for the citizens of Puerto Rico, they are almost completely out of money and President Trump has stated that he will not bail out the island.

One solution that could enhance the government’s financial situation is for the territory to seek statehood. Gov. Rosello recently held a referendum to gauge public interest in statehood. If Puerto Rico becomes a state, the economic recovery from the debt crisis could be a lot quicker with the backing of the federal government. The result of the referendum was an overwhelming 97 percent in favor of statehood, but only 23 percent of voters participated. Critics have said that despite the vote’s margin, the plan is not favored among the entire population.

Experts have pointed to debt forgiveness as the best possible solution to solving Puerto Rico’s debt. If austerity measures are put in place, Puerto Rico will need to pay off its debts to creditors first, which would mean the people who rely on the publicly funded programs such as schools, health care, and pension payments suffer. Furthermore, cutting back on public spending will only make for a longer and more painful economic recovery.

James Levinson

James Levinson is an Editorial intern at Law Street Media and a native of the greater New York City Region. He is currently a rising junior at George Washington University where he is pursuing a B.A in Political Communications and Economics. Contact James at staff@LawStreetMedia.com

The post What You Need to Know About Puerto Rico’s Debt Crisis appeared first on Law Street.

On Sunday, June 11, Puerto Rico voted in a non-binding referendum to become the 51st U.S. state. While that doesn’t necessarily mean much–it certainly does not in any way guarantee that Puerto Rico will actually become a state–it does fit into the overall conversation about the island’s relationship with the United States. Puerto Rico has been a U.S. territory for just over 100 years, and discussions about its relationship with the United States have been constant since then. Read on to learn about Puerto Rico’s potential bid for statehood and what could be next for the territory.

A Brief History of Puerto Rico’s Status

Puerto Rico officially became a territory of the United States on March 2, 1917, when President Woodrow Wilson signed the Jones-Shafroth Act. This act made the people of Puerto Rico citizens of the United States and made Puerto Rico an American territory. The island had been in U.S. possession for about 20 years prior to that point. Spain had ceded the area, as well as Guam and the Phillippines, to the U.S. with the Treaty of Paris that ended the Spanish-American War.

The Jones-Shafroth Act set up a government in Puerto Rico and defined the relationship between the island and the United States. In 1952, Puerto Rico officially became a commonwealth, meaning that it has its own constitution.

But despite such a long history, the relationship has remained contentious. While Puerto Ricans are American citizens, the region doesn’t necessarily enjoy the same privileges as a state. For example, Puerto Ricans don’t have a voting representative in Congress, nor are they able to vote for President (although, interestingly enough, they can vote in primary elections).

Statehood Votes in the Past and Present 

Puerto Rico has voted on the question of statehood four times prior to this weekend’s vote. The first time was in 1967; in that vote, only 39 percent of Puerto Ricans voted for statehood. In 1993, 46 percent voted for statehood. Next, in 1998, 46.5 percent voted in favor of statehood. In 2012, a majority of Puerto Ricans voted for statehood for the first time. At that point, 61 percent of Puerto Ricans said “yes” to the statehood question–although the validity of that number is actually contested.

In the referendum held on June 11, 2017, 97 percent of Puerto Ricans voted in favor of statehood. But it’s important to note that the vote is actually under some criticism. It had a very low turnout–only 23 percent of registered voters participated. That’s the lowest turnout in an election in Puerto Rico since 1967. And that low turnout was largely due to a boycott organized by parties that opposed statehood, which claimed that the vote was “rigged” in favor of statehood. They complained that the ballot question had been phrased in a way that made not voting for statehood seem negative. Although there was a huge majority that voted in favor of statehood, the criticisms of the referendum may mean that it’s not regarded as a legitimate vote.

The video below goes into more detail about the recent vote:

Arguments in Favor and Against Statehood

The debate is complicated–rife with historical, political, and cultural concerns. But here are some of the most popular arguments for and against Puerto Rican statehood.

