Federal funds sustains dependency instead of promoting Puerto Rican strength

Puerto Rico's diminished autonomy and self-government create an increasingly dysfunctional intergovernmental relationship between the Island and the United States. For Puerto Rico and the United States Government, a change in intergovernmental relations poses a solution where everyone benefits. Increased autonomy and self-government could provide a new phase of institutional, fiscal, and political stability and economic growth to the Island while reducing dependency, poverty, and migration.

The limited institutional mechanisms available to Puerto Rico for strengthening its government capabilities are through the federal courts, which, so far, have deferred to the U.S. Congress on most issues. Puerto Rico is highly vulnerable to Federal decisions over which it has little agency. The most glaring example of this situation was the elimination of crucial tax benefits enjoyed by U.S corporations benefitting from Sect. 936 of the Internal Revenue Code. The rejection of this most effective tool of economic growth, without any contingency plan, is enormously relevant in creating the current fiscal crisis (Caraballo-Cueto & Lara, 2018). So far, there is a lack of a coherent policy from the U.S. government regarding the avenues of economic growth within the current territorial model.

We argued that the U.S. government opted to offer more federal funds instead of improving the financial model, leading to increased dependency. This unofficial policy debilitates Puerto Rico's self-government and positions the Island on the verge of becoming a mere federal funds administrator. The continuous effort of President Trump to curtail the adequate flow of federal funds to Puerto Rico after Hurricane Maria is just an extreme example of the vulnerability of Puerto Rico under the current territorial model. In this sense, the failure of the Federal Government to respond to environmental challenges like the one created by Hurricane Maria is a symptom of a more significant problem. The death of more than three thousand Puerto Ricans during that crisis demonstrated an acute lack of preparedness and the limited political capital possessed by Puerto Rico to force effective Federal action.

Our last argument was that a majority of Puerto Ricans have expressed dissatisfaction with the present political status. In contrast, the U.S Congress has not been able to produce legislation with options for political development. The consideration of this problem finds itself amid a contentious political battle between the two main U.S. political parties, and Puerto Rico is in the middle of it without the right to vote. Agranoff's recommendations allowing for adequate levels of self-government and autonomy are relevant here. A positive step would be for the U.S. Government to define its long-term national interests on this matter. Offshore territories of the United States have taken different routes of political development. Some took the independence route, like the Philippines. Others achieved statehood (Hawaii and Alaska, for example) or free association (The Mariana Islands, recently). Unfortunately, the intractable case of Puerto Rico still lacks the benefit of a United States national policy that would accelerate the political status process (Bloomfield, 1985).

In the short term, creating the structural mechanisms to establish an effective dialogue between both governments could improve relations and facilitate finding fiscal solutions beyond federal funds.