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Puerto Rico Imposes Partial Government Shutdown Amid Financial Crisis

StoryMay 02, 2006
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In Puerto Rico, the government ran out of money on Monday and was forced to impose a partial public sector-shutdown. The island’s 1,600 state schools have been shut and nearly 100,000 government workers have been temporarily left without jobs. We go to Puerto Rico to speak with political commentator and analyst, Luis Davila Colon. [includes rush transcript]

We turn to the latest news out of Puerto Rico where the government ran out of money on Monday and was forced to impose a partial public sector-shutdown–the first of its kind in the history of the US commonwealth.

Puerto Rico’s 1,600 state schools have been shut, leaving half a million students and 40,000 teachers with no classes. Nearly 100,000 government workers have been temporarily left without jobs. The government is Puerto Rico’s largest employer, with some 200,000 workers.

Puerto Rico has a $740 million budget shortfall because the Legislature and Governor Anibal Acevedo-Vila have been unable to agree on a spending plan since 2004. Differing sales tax proposals have been presented that would allow the government to secure a line of credit to pay salaries through June 30, the end of the fiscal year. The island currently has no sales tax.

Hundreds of demonstrators took to the streets in San Juan’s financial district to protest the partial shutdown and the sales taxes proposed to close the budget gap. Protesters shattered the windows of two local banks and a shipping company’s office and painted graffiti calling for a "revolution" against taxes.

  • Luis Davila Colon, a leading political commentator and analyst in Puerto Rico. His radio show "En la Mirilla" (In the cross hairs) is the island’s number 1 radio show. He has written more than a dozen books about the Puerto Rico’s political status and he writes a weekly column in the island’s second largest daily news paper "El Vocero."

This is a rush transcript. Copy may not be in its final form.

JUAN GONZALEZ: We go now to Puerto Rico to speak with political commentator and analyst, Luis Davila Colon. He has written more than a dozen books about the island’s political status, and he writes a weekly column in the second largest daily, El Vocero. His radio show, En la Mirilla, is the number one radio show in Puerto Rico. He joins us on the line from Fajardo. Welcome to Democracy Now!

LUIS DAVILA COLON: Good morning, Amy and Juan.

JUAN GONZALEZ: So, Luis, what’s the latest on the shutdown, and could you give us a quick sense of what is the reason why this stalemate has developed in the government?

LUIS DAVILA COLON: Well, the reason is basically politics. But the real reason is we have spent more — the government has spent more than what it receives in taxes, and they have been going on a spending spree, basically in a hefty payroll which sustains almost 300,000 employees, and that’s the essence of the question. Both major parties control — one controls the House of Representatives, the other controls the executive, and they’re politicking about it. Really, the whole haggling is about whether sales tax should be 5.5% or 7%. So, there’s a minimum differential, and they’re just looking for every excuse possible not to come to an agreement or to a consensus, and that’s the whole problem.

AMY GOODMAN: So there’s a conflict between the parties for statehood, for independence, for commonwealth?

LUIS DAVILA COLON: This has nothing to do with statehood or independence or commonwealth. It has to do with incompetence and basically politicking and the deterioration of the whole political process. I mean, commonwealth has gone into bankruptcy, as such, but people in Puerto Rico don’t want to know that, they don’t want to acknowledge it. They are in denial. And that’s the whole problem about it. The model, as it’s known that it has worked for 50 years, is no longer viable.

JUAN GONZALEZ: And so, is this a sort of another version of the U.S. government shutdown that occurred several years ago at the pressing of the Republican revolution at that time, the new Republicans in Congress? Or is there one political party that is seen as more responsible for this, or is it — the voters have decided this is plague on both Houses?

LUIS DAVILA COLON: Well, both parties are responsible, but the Popular Democrats have been in governance for the last six years, so the degree — the deficits started in 2003, and that’s where the whole problem started. And they started solving deficits with more and more lending, and that’s part of the problem. You can’t solve your deficit unless you cut your expenses, and politicians being politicians, they don’t want to fire people, they don’t want to cut expenses, and that’s the essence. And the ruling party, of course, has been in power for six years, and this is a problem that has been compounded every year since they have been in power.

AMY GOODMAN: So what’s going to happen now, and particularly to the workers who are out of jobs?

LUIS DAVILA COLON: Well, eventually, there will be a settlement. There’s no way the crisis can continue forever. How long? The longer it stays, the harder it will be a hit to the economy. And we’re probably going into an economic depression after this, and while the economy of the States is booming and it’s growing, here in Puerto Rico we’ll probably go downwards for the next two years. If the government’s bank loses its credit, it’s going to be awfully tough to get more funding, cheap funding, and that’s going to make it very, very difficult. So we’re really in dire straits. We are going into dire straits no matter what happens. The crisis will end. Definitely it will end. How long? It’s up to the politicians.

AMY GOODMAN: Well, Luis Davila Colon, we want to thank you very much for being with us, leading political commentator and analyst in Puerto Rico. His radio show translated in English is called In the Crosshairs.

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