Clinton and Rubio Play Dumb to Placate Voting Bloc
Greece
isn’t the only beach tourism destination that is struggling with a debt
crisis. This summer, Puerto Rico announced that it would be unable to
repay some US$72 billion in debt. In recent days, the commonwealth successfully restructured some of this debt at the cost of an additional $60 million in fees paid to various financial advisory firms.
With
two 2016 Presidential hopefuls, former Secretary of State Hilary
Clinton and Senator Marco Rubio, appearing at campaign events in Puerto
Rico in the past few weeks, it’s worth examining one issue which has
contributed to Puerto Rico’s fiscal crisis: the US federal minimum wage.
Neither
Rubio nor Clinton were keen to discuss the harmful impact of a high US
minimum wage during their respective trips. Yet, they took opposing
views on the federal response to Puerto Rico’s debt problems.
Clinton supports giving Chapter 9 bankruptcy protections to the island. Marco Rubio took a different approach.
In an op-ed published in Puerto Rico’s largest daily, El Nuevo Dia, Rubio wrote:
“Like their counterparts in Washington, Puerto Rico’s liberal-leaning
politicians — who today are hosting Hillary Clinton in San Juan — have
taxed and spent too much, and lacked the political courage and
competence to pull Puerto Rico out of economic despair. The result is
today’s toxic brew of economic stagnation, high taxes, and bloated
government, which have led to a serious debt crisis and a mass exodus of
its people.”
Rubio’s
tone struck a chord on the island. Niesa Cruz, a law graduate who
normally votes for the Democrats, found herself siding with Rubio. She
spoke with Polizette as she prepares to take the island’s bar examination later this month.
“He
is right to not endorse bankruptcy protections for Puerto Rico. The
problem is the misadministration of our nation and the people we have
put into office. Bankruptcy might help us for four years, but then we
will be in the same position. Marco Rubio is not sugar-coating the
issue, and I respect that.”
A significant contributing factor to Puerto Rico’s situation is the $7.25 an hour federal minimum wage. Speaking to the PanAm Post, Juan Carlos Hidalgo,
a policy analyst at the Cato Institute, noted: “Puerto Rico’s per
capita GDP is 60 percent of Mississippi’s, the poorest state on the
mainland. As we have seen elsewhere, high minimum-wage levels harm
low-skilled workers and minorities. It keeps the unskilled from
improving their situation. Puerto Rico has one of the lowest
labor-participation rates in the Western Hemisphere.”
Hidalgo
further noted that only 39.8 percent of working-age adults are in the
workforce, while 25 percent of working adults are employed in the public
sector.
“In
Puerto Rico,” Hidalgo explains, “the minimum wage is 75 percent of
average GDP per capita. That is extremely high, higher than France or
eastern Germany, where average GDP per capita hovers around 60 percent.”
The minimum wage in Puerto Rico, meanwhile, is also a larger share of the median wage than that of any US state.
These
factors have made it difficult for Puerto Rico to balance its budget.
They have also contributed to the fact that many Puerto Ricans are now
looking for jobs elsewhere.
Hidalgo
states that, “in the last decade, the island’s diminishing economic
prospects have caused 10 percent of the population to leave for
elsewhere, and much of that migration has been to Florida, an important
swing-state in recent presidential elections.”
As
a result of this migration, Orlando, Florida, and its surrounding
communities now have a larger Puerto Rican population than San Juan or
New York.
Although
both Clinton and Rubio have chosen to ignore the federal minimum wage’s
clear contribution to Puerto Rico’s economic troubles, each seems to
realize that the road to winning Florida in the general election may
start in San Juan.
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