How Puerto Rico's Debt Crisis Is Impacting America
Juan Cartagena, President and General Counsel of LatinoJustice, talks about Puerto Rico’s debt crisis, the ways this crisis affects the United States, and what is being done to fix the problem.
"Welcome to "New Jersey Capitol Report." I'm Steve Adubato. And I'm Rafael Pi Roman. Puerto Rico owes more than $70 billion to its creditors, a debt larger than that of any state in the union except California and New York. How did things get so out of hand? And will a rescue package passed by Congress and signed by President Obama in June begin to solve the crisis? Joining us now to answer these and other questions is Juan Cartagena, president and general counsel of LatinoJustice. Juan, welcome to the program. Thank you so much, Rafael. So, first question -- How did things get so out of hand on this island of 3.5 million people? 3.5 million people who are under economic distress right now. A lot of combination of factors, including decisions by the local government to just, you know, pay for balancing a budget with debt -- municipal bond debt. Municipal bond debt was made very attractive to investors. It was triple tax exempt. It was being marketed all over the place. Pensions all over the country, the U.S. proper, have invested in these funds for those purposes. Unfortunately, the ability to try to balance the budget kept getting paid by, you know, debt service. And as a result, over time, over administrations, regardless of political party, this just continued to bubble up to the point now that the issue has gotten out of hand. And austerity measures have already been taking place. Many people lost their jobs. In the government? In the government. Yeah, 30,000 plus. Sales tax -- 11.5% sales tax, largest sales tax anywhere under the American flag. So, they've been trying to cut back on services and expenses. But the debt is just too big to manage. By the way, we should make it clear to folks tuning in to "Capitol Report." We are coming to you from the heart of Newark, New Jersey, at the North Ward Center Community Center. We want to thank the folks at North Ward Center for allowing us to be here. Juan, but in this, in fact, community, where we are in the North Ward of Newark, a very large Puerto Rican population. Definitely. So, Raf and I were just talking before we got on the air. We actually do have these conversations, and we said, "Look at the question of how many people are coming from Puerto Rico to the mainland." Who is coming to Newark? Who is going to Jersey City? And who is left behind? And Florida. And Florida. Thank you. Well, the fact is that we are experiencing a migration out of Puerto Rico that rivals the one that my parents went through in the '50s and the late '40s. I mean, it actually rivals it. That's what's amazing thing...