[Congressional Record Volume 144, Number 54 (Tuesday, May 5, 1998)]
[House]
[Pages H2749-H2750]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  PUERTO RICO IS FISCALLY CONSERVATIVE

  The SPEAKER pro tempore (Mrs. Emerson). Under the Speaker's announced 
policy of January 21, 1997, the gentleman from Puerto Rico (Mr. Romero-
Barcelo) is recognized during morning hour debates for 5 minutes.
  Mr. ROMERO-BARCELO. Madam Speaker, when the United States was 
founded, many States severed the previously existing relationship 
between property ownership and voting rights by granting universal 
sufferage to white men. Since then, of course, the right to vote has 
become truly universal, extended to all men and women without regard to 
race, ethnic origin, or economic considerations.
  The point I wish to make today, however, is that early on in the 
Nation's history, it was established that the right to vote, that is, 
the right to participate in this democracy, exists independent of an 
individual's economic well-being. Unfortunately, it is a concept that 
the opponents of self-determination for the 3,800,000 American citizens 
in Puerto Rico just do not seem to get. They would deny the U.S. 
citizens in Puerto Rico the opportunity to vote on status just because 
they allege that poverty on the island would affect the Nation's 
pocketbook.
  Opponents of Puerto Rican self-determination incorrectly state that a 
vote for self-determination is a vote for Puerto Rican statehood. And 
contrary to reality, they also allege the Island's poor will cost the 
U.S. Treasury many millions of dollars more a year if Puerto Rico 
becomes a State. Quite the contrary is true.
  Puerto Rico is now a welfare Commonwealth. We receive Federal grants 
but do not pay Federal income taxes. If Puerto Rico were a State today, 
our tax contribution to the U.S. Treasury would net a positive cash 
flow of $1.5 billion over and above the additional Federal expenditures 
in grants and direct payments, which Puerto Rico would receive as a 
State in addition to what it is now receiving.
  In their rush to paint the worst case scenario, opponents of Puerto 
Rican self-determination overlook the stable investment environment 
which statehood would bring about, overlook the growth potential of 
Puerto Rico's many assets and the fiscally conservative underpinnings 
of the Puerto Rican economy.
  It is a fact that the present territorial relationship between Puerto 
Rico and the rest of the Nation has its economic downside. Tax credit 
to U.S. corporations designed to stimulate economic development on the 
Island have actually drained the territory of investment capital. A 
study by Hex, Incorporated, an international economic policy and 
development consulting firm based in Cambridge, Massachusetts, reveals 
that despite an investment of $12.3 billion in Puerto Rico between 1981 
and 1994, the Island suffered a net loss of $2.2 billion in investment 
capital. The repatriation of profits by the U.S. companies which 
benefit from tax credits accounts for the most of the loss.
  Alexander Odishelidze, president of Employee Benefits Associates, 
Incorporated, which is a consulting firm, is correct when he says, 
``You cannot build a solid economy when the capital created by the 
productivity of the workers is shipped out as soon as it is created.'' 
Statehood would confer the sense of stability that encourages economic 
investment. Hex, Inc. projects that statehood would accelerate fiscal 
and economic growth in Puerto Rico by an annual 2.2 to 3.5 percent.
  Chilean economist Fernando Lefort, in a working paper for the 
International Tax Program at Harvard Law School, calculated if Puerto 
Rico had become a State in 1955, the average Puerto Rican would have 
been earning $6,000 a year more by 1994.
  The fact is that Puerto Rico has the assets for growth. It boasts a 
manufacturing base which employs 15.6 percent of the Island's work 
force; highly educated skilled workers, many of whom are bilingual and 
experienced users of high-tech equipment in the pharmaceutical, 
plastics and electronics industry, as well as the scenic beauty and 
historic landmarks that so much appeal to tourists.
  What is more, the value-added per dollar of production wages paid in 
Puerto Rico is double the national average. These assets alone led one 
analyst interviewed by the Wall Street Journal to conclude that as a 
State, Puerto Rico's underlying growth potential would be the strongest 
in the country, the Nevada of 10 years from now.
  In addition, Puerto Rico practices sound fiscal policy. Since 
adoption of its Constitution in 1952, Puerto Rico has required the 
government to approve the balanced budget annually. Four years ago tax 
reform provided $400 million in tax relief to Island residents while 
generating a government

[[Page H2750]]

surplus. Puerto Rico has also initiated a privatization strategy, which 
is expected to save the government $1 billion over a period of 10 
years.
  It is grossly unjust and undemocratic to bind the people of Puerto 
Rico to a colonial economy and then deny them the right to self-
determination, giving as a reason the fact that the Island territory 
has not thrived fiscally as well as the equal partners, the 50 States. 
Let us not revive the practice of democracy for the rich and by the 
rich, but rather let us extend the right of self-determination to the 
American citizens of Puerto Rico, no matter the size of their bank 
accounts.
  We discarded the poll tax as unfair and undemocratic. It should not 
be revived to deprive 4 million U.S. citizens of the right to self-
determination.

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