Puerto Rico's statehood vote is Sunday, as country seeks relief from economic crisis.

Cash-Strapped Puerto Rico Holds Vote to Demand Statehood

Cash-Strapped Puerto Rico Holds Vote to Demand Statehood

The Slatest
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June 10 2017 9:12 AM

Cash-Strapped Puerto Rico Holds Vote to Demand Statehood

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A school in San Juan, Puerto Rico, is shuttered amid the island’s dire financial crisis that has left it $70 billion in debt and forced to seek bankruptcy protection. Could a vote for statehood reverse its fortunes?

AFP/Getty Images

Huge numbers of Puerto Ricans will decide Sunday on whether their economically distressed territory should appeal for U.S. statehood, seek independence, or remain as a U.S. territory. The vote, which is the second such referendum in five years, was precipitated by Puerto Rico’s declaration of bankruptcy in May and a widespread exodus from the island. But even if it passes on the island, the prospect of statehood faces poor odds in the U.S. Congress.

Seventy-two percent of the island’s 3.4 million people are expected to vote in the plebiscite, and polls show a vote for statehood seems the most likely outcome, with few leaders campaigning for sovereignty.

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After 10 years of recession, Puerto Rico’s unemployment rate is at 11.5 percent, and the territory owes $74 billion in debt. It also has almost $50 million in pension obligations that it cannot repay. Historically, Puerto Rico has relied heavily on traders purchasing bonds because of their tax-exempt status, but the downgrading of its credit rating to junk-bond status in February 2014 has diminished that revenue source.   

Although Puerto Ricans fully pay into the U.S. Medicare, Medicaid, and Social Security systems, they cannot collect the same benefits as citizens in the 50 states, which shifts more of their health care costs onto the territory’s government.

Because residents of the island are granted U.S. passports, the easiest way of escaping from the economic crisis is to migrate to the mainland. And many already have: Since the recession started 10 years ago, 400,000 people have left to work in the United States.

Because so many families with children have left, the school-age population has shrunk dramatically, leading to a vicious cycle in which schools are cut in order to funnel money into other areas of the budget. Currently 184 schools were ordered to close as part of the bankruptcy negotiations. Students at the University of Puerto Rico have shut down the campus for over two months protesting a budget cut of nearly $500 million.

Puerto Rico took a similar plebiscite vote on its territorial status in 2012. However, the result of that vote was ambiguous because of the two-step process that Puerto Rico employed. Although 54 percent of the voters did not want the island to remain a territory, and 61 percent of the voters who filled in the second step voted for statehood, a quarter of those who voted did not complete the second step. This meant that overall only 44 percent of the population cast votes for statehood.

Even if a majority chooses statehood this time around, that outcome merely kicks off a formal process to pursue the status and instructs the territory to send a delegation to the U.S. Congress to demand seats to represent the island as a state. For Puerto Rico to be admitted, the Republican-held House and Senate would need to pass a joint resolution on a simple majority vote, and President Trump would then need sign the resolution. Although the Republican Party platform pledges support for Puerto Rican statehood, admitting the island as the 51st state would likely add two Democratic senators and seven Democratic representatives to the chambers—not exactly an incentive for Republicans to accede to Puerto Ricans’ wishes.