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The Puerto Rico Status Act: What it Could Mean for the U.S. Territory’s Economy

Via Ana Toledo

Puerto Rico is a territory of the United States of America, but what makes this title vary from that of an official U.S. state? Under the territorial clause of the U.S. Constitution (Article IV, Section 3), Congress is given power over U.S. territories to establish “rules and regulations.” Puerto Rico, as a territory, has limited representation in U.S. politics, however, it’s given elements of self-rule. Unfortunately, Puerto Rico faces various economic and social crises due to several factors such as natural disasters, government management, and COVID-19. Now, the citizens of Puerto Rico may face an important choice. Puerto Ricans might vote on whether the territory should become independent (or independent in free association within the U.S.), receive statehood from the U.S., or maintain its status due to proposed legislation known as the Puerto Rico Status Act. 

The status of Puerto Rico is a long debated topic since the U.S. gained control of the territory after the Spanish-American War in 1898. Puerto Rico became an official U.S. territory in 1917 and the residents were granted U.S. citizenship. In 1952, the territory’s constitution was approved and Puerto Ricans were granted the right to elect their governors. Despite this, residents are not permitted to vote in presidential or other certain elections, othering them from important U.S. procedures. This rule is only overturned if the individual resides in a U.S. state.

 In the post-WWII period, Puerto Rico’s economy boomed as a result of the economic development operation—Operation Bootstrap. Unfortunately, economic prosperity was disturbed as the country “continues to be ravaged by a sustained regression.” Puerto Rico’s debt is considered the “biggest government bankruptcy” in U.S. history as it currently faces $33 billion in total debt. Additionally, Puerto Rico’s lack of economic sovereignty means the U.S. dollar is its currency, U.S. regulators oversee its businesses, and residents pay most federal taxes. Puerto Rican residents, however, do not pay federal income taxes which incentivizes business but residents receive fewer federal benefits. It was not until November 2021 that Puerto Rico’s exclusion from the SSI program was ruled unconstitutional

As the debate continues on what the status of Puerto Rico should be, many residents have varying opinions on what the best option is. One resident believes “If Puerto Rico became independent, it would be a horrible situation.” On the other hand, Raúl Santiago Bartolomei—an assistant professor at the University of Puerto Rico—is pro-independence as some people believe the island can survive and sustain itself, while others do not. Still, the economic situation is a big concern involving status and in general for Puerto Ricans. Puerto Rican business owner Rosa Andujar reports “running a business requires a lot of sacrifices because the economy is not very good.” 

The status of Puerto Rico will decide how the economic elements of the territory will be managed. If residents choose independence, the country would have economic autonomy; if they chose statehood, they would receive more access to U.S. public programs, gain political representation, and receive the rights of any U.S. citizen but lose any chance of independence. In November 2020, over 52% of voters supported Puerto Rico’s statehood. However, the Puerto Rican Independence Party received 13.7% of the vote which is a significant increase from 2% in 2017. Considering economic turmoil amongst social issues on the island, the Status Act is not the only or most significant element in providing aid to the territory immediately. 

Other actions could be taken to relieve Puerto Rico’s economic situation. If a similar program to the Affordable Care Act (ACA)—which provided the island with billions of dollars in additional aid—were restored, this could potentially help the economic crisis. Furthermore, some individuals propose changing the territory-specific policies that disadvantage Puerto Rico, including the 1920 Jones Act which requires U.S. vessels to transport goods traveling to Puerto Rico from the mainland which drives up prices on the island. A 2019 study found that removing this act could “create more than thirteen thousand jobs [PDF] and inject $1.5 billion into the economy.” Other factors such as better disaster relief after events like Hurricane Maria are essential for economic prosperity on the Island as well. 

Puerto Rico’s status is not just a significant political issue but it is a social issue as well. The lives of the residents on the island are hindered by the economic crisis the territory faces due to poor management. While they decide what might be best for the island’s future, I can only hope the U.S. proves to be a better resource for the territory while it remains a part of the U.S. 

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