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November 2nd, 2015 9:37 am
WSJ’s O’Grady: “Puerto Rico Doesn’t Need Bankruptcy”
Posted by Print

We at CFIF have steadfastly opposed the effort by some to upend American bankruptcy laws in order to allow Puerto Rico to declare bankruptcy.  “American taxpayers,” we believe, “should not be saddled with yet another bailout and force Americans saving for retirement to take a financial hit.”  Rather, “Congressional Republicans should guide Puerto Rico into doing the right thing:  trim spending and taxes, stand up to unions and undertake badly-needed governing reforms.”

We’re therefore happy to find in this morning’s Wall Street Journal that weekly “Americas” columnist Mary Anastasia O’Grady agrees:

[T]here is little evidence that Puerto Rico faces a humanitarian crisis any more than the heavily indebted states of California and Illinois.  And as to the deteriorating fiscal environment, it seems to be largely the work of Gov. Alejandro Garcia Padilla, who has been signaling markets that default is a policy goal.  As Carlos Colon de Armas, a professor of finance at the Graduate School of Business at the University of Puerto Rico, told me last week, ‘If, instead of doing everything it can do in order not to pay, the government of Puerto Rico were doing everything it could do in order to pay, things would be very different.'”

The answers to Puerto Rico’s situation, as is the case with fiscally irresponsible states like Illinois and even the federal government itself, lie with the tried-and-true concepts of fiscal responsibility, lower taxes, fewer regulations and respect for established rule of law and contractual expectations.

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