Arguments in Favor of Statehood 

Those who want to see Puerto Rico become a state claim that it will be better for the area. Currently, the economic situation on the island is dire. Puerto Rico is bankrupt, and as a result, the government has had to implement austerity measures, including closing some public schools. The tax situation in Puerto Rico is also complicated–people who live there don’t have to pay federal taxes on the money they make on the island. But that means that it also doesn’t reap the financial benefits of being a state, like its share of income and corporate tax revenue. According to Frances Robles of the New York Times: “If Puerto Rico had been a state in 2011, it would have received up to $3 billion in additional funding for Medicaid and Supplemental Security Income payments alone, according to a federal Government Accountability Office report.” Statehood advocates claim that with that money, Puerto Rico wouldn’t be in such dire straits.

There’s also a political argument to be made. While Puerto Ricans can vote in party primaries, they are not able to vote in the presidential or vice presidential elections. Additionally, they have no voting representatives in Congress. Advocates of statehood argue that Puerto Rico won’t be able to effectively advocate for itself or its 3.5 million people until it has political representation on par with the rest of the United States (minus other territories and the District of Columbia). Some Puerto Ricans believe they are being treated as “second-class citizens.”

The current governor of Puerto Rico, Governor Ricardo Rosselló, supports Puerto Rican statehood. After the vote on June 11, he stated:

It will be up to this new generation of Puerto Ricans to demand and claim in Washington the end of the current improper colonial relationship, and begin a transition process to fully incorporate Puerto Rico as the next state of the Union.

What Are the Arguments Against Statehood?

There is also a range of arguments for why Puerto Rico should not become the 51st American state. Some argue that it doesn’t make sense to grant statehood to Puerto Rico because of its financial situation. It could be a burden on the rest of the United States to help the island out of its economic struggles.

There’s also an argument that Puerto Ricans don’t actually want it to become a state. The first three times the question was posed–the 1967, 1993, and 1998 votes–Puerto Ricans rejected statehood. While the 2012 vote is cited as the first time that Puerto Ricans voted for statehood, that conclusion is contested, because votes that were essentially abstentions were included. And the most recent vote, the one that garnered 97 percent in support of statehood, remains hotly contested because of the boycotts against it.

There are cultural arguments against statehood as well, including that Puerto Rico’s culture could be watered down if it is fully incorporated into the United States. Puerto Rico has some unique features as a territory of the United States–for example, it sends its own delegation to the Olympics and its own beauty queen to Miss Universe. Some argue that the island will lose part of its identity if it becomes the 51st state.

Conclusion: What’s Next?

Probably not that much. The vote that Puerto Rico held over the weekend is non-binding. Congress has the final say on making Puerto Rico a state. Puerto Rico could follow something called the “Tennessee Plan.” In that situation, Puerto Rico’s governor would appoint a delegation proportional to its population–two Senators and five Representatives–to go to Washington, D.C. and demand to be seated. This is the process by which Tennessee became recognized as a state, as well as Michigan, Iowa, California, Oregon, Kansas, and Alaska.

While the Republican Party has long supported Puerto Rican statehood, the addition of seven new colleagues on Capitol Hill, all of whom are likely to be Democrats because they will be appointed by the Democratic governor, would likely not sit well. Additionally, it’s unclear how the Republican Party’s current standard bearer, President Donald Trump, feels about potential statehood. He has tweeted negatively about not wanting to “bail out” Puerto Rico. Long story short, it seems very unlikely that there’s going to be a big change anytime soon when it comes to Puerto Rico’s lack of statehood.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post Will Puerto Rico Become the 51st U.S. State? appeared first on Law Street.

Zika Becomes A Crisis in Puerto Rico

Zika has officially been declared a public health crisis in Puerto Rico after 10,090 laboratory-confirmed cases were recorded this past Friday. Of those cases, 1,035 were pregnant women. However, the U.S. Department of Health and Human Services says that the number of infections is most likely much higher. The administration hopes that this declaration will prompt fresh support for Puerto Rico. HHS says it has had to shift money from other projects in order to continue work on Zika vaccines and research in the absence of federal funding from U.S. lawmakers. Any decision that lawmakers make or do not make directly affects citizens of Puerto Rico. But something tells me that if the virus were to spread in the capital, Congress would definitely put aside those “fundamental” difference and prevent Zika from affecting more lives.

via GIPHY

Florida also confirmed on Friday that three more people had contracted the virus from local mosquitos, bringing the recorded number of infections in the state up to 28.

