PUERTO RICO - Their Economic Crisis

"Everything you should know about Puerto Rico’s debt crisis" PBS NewsHour 7/11/2015

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SUMMARY:  Puerto Rico’s financial crisis has been well-documented over the last few weeks, but a new report in the Washington Post sheds light on how Congress may have played a role in the fiscal troubles being felt in the U.S. commonwealth.  Michael Fletcher of The Washington Post joins Hari Sreenivasan from Baltimore with the latest.

HARI SREENIVASAN, PBS NEWSHOUR WEEKEND ANCHOR:  Now to financial trouble in Puerto Rico, where leaders want to declare bankruptcy, but cannot, unless the U.S. Congress changes the law.

Puerto Rico announced last month it simply cannot pay $72 billion in debt. Congressional Democrats want to allow limited bankruptcy relief, but Republicans say it’s not enough and that leaders need to address the territory’s underlying budget issues.

Ironically, a new report in The Washington Post says Congress has actually played a contributing role in the fiscal trouble of the U.S. commonwealth.

Joining us now with the details, from Baltimore, is Michael Fletcher, who has been covering the story.

You were just down there a few weeks ago.  So, what’s the U.S. responsibility in this crises?

MICHAEL FLETCHER, THE WASHINGTON POST:  Well, it’s interesting.  The political economy has been skewed for years by U.S. taxpayers essentially.  In many ways, early on decades ago, that led to a kind of a development of the island as kind of this manufacturing hub, which is a very generous tax break.

The first ones to clothing and shoe manufactures.  Then in 1970s, it kind of shifted to more capital-intensive businesses like pharmaceutical manufacturing.  And that made Puerto Rico into one of the top prescription drug manufacturers in the world.  At one point, something like 13 of the top 20 prescription drugs are actually made in Puerto Rico.

And in many ways, that development took away from other things the island might have done naturally, like develop more, its tourism sector or what have you.

It was fine as long as the tax break lasted, but then in 1996, Congress did away, it began to phase out that tax break, and ti was fully phase out since 2006.  And since then, Puerto Rico’s been in recession.

HARI SREENIVASAN:  And they can’t declare bankruptcy like Detroit can.

MICHAEL FLETCHER:  They can’t.  They’re treated just like states are under bankruptcy law.

[Un]like municipalities and hospital districts, things like that.  They can — they can declare bankruptcy which gives them breathing room to reorganize their debts, and Puerto Rico cannot do that.

WALL STREET - Remembering the Crash of 2008

"Remembering the Day When the American Financial System Began to Crumble" (Part-1) PBS Newshour 9/16/2013

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SUMMARY:  In September 2008, the global financial markets were melting down and banking giants teetered on the brink.  Judy Woodruff recounts how the U.S. government responded in shoring up the financial sector, and, five years later, how some Americans remain angry and resentful of Wall Street.

"Henry Paulson Wishes He Had Today's Regulatory Tools During His Treasury Tenure" (Part-2) PBS Newshour 9/16/2013

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SUMMARY:  On the fifth anniversary of the meltdown that crippled the nation's economy, Judy Woodruff talks with the former treasury secretary who was on the front lines of the financial crisis.  Henry Paulson reflects on progress by the financial industry, what tools he wishes he had before the collapse and the fight over the debt ceiling.

ECONOMY - Double-Dip Recession in Housing?

"Foreclosures, Unemployment, Confidence Continue to Drag Down Housing Market"
PBS Newshour 5/31/2011

ECONOMY - More Americans Join Ranks of the Poor

"US adds 4.8 million more to ranks of the poor as poverty rate jumps" by Ron Scherer, Christian Science Monitor 9/16/2010

The deepest recession in modern times has sharply increased the ranks of the poor during the past year, with 1 in 7 people in America officially counted as living in poverty.

The news from a US Census Bureau report released Thursday underscores how deeply the Great Recession has affected the nation's standard of living. The key findings of report, which compared income, poverty rate, and health-care insurance coverage in 2009 with 2008 numbers, include the following.

1. Some 43.6 million people were living in poverty last year – the highest number since 1959, five years before President Lyndon Johnson declared his War on Poverty. The poverty rate was 14.3 percent, up from 13.2 percent in 2008 and the highest level since 1994. Hispanic households took the hardest hit: Their poverty rate rose 2.1 percent from 2008's level, compared with a 1.1 percent jump in the rate for blacks and whites. (The US government considers an annual income of $21,756 to be the poverty line for a family of four.)


2. A record number of Americans, 50.7 million, were not covered by health-care insurance in 2009. At the same time the survey was being taken, Congress passed President Obama’s contentious health-care reform law.


3. The median household income was $49,800 last year, about the same as in 2008. This "hold steady" figure for income may reflect the fact that many people were helped by the government safety net, such as unemployment insurance, which Congress repeatedly extended and which kept some 3.3 million people out of poverty, according to the Census data.

The data, contained in a statistic-thick 87-page report, are likely to have widespread implications for policymakers, say economists and analysts. Here is how some of them interpret the numbers.

• The poverty rate is likely to rise further, predicts Isabel Sawhill, a senior fellow at the Brookings Institution in Washington, in a new analysis. The rate will approach 16 percent and stay high for most of this decade, she says. The recession will add some 10 million people, including 6 million children, to the poverty rolls.


Robert Greenstein, executive director of the Center on Budget and Policy Priorities in Washington, writes in an analysis that in the past three recessions the poverty rate has not fallen until a year after the unemployment rate began to fall.


• Some advocates for the poor hope the new data spur Congress to ameliorate the situation for the needy. One way would be to renew the Emergency Contingency Fund (ECF), part of the Temporary Assistance for Needy Families, which expires at the end of this month. The fund, targeted to low-income individuals, pays employers to take on workers.


“It helps pay for the cost of bringing a new person on,” says Rachel Gragg, federal policy director at the National Skills Coalition, which is lobbying Congress to extend the program for another year at a cost of $2.5 billion. “Most states say they will have to stop their existing programs if it’s not extended,” she says.

Another program designed to help low-income people, the Earned Income Tax Credit (or Making Work Pay program), is set to expire, too, on Dec. 31. “With this report, extending that could be a discussion item,” says economist Richard DeKaser of Woodley Park Research in Washington. “With poverty at its highest level, you could argue the least fortunate should be shielded from a tax burden.”


• Congress may want to delve deeper into safety net programs such as TANF and Medicaid, suggests Ron Haskins, a fellow at the Brookings Institution. Lawmakers are likely to find that Medicaid has “expanded like mad” because fewer Americans now have private health-care coverage. “It’s functioning like a good safety net program,” he says, adding that the same can be said for food stamps. But, he says, Congress might want to examine TANF, which replaced welfare, to examine why the program hasn't grown, even with higher poverty. “No one knows why,” he says.



• After the November election, Congress may dissect the data to determine how to reduce the budget deficit, says Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pa. “The National Commission on Fiscal Responsibility and Reform in December may want to tie how to pay for fiscal austerity to the distribution of income and wealth,” he says. “Where is the burden going to fall?”

The problem is when "fiscal austerity" = MORE joining the ranks of the poor. Which, if history is any guide, is what will happen.

"Record Poverty Level: 'Long Slog Ahead' for Poor Americans?"
PBS Newshour 9/16/2010