The weird groupthink worsening Puerto Rico's economic crisis

Puerto Rico literally has no good options, but that's only because policymakers are unwilling to think outside the conventional wisdom

A man plays his guitar while he begs for money in front of a closed down business in Old San Juan, Puerto Rico
(Image credit: AP Photo/Ricardo Arduengo)

Puerto Rico, as you may have heard, is in financial shambles. It's been battling an economic downturn, it labors under a Rube Goldberg-ian system of fiscal relationships to the U.S. mainland, and it faces over $70 billion in looming debt repayments — a staggering 89 percent of its personal income. (The average ratio for a U.S. state is 3.4 percent.) The territory may face "a humanitarian crisis as early as this winter," an anonymous White House source told The New York Times.

The Obama administration has worked up a possible deal to avert the crisis. But it would effectively add a new chapter to U.S. bankruptcy law, as well as provide Puerto Rico some fiscal help. So the austerity-obsessed denizens of the House of Representatives would have to pass it, which seems unlikely.

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Jeff Spross

Jeff Spross was the economics and business correspondent at TheWeek.com. He was previously a reporter at ThinkProgress.