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RantCrush collects the top trending topics in the law and policy world each day just for you.

The post RantCrush Top 5: August 15, 2016 appeared first on Law Street.

On Wednesday, Congress approved a bill to rescue Puerto Rico’s finances, only two days before the U.S. territory’s deadline on a $2 billion payment. But Governor Alejandro Garcia Padilla declared that the island would still not be able to pay bondholders.

“On July 1, 2016, Puerto Rico will default on more than $1 billion in general obligation bonds, the island’s senior credits protected by a constitutional lien on revenues,” he wrote on CNBC’s website.

Puerto Rico is in deep financial trouble; as Law Street previously reported, the island is $72 billion in debt, and is due to pay a big chunk of it this week. It has already defaulted on previous payments, but the payment due on Friday includes about $780 million of General Obligation bonds, which are the most important and supposed to be paid off first.

Since the island is not expected to make that deadline, this would be its first default of GO bonds, which it is bound to pay according to its constitution. The White House has expressed warnings that unless the U.S. steps in and helps, the island could face a possible humanitarian crisis and complete financial chaos. Since Puerto Rico is not a U.S. state but a territory, it can’t file for bankruptcy, which would allow it to restructure their debt.

Last Minute Bill

The bill that was voted through, called the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), will provide protection from any creditor litigations that could be brought to the Puerto Rican government. It will also put together a control board that will supervise restructuring of debts and finances. Both Republicans and Democrats unanimously supported it.

“If we don’t act before the island misses a critical debt payment deadline this Friday, matters will only get worse — for Puerto Rico and for taxpayers,” said Senate Majority Leader Mitch McConnell.

And President Obama said “This bill is not perfect, but it is a critical first step toward economic recovery and restored hope for millions of Americans who call Puerto Rico home.”

Puerto Rico’s Governor Padilla has mixed feelings about PROMESA, and wrote in a commentary on CNBC:

PROMESA is a mixed bag. On the one hand, it provides the tools needed to protect the people of Puerto Rico from disorderly actions taken by the creditors. The immediate stay granted by the bill on all litigation is of the utmost importance in this moment. Most importantly, the authority to adjust our debt stock provides the legal tools to complete a broad restructuring and route Puerto Rico’s revitalization.

On the other hand, PROMESA has its downsides. It creates an oversight board that unnecessarily undercuts the democratic institution of the Commonwealth of Puerto Rico. But facing the upsides and downsides of the bill, it gives Puerto Rico no true choice at this point in time.

The bill will provide some hope for the people of Puerto Rico. Thousands have already fled their homes on the island, while hospitals can’t treat patients without advance cash payments. Obama has promised to sign the new bill before July 1.

Emma Von Zeipel

Emma Von Zeipel is a staff writer at Law Street Media. She is originally from one of the islands of Stockholm, Sweden. After working for Democratic Voice of Burma in Thailand, she ended up in New York City. She has a BA in journalism from Stockholm University and is passionate about human rights, good books, horses, and European chocolate. Contact Emma at EVonZeipel@LawStreetMedia.com.

The post Congress Approves Financial Rescue Plan for Puerto Rico appeared first on Law Street.

Welcome to the RantCrush Top 5, where we take you through the top five controversial and crazy stories in the world of law and policy each day. So who is ranting and who is raving today? Check it out below:

Ugh, George Zimmerman Actually Sold the Gun

Last week we talked about how atrocious it was that George Zimmerman was trying to auction off the gun he used to kill Trayvon Martin. While the original auction Zimmerman set up was taken down, he successfully sold the weapon through the United Gun Group. Some sources report that the final offer was almost $140,000,  but it’s unclear if that was legitimate information. However according to United Gun Group, it appears to have certainly been sold:

pic.twitter.com/wYTCTcIjJZ

— United Gun Group (@UnitedGunGroup) May 18, 2016

What Happened to Egypt Air MS804? Trump is Certain He Knows

Tragically, Egypt Air MS804 disappeared late last night, en route from Paris to Cairo. The flight was carrying 66 people and disappeared close to Greece. While circumstances are unknown, the presumptive Republican nominee Donald Trump has of course proclaimed he knows exactly what’s going on: terrorism.

