The tiny U.S. territory of Puerto Rico is at least $70 billion in debt and has another $37 billion in unfunded pension obligations.
Puerto Rico’s population, now down to just 3.7 million residents, also confronts a 15% jobless rate–a calamitous mix of debt and dwindling economic opportunity reminiscent of bankrupt Detroit, reports the Washington Post.
“Some people might say, ‘This is their problem.’ But Puerto Rico is part of the United States, you own this problem,” said Puerto Rico’s nonvoting representative in Congress Pedro Pierluisi (D). “It is not like you can ignore it.”
The Obama Administration strongly denies it is considering a taxpayer-funded bailout but says it is closely monitoring the situation and has appointed a team of advisers to assist the troubled territory.
Deepak Lamba-Nieves, a researcher at the San Juan think tank Center for a New Economy, says Puerto Rico’s borrow and spend ways have finally hit the financial wall.
“You cannot pay daily expenses with your credit card, and that’s what Puerto Rico has been doing for years,” says Lamba-Nieves.
U.S. taxpayers are already propping up Puerto Rico through welfare programs with unusually high enrollments. Roughly one out of every three Puerto Ricans receives food stamps, “and residents of the island are twice as likely as those on the mainland to receive Social Security disability benefits,” reports the Post.
Puerto Rico is considered a hotbed for disability fraud. In August, federal authorities busted up a massive Puerto Rico disability scam thought to be among the largest ever. In 2006, 36% of applicants were approved. By December 2010, 69% of Puerto Ricans who applied for disability received it. Over 33% of Puerto Rico residents on disability qualified by claiming they could not work due to “mood disorders.”