<p class="MsoNormal">An announcement Monday confirmed that the US will not be bailing out Puerto Rico. The island country faces a $72 billion debt due Wednesday, July 1st.  ;Puerto Rican Governor Alejandro Garcia Padilla admits to The New York Times: &ldquo;The debt is not payable.&rdquo; ;</p>
<p class="MsoNormal">To put things into perspective, $72 billion is nearly 100% of the island nation&rsquo;s annual economic output. &ldquo;This is not politics, this is math,&rdquo; says Padilla. The Governor hopes to restructure the debt under the US bankruptcy code as it faces running out of cash. ;</p>
<p class="MsoNormal">According to Padilla, the goal would be to negotiate with bondholders, hopefully postponing the payments long enough for Puerto Rico to create jobs and accelerate its economy. ;</p>
<p class="MsoNormal">But the situation is complicated. Default isn&rsquo;t an option because according to US law, states cannot declare bankruptcy (only cities). Puerto Rico is classified as &ldquo;commonwealth&#8221; &#8211; neither state nor city &#8211; making it unclear how this problem is to be solved. ;</p>
<p class="MsoNormal">According to Josh Earnest, White House press secretary, the administration is hoping Congress will approve a bankruptcy &ldquo;mechanism&rdquo; under Chapter 9 that would allow Puerto Rico&rsquo;s public corporations to declare bankruptcy. He also admitted: &ldquo;There&rsquo;s no one in the administration that&rsquo;s contemplating a federal bailout of Puerto Rico.&rdquo; ;</p>
<p class="MsoNormal">A recent analysis shows that this US quasi-colony has seen virtually zero economic growth since the closure of Section 936 in 1996 pushed most US corporations off the island. ;</p>
<p class="MsoNormal">On top of that, the North American Free Trade Agreement eliminated the island&rsquo;s advantage as a Latin American country with free, easy access to US markets. Add the combination of rising oil prices, removal of tax preferences from manufacturers, a housing price bust, and the 2009 mainland recession in the US and you get a 14% unemployment rate with over 30,000 citizens fleeing the island every year. ;</p>
<p class="MsoNormal">And it&rsquo;s not just Puerto Rico suffering. The municipal bonds making up the debt went into nearly 2/3 of all the pensions and retirement plans in the US. These plans are at risk of losing billions. ;</p>
<p class="MsoNormal">Throughout this string of bad luck, Puerto Rico&rsquo;s shocking lack of responsibility led to decades of overspending and borrowing. If Congress were to pass a law allowing Puerto Rico to declare bankruptcy &ndash; similar to what happened with Detroit in 2013 &ndash; the country could start to restructure the debt. The stakes are simply too high for us to turn our backs now.  ; ;</p>
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