Looks like yet another terrorist attack. Airplane departed from Paris. When will we get tough, smart and vigilant? Great hate and sickness!

— Donald J. Trump (@realDonaldTrump) May 19, 2016

While terrorism may very well  be the cause, do we really want a president who jumps to conclusions so publicly?

Speaking of Trump…

If you want to read a truly badass rant today, check out Robert Kagan’s piece in the Washington Post on Trump’s rise entitled “This is How Facism Comes to America.” It’s a powerful look at how Trump’s rhetoric and machismo threaten to take over the country. As Kagan points out:

And is a man like Trump, with infinitely greater power in his hands, likely to become more humble, more judicious, more generous, less vengeful than he is today, than he has been his whole life? Does vast power un-corrupt?

Context is Always Important, Guys

People got pretty mad at rapper Waka Flocka Flame after he posted a video on his Snapchat of a little girl locked in a dog cage. The little girl is crying, and the rapper jokes about “bonding her out.”
Social media followers, of course, immediately exploded in anger, claiming that he had committed some sort of child abuse.

But don’t worry, it turns out the little girl was just his niece who had locked herself in by accident, and Waka was just letting her out. He also posted a pretty angry response video, pointing out that he absolutely does not lock children in cages.

We Need to Work on Our Civics Education

Puerto Rico has been in the news a lot lately over its financial troubles. But it turns out that a terrifyingly large chunk of Americans don’t know that Puerto Rico is actually a U.S. territory. Only 43 percent of Americans know that Puerto Ricans are actually American citizens.

Rant Crush

RantCrush collects the top trending topics in the law and policy world each day just for you.

The post RantCrush Top 5: May 19, 2016 appeared first on Law Street.

Puerto Rico’s Government Development Bank defaulted on $422 million in debt on Monday, a small but important portion of the island’s $72 billion debt. This isn’t the first time Puerto Rico has failed to pay its debt; the country has been in dire financial trouble for a long time and its governor announced last June that the island’s debts were not payable. But Monday’s default marks the first time that Puerto Rico’s Government Development Bank will not be able to make a payment, a signal that the crisis in Puerto Rico is worsening by the day.

As the island continues to default, Peurto Rico faces increasing economic turmoil and may eventually fail to pay for the debt on its general obligation bonds, which are actually guaranteed by its constitution. The government in Puerto Rico has already taken harsh measures to cut spending and make some payments on outstanding debt. But as it reduces public services it threatens to weaken its economy even further.

Read on to learn how we got here and what’s in store for Puerto Rico’s future.

What Happened on Monday?

The entirety of Puerto Rico’s $72 billion debt is not due all at once, and on Monday, it only failed to pay most of the $422 million that it owed. Puerto Rico is a unique case in that there is not a single entity responsible for issuing all of its bonds, but the Government Development Bank is the commonwealth’s largest bond issuer–meaning its default is particularly significant.

The GDB did manage to make an agreement with credit unions to push back $33 million of its debt for another year, though much of the outstanding debt remains. In early April, Peurto Rican lawmakers passed a bill issuing a moratorium on debt payments, effectively allowing the government to stop paying its debts until 2017, though bondholders quickly took the issue to the courts. The island will continue to negotiate with its bondholders to the extent that it can, but because Puerto Rico cannot declare bankruptcy, there is no established process for doing so.

While the commonwealth has already defaulted on some of its debt, it has, so far,  managed to stay current on its general obligation debt–which it is constitutionally required to pay (there are several different types of bonds issued by Puerto Rico, but the general obligation bonds are considered to be particularly important). As the government continues to default, staying current on its general obligation payments will become increasingly less likely. Notably, the government will need to pay more than $800 billion in general obligation debt on June 1, which many consider the deadline to work out a resolution before the crisis peaks.

How did we get here?

Economic woes in Puerto Rico largely began after a 1996 law removed tax incentives for companies located in Puerto Rico. That law began a 10-year phase out of section 936 of the tax code, which had previously given significant tax benefits to companies with subsidiaries in Puerto Rico. Since then, the island has been in the throws of economic contraction and large numbers of Puerto Ricans have fled to the U.S. mainland.

