Nothing did, actually. I enjoyed Puerto Rico and I enjoyed what I was there for, which was to give a speech regarding the Year 2000 crisis that was supposed to happen. You remember that, back when we thought that computer software all over the world was going to go haywire in odd ways because so much of that software was written with two-digit year date fields.
I knew that was going to be a problem because I had literally written hundreds of thousands of lines of that programming code with the bug myself, and knew that, on a small scale, something was going to work out not as well as expected, and certainly not normally. Now, the code that I wrote was for marginally vital things like production-floor control for a mug-casting company. The world was not going to end, although the mug-maker no longer exists.
But there were some sensitive areas like, say, the power grid and the military and a lot of HVAC controllers that could do some wacky things if they suddenly didn't operate predictably. So groups around the world hired people like me who, if not experts in the field, at least could give a good scary speech on the "Y2K Crisis." That was why I was in Puerto Rico.
So now today, the island territory, whose citizens are Americans, is in a financial disaster. High on government employees, low on private economy, Puerto Rico defaulted this week on hundreds of millions in debt in one payment due alone. Its governor, Alejandro Garcia Padilla, has been pleading with Congress to allow it the flexibility to restructure its debt.
Others are insisting that the territory should massively cut back on its government payroll. Garcia, however, said that would "hurt
families" and would just ripple across the private sector as, he feels, it has in
the past. He said he would only cut the public payroll if ordered by a
court. "It's a very complicated situation", he said. "We are navigating waters that no one has ever navigated. There's no map."
Well, yes, in fact there is, and those waters are quite familiar. They're familiar in Detroit, a bankrupt city trying to figure things out. They're familiar in other jurisdictions like Chicago, Baltimore or even the state of Illinois, which is choked by the retirement obligations of its public-sector union contracts. They're familiar pretty much everywhere Democrats run the place.
Beholden to the unions for whom their employees work, Democrat mayors and councils cut sweetheart deals with the union bosses of the public-sector unions, who have just contributed to their election. Leaving the taxpaying voter out of the process, it is no wonder that obligations and debts spiral far past the capacity of the tax base to pay even the interest on them. People vote with their feet, and eventually businesses leave to greener pastures.
Puerto Rico is not that different. Generations of Democrats have over-promised, under-delivered and grossly over-borrowed. It's what Democrats do. Then when things collapse, they try to blame the unwillingness of others to bail them out of their self-caused crises on things like "racism." Anything other than their own mismanagement.
Puerto Rico can only be an opportunity for a lesson. Congress was unable to reach agreement on legislation to allow the territory to restructure its debt, before going on its current break. When it returns for the next session, Paul Ryan and the leadership need to come up with a truly creative solution to address this.
By "creative", I mean that it needs to make sense and discourage a repeat of the profligacy that got Puerto Rico there in the first place. "No, we are not going to bail you out. You will pay all your debts, but you will sharply cut the practices by which you are incurring them. You will limit public services to what your tax revenues allow you to provide. If you can't generate tax revenues, then you can't afford a government as big as you want it. We will help you restructure the debt but, while it may be a grant of extra years to pay, it will be 100 cents on the dollar."
Most important, to me, is limiting public services to what tax revenues can provide. In other words, part of the price of restructuring is a balanced budget mandate. It will hurt, because they obviously grossly overspend revenues now. But government borrowing is alcoholism. You have to stop drinking, in this case from borrowing beyond the taxpayers' wallets, for good. Services will be cut, but it is up to the island to prioritize what is needed and halt the rest until the economy can generate the revenues to afford it.
Garcia thinks there is "no map." But there certainly is. It is the map that every household has; it is called a "budget." We are obliged to spend only what we take in, lest we bankrupt ourselves. Puerto Rico for years has acted as if there were always going to be someone to bail them out. Instead of that, they should have been looking many years ago to find a path to a balanced budget, knowing that sustainability of that balance would always be fragile until the island's economy were more stable.
Borrow-and-spend is not the path for any government. Now that Puerto Rico has been confronted with the fruits of its mismanagement, it is time for Congress to put a price on the way forward that specifically curtails its ability to let this problem recur.
And not just in Puerto Rico.
Copyright 2016 by Robert Sutton
Like what you read here? There's a new post from Bob at www.uberthoughtsUSA.com at 10am Eastern time, every weekday, giving new meaning to "prolific essayist." Sponsorship and interview inquiries cheerfully welcomed at bsutton@alum.mit.edu or on Twitter at @rmosutton.
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