Others say

Greece isn't the only one

The debt crisis in Puerto Rico reached a critical stage this month when a government agency signaled that it may default on a payment due August 1.

Puerto Rico's debt problem is smaller in scale than the one in Greece--$72 billion, versus $355 billion for Greece--but it is every bit as grave. And given Puerto Rico's smaller population, with only 3.5 million residents, and its dire economic outlook, crafting a solution could be just as hard as it's been for Europe to come to terms with the Greeks.

The reasons for Puerto Rico's inability to pay are multiple and complex, but the basic problem is that Puerto Rico has piled more municipal debt per capita on its residents than any American state. Years of fiscal mismanagement led up to today's impending collapse. Also contributing: the oil-dependent energy sector and a failure to properly develop the tourism industry. The 2006 phase-out of IRS tax incentives for U.S. companies operating in Puerto Rico led to major job losses.

Already there is a move in Congress, half-heartedly endorsed by the administration, to allow Puerto Rico's municipalities and public corporations to seek protection under Chapter 9 bankruptcy. That could help the island avoid the worst consequences of the debt crisis and provide needed debt relief, but it's only a partial remedy for Puerto Rico's larger ills.

Full statehood may be the only enduring solution that gives its people equality and establishes a framework for sustained prosperity after it emerges from crisis.

Editorial on 07/28/2015

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