The island has been in a recession for nearly 10 years, which has increased the local government’s cost of borrowing money. As a result, Puerto Rico has had to raise taxes and cut back on services to pay its bondholders. In 2014, Puerto Rico managed to strike a deal with several hedge funds to provide much-needed funding to keep the commonwealth solvent. But it was forced to take on short-term debt at a high interest rate, making its current situation even worse.

Underneath its current fiscal concerns, Puerto Rico has been dealing with ongoing economic contraction. A report commissioned by the government outlines many of the current challenges–from laws like the Jones Act, which inflates the cost of goods on the island by requiring all shipments to be made with U.S. boats; the federal minimum wage, which particularly high relative to the average income on the island and can prevent companies from hiring; and mismatching welfare needs relative to the mainland United States–that limit the island’s economic prospects. These problems have also caused many to leave the island altogether.

This chart from the Pew Research Center illustrates how the rate of population decline in Puerto Rico has been increasing in recent years:

Hope that Puerto Rico will one day be able to pay off its more than $70 billion debt is leaving the island as quickly as its residents. As the commonwealth’s population dwindles so too does its tax base, which is a crucial factor in the local government’s ability to increase its revenue and pay of future debt.

What about Wall Street?

Some argue that hedge funds exploited the situation in Puerto Rico by purchasing large amounts of government debt at very low prices. Economic troubles pushed interest rates on Puerto Rican bonds to over eight percent, which combined with significant tax advantages, made the island’s debt particularly appealing. Puerto Rico is able to issue triple tax-exempt bonds because Congress made the government and its public corporations’ debt exempt from federal, state, and local taxes.

That, combined with the constitutional guarantee–the general obligation bonds take precedence over all other public expenses–made Puerto Rican debt look particularly attractive to large investors. The New York Times summed this point up in an in-depth look at the situation last December:

There were plenty of reasons for the hedge funds to like the deal: They would be earning, in effect, a 20 percent return. And under the island’s Constitution, Puerto Rico was required to pay back its debt before almost any other bills, whether for retirees’ health care or teachers’ salaries.

Critics note that hedge funds have been taking advantage of attractive bonds issued by Puerto Rico and are now turning to the courts to ensure that they are paid the full price for bonds that they bought at a discount.

Is there a solution?

In light of Puerto Rico’s dire situation, the commonwealth’s fate lies almost exclusively in the hands of Congress. In light of its ongoing economic contraction and population decline, Puerto Rico will almost certainly be unable to stay current on its debt. Congress is now tasked with deciding if and how it will help the Puerto Rican government deal with the crisis.

The government in Puerto Rico is currently asking Congress to allow it to restructure its debts using the formal Chapter 9 bankruptcy process or something similar. Currently, Puerto Rico is unable to go bankrupt and has very little ability to negotiate with its creditors. Going bankrupt would allow the commonwealth to negotiate a plan to pay all or part of its debt over on a new time frame with different interest rates. U.S. Treasury Secretary Jack Lew argues that if Congress doesn’t act now and allow Puerto Rico to restructure its debts a bailout may actually be needed in the future.

Republicans in Congress have proposed a slightly more hands-on approach–creating a panel to manage and restructure the island’s debt obligations. The fiscal control board would allow the island to restructure its debts but would have a guiding authority to handle the politically difficult decisions involved with cutting back services and negotiating with bondholders. But that plan has faced opposition on both sides of the aisle.

Many conservatives have been wary of granting Puerto Rico the ability to restructure its debts, arguing that doing so could create a dangerous precedent and may amount to a bailout. It would not, in fact, be a bailout–debt restructuring would not involve any government funding–restructuring would merely allow the Puerto Rican government to renegotiate with bondholders without any taxpayer funds. Democrats argue that creating a control board would put too much control in the hands of an undemocratic entity. Puerto Ricans are also particularly wary of giving up control over their finances to a board of people installed by Congress.

While disagreements over how to deal with Puerto Rico’s imminent default persist, it’s important to note that such measures would only go so far in solving the island’s fiscal crisis. Even if it manages to renegotiate its debts, the commonwealth will need to rebuild its economy in the face of consistent population loss. As further cuts to public services are necessary to meet its debt obligations, the island will have an increasingly difficult time bringing money in to make future payments.

