Can Puerto Rico's debt actually be wiped out?

In theory, yes. Kind of.

The American and Puerto Rican flags hang on a church damaged by Hurricane Maria.
(Image credit: REUTERS/Carlos Garcia Rawlins)

Even before it was decimated by Hurricane Maria, Puerto Rico was staggering under a decade-long recession and debt crisis. The United States territory owes something around $72 billion, which it cannot repay: Massive tax hikes and spending cuts to fund the debt have already wrecked the island's economy — a doom loop that make its debt burden worse, not better.

On Tuesday, in standard fashion, President Trump offered the most simple of solutions: Just cancel Puerto Rico's debt. "They owe a lot of money to your friends on Wall Street, and we're going to have to wipe that out," Trump told Fox News correspondent Geraldo Rivera. "You can say goodbye to that. I don't know if it's Goldman Sachs, but whoever it is, you can wave goodbye to that."

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Jeff Spross

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