Bill introduced to resolve Puerto Rico status

For more than 500 years, Puerto Rico has been held as a colony of a larger country, stretching back to Christopher Columbus’ second voyage to the Americas. It was one of the spoils of war that went to the U.S. after the Spanish-American War in 1898, and David Badillo, a professor of Latino studies at Lehman College, said it established the new emerging county's influence at the edge of the Caribbean. But Washington gave little thought to the island’s political future.

“The United States wasn’t sure what to do with it after the Spanish-American War,” Badillo said in an interview. “It’s been over 100 years, and Puerto Rico is still indeterminate.”

Puerto Rico’s legal standing was cemented in 1901 through what are known the Supreme Court's Insular Cases, which declared that Puerto Rico, the Philippines and Guam “belong to, but are not part of the United States.” Laws Garcia noted that all but one of the justices who upheld racial segregation under Plessy v. Ferguson also ruled in the Insular Cases. Eventually Plessy was overturned, but the precedent of the Insular Cases remains.

“We’re still under a legal framework set by the Supreme Court that we can be not only separate, but we can be unequal,” he said. “There’s no way to achieve full equality as U.S. citizens under the territory status.” 

Movements for statehood and independence have grown and waned over the decades, sometimes violently. Nationalist uprisings in the 1950s culminated in a shooting on the floor of Congress, the attempted assassination of President Harry Truman and the only instances that the military has conducted air bombings of U.S. citizens.

Badillo said the current status debate is driven by the island’s bleak economic situation, which is fueled by U.S. development policies, accumulating debt and tax laws. 

Throughout Puerto Rico’s history, the United States has sought to encourage outside economic investment rather than sustained indigenous development. For a large part of its history, corporations were able to get a special tax break by going to the island, but that was phased out by 2006. 

The island’s government has been buried in debt through the complex business of municipal bonds, which are used by local, state, territorial or federal entities to take out loans. The bonds are primarily used for onetime capital expenses or projects, with governments frequently warned by their financial and legal departments that using the funds for ongoing expenses can create a cycle of debt.

Municipal bonds can be more attractive to local investors because they offer some form of federal tax exemption. For nearly all such bonds, the exemption has narrowly focused to apply if the person purchasing the bonds resides within the state issuing them. But in Puerto Rico, the Jones-Shaforth Act of 1917 created triple tax exemption regardless of where the purchaser lives.

A succession of governors turned to bonds to fund operating expenses over the years, causing the island’s debt to accumulate. By 2015, then-Governor Alejandro Padilla said the island’s debt was an “unpayable” $72 billion.

The heaviest blow came at the turn of the century when federal tax reform law prohibited Puerto Rico from seeking bankruptcy relief.

“Without bankruptcy protection, Puerto Rico could never default on the bonds — they would always be required to pay back in full,” Morales wrote in "Fantasy Island."

In response to the debt crisis, Congress passed a bankruptcy law called the Promesa Act, which created an unelected federal oversight board to manage the island’s finances. The board, which some Puerto Ricans derisively call la junta, was given final say over any decisions by the Legislature or governor that involved spending money.

In January 2022, a federal judge approved an agreement between the board and the island’s government to cut $33 billion in debt obligations, reducing annual payments to about $1 billion. The deal avoided cuts to public pensions, but critics worried that without structural reforms, the island is likely to return to the same financial struggles.

Laws Garcia said the debt crisis is “intricately, fundamentally and structurally connected” to Puerto Rico’s territorial status. Because islanders receive stronger rights and benefits as citizens on the mainland, Puerto Rico’s government faces pressure to keep up with progress in the states, he noted.

“The only way politicians can try to meet that demand from constituents is by borrowing,” he said.

Badillo opined that Puerto Rico also is plagued by a political system that seems to promote uncertainty about the island’s status by making it difficult to form a coalition across the Legislature and governorship.

Puerto Rico’s Legislature has representatives from five political parties, but two have remained the dominant forces over the past half century. The Popular Democratic Party advocates for a continuation of the status quo with semi-autonomy from the United States. The New Progressive Party advocates for statehood, while the smaller Puerto Rican Independence Party favors full independence. 

A plurality of each chamber of the Legislature is held by the Popular Democrats, which hold the presiding seat in each house. Governor Pedro Pierluisi, however, is with the New Progressives.

“The whole structure is almost set up to promote indeterminacy,” Badillo said. “The whole thing is designed toward preserving stasis because there’s so many moving parts.”

Martin Kifer, a political science professor at High Point University, said a resolution is difficult because “it’s tough to change the status quo no matter what.”

“It just takes a lot — a big push and a recognition of the parties that can make the decision,” he said.

Democrats who controlled the U.S. House of Representatives managed to pass last year's bill on Puerto Rican statehood with support from only 16 Republicans. In a Republican-controlled House, the legislation faces an uphill climb from lawmakers who have balked at making the District of Columbia a state.

Kifer spoke to some of the partisan forces in play. He said Republicans are unlikely to support statehood for an area they believe would generate more Democrats in Congress and shift the balance of power.

It’s hard to estimate exactly how the electorate would fall if Puerto Rico were a state. In the 2016 presidential primary, about 88,000 turned out for the Democratic primary, while about 41,000 voted in the Republican primary. Both sets of numbers pale meanwhile against the roughly 1.3 million who voted in a 2020 referendum on the island’s status.

On his campaign website, President Joe Biden promised to “work with representatives who support each of the status options in Puerto Rico to engage in a fair and binding process to determine their own status.” He also pledged to create a federal working group that would ensure the commitment of resources and technical assistance to Puerto Rico

The Biden administration gave an update on the working group in a December fact sheet. While it announces several agency programs to support economic growth and hurricane recovery in 2023, there is no mention of a path to resolution of the island’s status.

Those on the island have little legislative recourse other than making noise about their status. Laws Garcia said any resolution relies on the will of those on the mainland.

“The federal government is holding Puerto Rico as a territory against the will of your fellow U.S. citizens on the island,” he said. “We need U.S. citizens stateside to get interested in this topic.”

The White House and leading Puerto Rican politicians did not return multiple requests for comment. Representatives for Gonzalez-Colon said she was unavailable over multiple weeks and did not return a request for emailed comments as of Friday afternoon.

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