Kevin Rizzo

Kevin Rizzo is the Crime in America Editor at Law Street Media. An Ohio Native, the George Washington University graduate is a founding member of the company. Contact Kevin at krizzo@LawStreetMedia.com.

The post Puerto Rico is Defaulting: What You Need to Know appeared first on Law Street.

Puerto Rico received a rather unwelcome and tightly wrapped Christmas gift this year from the United States as it was reminded, in a brief filed by Solicitor General Donald B. Verrilli Jr., that it is not a sovereign state regardless of the fact that it has its own Constitution and is much more independent than a colony or territory.

The United States, taking a substantial interest in the outcome of the two cases reaching the Supreme Court in January 2016 regarding Puerto Rico’s political status and future, just planted its feet firmly in the argument that Puerto Rico does not self-govern and is actually a territory with a limited ability and authority to govern over its own interests, disputes, and affairs. The brief has created a media frenzy in Puerto Rico and has even involved the United Nations through an appeal highlighting human rights issues pertaining to self-determination.

Image Courtesy Of [Vxla via Flickr]

Historically speaking, Puerto Rico was ceded to the United States by Spain in 1898 following the conclusion of the Spanish-American War pursuant to the Treaty of Paris signed on December 10, 1898. Following several years of constructing Puerto Rico’s government, legislature, and judiciary, it was finally provided a bill of rights by Congress in 1917, and the people of Puerto Rico were granted U.S. citizenship. In 1950, Congress gave Puerto Rico the right to create its own Constitution to be adopted by its government so long as it “provided a republican form of government” and “include[d] a bill of rights.” Puerto Rico’s Constitution was approved by Congress in 1952 following several changes and revisions. Since then, Puerto Rico has enjoyed a level of autonomy and sovereignty similar to that of the states. Constitutionally speaking however, Congress has directly managed and overseen Puerto Rico’s affairs under the Territory Clause of Article IV of the Constitution.

The cases to be heard by the Supreme Court, while narrow in focus, will directly address the debate over Puerto Rico’s constitutional and political future–a bigger picture effect, if you will. One case addresses whether the United States and Puerto Rico are separate sovereign nations for the purposes of Double Jeopardy under the Fifth Amendment of the U.S. Constitution. Due to the fact that the Double Jeopardy Clause prohibits individuals from being tried for the same offense twice, Puerto Rico would have to have sovereignty and operate in an autonomous fashion to charge individuals for the same crimes they were convicted of in federal court. While the federal U.S. government and the states are considered separate sovereigns for the purposes of Double Jeopardy, in its brief, the U.S., who is not a party to the case, submitted support for the Respondents in Commonwealth of Puerto Rico v. Luis M. Sanchez Valle, concluding that Puerto Rico is not a separate sovereign entity and therefore, Puerto Rico’s individual and independent prosecution of the individuals convicted in federal court violates the Double Jeopardy Clause of the Fifth Amendment.

The second case to be heard by the Supreme Court centers around Puerto Rico’s catastrophic public debt of approximately $72 billion, which it wants to be able to control and restructure in the same way each individual state can, but is not able to under the Bankruptcy Code of U.S. law. The debt incorporates $20 billion for public utilities, used by the people of Puerto Rico including 3.5 million Americans, which Puerto Rico is unable to pay. It is urging the Supreme Court to grant Puerto Rico the right to enact laws allowing for restructuring. This desperate measure comes on the heels of a 2014 decision by the U.S. Court of Appeals for the First Circuit that struck down Puerto Rico’s Recovery Act, which allowed for Puerto Rico to fill the gaps of Chapter 9 of the Bankruptcy Code that had excluded any part of Puerto Rico’s government to take part in restructuring. As such, the Recovery Act was found to be in direct opposition to U.S. law and deemed unconstitutional. The financial crisis in Puerto Rico has brought the small island to the brink of an economic meltdown.

