Will Puerto Rico’s governor part ways with Grover Norquist?
Last month, Puerto Rico Governor Luis Fortuño delivered a speech at the libertarian Reason Foundation on “how Puerto Rico avoided becoming “America’s Greece.” In his talk, the governor espoused the anti-government ethos of Grover Norquist, whom he cited as a friend in the first minute of his remarks. Fortuño has been a staunch advocate of “right-sizing” government: Soon after taking office, he laid off a substantial number of the commonwealth’s employees and reduced the island’s personal, corporate and property taxes.
Despite these cuts, Puerto Rico’s budget is still unbalanced. Fortuño has been relying on bond issuance through COFINA, the government’s off-balance-sheet, special-purpose vehicle, to make up for annual shortfalls to his budget.
Now, Republicans in Congress are working to blow another hole in Fortuño’s budget. As part of their effort to stave off the impending, automatic cuts to the defense budget, House Republicans passed legislation that kills a special provision of the Affordable Care Act increasing Medicaid grants to Puerto Rico. Faced with the threat of losing billions of dollars in federal payments each year, Fortuño now seems to think that lower federal spending is not that appealing. He pushed back on these cuts in an op-ed on CNN.com:
Historically, Puerto Rico’s Medicaid program has been chronically underfunded by the federal government. In 2010, Puerto Rico and the other territories secured corrective legislation to provide $6.3 billion in Medicaid funding over 10 years, which includes $5.4 billion for Puerto Rico.
Now, House Republicans have assembled a package of budget cuts to replace the automatic, across-the-board sequester. The proposal does not cut the Medicaid expansion funds for the 50 states, but Puerto Rico’s $5.4 billion Medicaid provision has been singled out for elimination.
It’s important to note that residents of Puerto Rico are already treated differently in the federal government’s eyes, at least when it comes to the tax code. Its residents do not pay federal income tax on money earned within Puerto Rico, making federal tax collections there much smaller than in any U.S. state. The most recent data available showed federal per capita collections of $888; West Virginia, the state with the second-lowest federal per capita collections, took in $3,599. According to the AARP, Puerto Rico has a higher percentage of residents receiving Social Security than the national average, and only half of those recipients are retirees.
When the food stamp program was modified in 1977 to cover Puerto Rico, 56 percent of the island’s residents signed up to receive those benefits. Although Puerto Rico represents barely more than 1 percent of the national population, Puerto Ricans accounts for about 8 percent of federal dollars spent through the food stamp program. After Congress later modified the program, the percentage of Puerto Rico’s population on food stamps fell, to about 25 percent today, but that’s still well over the national usage rate of 15 percent.
From these figures, it’s clear that Puerto Rico is a very poor place and needs support from the mainland. Given the fragility of the island’s economy, its massive debt load and its need for support from the rest of the nation, Fortuño might do well to break with Grover Norquist and his anti-government message. It’s the taxes he rails against that are helping his people.