NICK EICHER, HOST: The government of Puerto Rico is so heavily in debt that a federal oversight board is working with the government. The goal is to restructure the debt into something more manageable. And so last Thursday, the government submitted its proposed fiscal plan.
The oversight board had sought pension cuts and layoffs for public workers. Puerto Rico’s plan includes none of that. And some Puerto Rican legislators are so unhappy with the oversight board’s requirements, they’re debating a bill that would withhold payments for board member salaries, among other things.
WORLD Editor in Chief Marvin Olasky joins me now from his home in Austin, Texas. He’s just returned from a reporting trip to the island. Good morning, Marvin.
MARVIN OLASKY, EDITOR IN CHIEF: Hey, good morning, Nick.
EICHER: It sounds like things are going in the wrong direction here, and I’d like your sense of things. But could you start by explaining this oversight board? What is is, exactly, and why’s it necessary.
OLASKY: It’s necessary because Puerto Rico is $123 billion in debt — the government of Puerto Rico, that is. And that’s the first U.S. state or territory to admit it’s essentially bankrupt. And it’s an important precedent. Some states like New Jersey, Illinois, Massachusetts, maybe some others, they may also be bankrupt in the next decade or so. Bankruptcy on this scale is unprecedented, so Congress in 2016 passed a law setting up an oversight board made up of people with strong financial understanding. And that board has the power to make the tough fiscal moves that Puerto Rican politicians have been unwilling to make.
EICHER: Well, and yet those politicians– some of them, anyway — seem not only to be fighting tough fiscal moves, they seem to be fighting the board itself. What do you know about that, Marvin?
OLASKY: Well, bears like honey and politicians like to be popular. The board is asking the Puerto Rican politicians to do some hard things. They’re not willing to do it, they’re poking back. That’s a small part of the problem. The big part of the problem is the $123 billion in debt and no way around it. It’s huge. And the politicians just don’t want to take the hard steps that they need to deal with it.
EICHER: Well, I saw something else as the weather is getting warmer that means also that storm season is coming in and I read a report that Puerto Rico is absolutely unprepared for another big storm, of course, because the island hasn’t recovered from the last one. Tell me, from your trip there, how is the recovery from the hurricane coming and shouldn’t the federal government be spending a little more to speed things along?
OLASKY: Well, I was in San Juan and looking around there, the bigger problems are way out in the countryside where 6 ½ months after the hurricane, 10 percent of the people are without electrical power. 10 percent of all the people in Puerto Rico. And then other aspects of recovery are also slow. So, it’s a real mess. I think we have to be and I think we should be sympathetic to the people out in the countryside who are in trouble, but in many ways the bigger problem is in San Juan where politicians are playing the colonialism card. They’re saying yank the imperialists, they’re treating Puerto Ricans worse than they’re treating Texans and Floridians who suffer from the hurricanes. And they may have a point. The problem is the Puerto Rico government has not shown that it can spend money well.
EICHER: Well what are some of the specific spending battles that you’re aware of?
OLASKY: Well, Puerto Rico has overly large fringe benefits, overstaffed schools. I’ll give you an example: Right now, everyone gets a $600 Christmas bonus regardless of performance. The oversight board wants to change that. The number of public school students has shrunk by 45 percent since 2004. Last week the island’s department of education announced that 283 public schools were closed. That makes sense, but the announcement also stipulated that not a single administrator or teacher would be laid off. Hmm. The emphasis should be on help. Help for those who are suffering because of Hurricane Maria, but if Puerto Rico gets a bailout that allows it to be fiscally irresponsible, politicians in debt-ridden states will demand the same and we’ll be in bigger trouble all over this country.
EICHER: Right. Demand and probably receive. Then we’ll have to confront the question who will bailout those who have been doing the bailing out. Marvin Olasky is editor in chief for WORLD. Marvin, I assume you’ll be writing about Puerto Rico in the next issue of the magazine.
OLASKY: Yep. Just finished the story, goes to press tomorrow, be available online on Friday.
EICHER: Alright. Marvin, thank you so much.
OLASKY: Thank you, Nick.