Puerto Rico’s Governor, Alejandro García Padilla, issued an impassioned and assertive statement following Verrilli’s brief filing, stating that the Solicitor General’s stance is “contrary to all Supreme Court jurisprudence” and that Verrilli’s position is “at odds with prior postures by his office with regards to the sovereignty of the Commonwealth.” As far as Padilla is concerned, using the term “colony” to describe Puerto Rico’s current political status, well, those were fighting words.

While the upcoming Supreme Court cases both carry the answer to a long-lasting debate about Puerto Rico’s constitutional and political future, it appears that both sides want their cake and to eat it too. Padilla does not support either statehood or independence for Puerto Rico and wants U.S. financial and legal support on his own terms. The U.S. has received many benefits from its relationship with Puerto Rico, yet it fails to address the major pitfalls threatening the territory and is unwilling to be flexible in order to address dire concerns that only it can to date. Nothing is for certain except this–come early 2016, the Supreme Court will tackle the issue as to whether Puerto Rico is separate and sovereign from the United States. Until then, all we can do is wait and hope that Puerto Rico works with the United States to come up with additional solutions to the major problems at hand.

Ajla Glavasevic

Ajla Glavasevic is a first-generation Bosnian full of spunk, sass, and humor. She graduated from SUNY Buffalo with a Bachelor of Science in Finance and received her J.D. from the University of Cincinnati College of Law. Ajla is currently a licensed attorney in Pennsylvania and when she isn’t lawyering and writing, the former Team USA Women’s Bobsled athlete (2014-2015 National Team) likes to stay active and travel. Contact Ajla at Staff@LawStreetMedia.com.

The post Puerto Rico: A Sovereign State or Still a U.S. Colony? appeared first on Law Street.

It’s no secret that obesity is weighing down our country. Lawmakers have tried everything to get Americans to lose weight from soda warning labels and “fat taxes” to exercise initiatives, but when it comes to getting kids fit it has been anything but easy. However Puerto Rico has a new approach–make it illegal for parents to have obese children.

According to The Guardian, a controversial new bill introduced by Senator Gilbert Rodriguez Valle would label parents of obese children in Puerto Rico “child abusers” and force them to pay some hefty fines. Valle’s bill would make schools responsible for identifying obese children and reporting cases to counselors or social workers. Health Department officials would then investigate the parents to determine the cause of the child’s obesity, and then create a diet and exercise program that’s combined with mandatory monthly check-ins to monitor the child’s progress.

According to The Guardian:

If social workers believed there had been no progress after six months, they would have the authority to open a child neglect case and impose a fine of $500; if after a year they believed things were the same, another fine of $800 could be levied.

Puerto Rico does have a slightly greater child obesity problem, with more than 28 percent of its children considered obese, compared with some 18 percent on the U.S. mainland according to Al Jazeera. Dr. Ricardo Fontanet, president of the Puerto Rico chapter of the American Academy of Pediatrics, told the Guardian that encouraging parents to get their children to exercise more is also a challenge. According to him the Puerto Rico government is battling a $70 billion public debt crisis, and has little money available for maintaining parks and open spaces. He said:

You see high grass, parks unsuitable for walking or playing, or for soccer, baseball, whatever the children want to play.

The bill is considered to be a radical proposal to curb child obesity, with many doubting that it will ever come into effect or make its way to the states. Valle denied an interview with The Guardian, but Dr.  Fontanet said that the politician did not expect it to become law but rather just wanted “to shake the tree.” Even so many are still offering up their critiques in response. Nutritionist Milly Garcia discussed the bill with Fox News Latina saying:

The fact that these childhood obesity cases are rooted in lifestyle does not give one the right to step into people’s private spaces. This is not abuse, it’s a disease. It would mean entering into a private area where the government does not belong. Obesity is the result of many factors and what we need to do is find solutions

This bill is perhaps the definition of government overreach. Yes it’s true that obesity has been linked to lifestyle choices, but other factors such as genetics and economic restrictions can also play a role. Overall having a child that is overweight is hardly the definition of abuse, and targeting these parents is a misappropriation of time and funds that could be spent looking into actual cases of neglect and abuse.

Alexis Evans

Alexis Evans is an Assistant Editor at Law Street and a Buckeye State native. She has a Bachelor’s Degree in Journalism and a minor in Business from Ohio University. Contact Alexis at aevans@LawStreetMedia.com.

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