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Editor’s Note: Andy Uhler went to Puerto Rico to find out how the territory’s $72 billion debt crisis is affecting its residents. This is the first story of a series.
Puerto Rico’s financial crisis comes from borrowing far too much while bringing in far too little, in the form of tax revenue, to pay the debt. The island, a U.S. territory that has found little assistance from its governing body, watched its economy tank after manufacturers pulled out because of a repeal of tax incentives. The ensuing debt led to Puerto Ricans fleeing the island for the mainland — and jobs. It also led to problems like escalating health care costs, and hedge fund managers asking the government to close schools.
So how did Puerto Rico end up with this massive debt? Here’s a brief history lesson:
Puerto Ricans living on the island today are forced to watch their commonwealth’s government, which they don’t trust, spend their tax dollars. The host of ensuing problems have residents feeling hopeless and frustrated, including students who recently protested the government’s allocation of funds away from their education to pay for unrelated bond payments. Hundreds gathered at the University of Puerto Rico’s Río Piedras campus last month to express their concerns:
“We believe that the Treasury Department should give the University of Puerto Rico the $80 million right now, at this moment that they owe us,” student Guillermo Guasp said.
To learn more about the government’s strained relationship with residents, we also talked to a legislator and an investor who co-wrote a restructuring plan Puerto Rican authorities took to the U.S. Congress. Click on the audio player above to hear more.
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