[Congressional Record (Bound Edition), Volume 147 (2001), Part 3]
[House]
[Pages 3406-3407]
[From the U.S. Government Publishing Office, www.gpo.gov]



                  ECONOMIC DEVELOPMENT FOR PUERTO RICO

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2001, the gentleman from Puerto Rico (Mr. Acevedo-Vila) is 
recognized during morning hour debates for 5 minutes.
  Mr. ACEVEDO-VILA. Mr. Speaker, the United States is currently faced 
with great challenges and at the same time great opportunities. The 
balanced Federal budget and projected surplus provide economic 
alternatives that some years ago were not available. However, the 
indications of an economic slowdown have helped generate calls from the 
President and Congress to create economic stimulus through a variety of 
proposals.
  Last week the House voted in favor of generous individual income tax 
reductions. Debate continues on the size and scope of tax cuts and what 
should be done to spur real economic growth. As the Representative of 
Puerto Rico before Congress, I will work hard and in a bipartisan 
fashion to develop and pass the necessary and deserved economic 
stimulus package that will benefit the 4 million U.S. citizens living 
in Puerto Rico.
  We have before us a unique opportunity to use current budgetary 
circumstances as a tool for economic development through the creation 
of jobs and investment in businesses in Puerto Rico.
  During the period of 1993 to 1996, Congress took the necessary steps 
to balance the budget and eliminate the deficit. Many Members may 
already appreciate how Puerto Rico paid substantially during this 
process. In 1993, Congress passed the Omnibus Reconciliation Act, which 
included a provision that substantially curtailed the tax incentives 
provided by section 936 of the Internal Revenue Code to U.S. companies 
doing business in Puerto Rico.
  In 1996, Congress enacted another set of amendments that eliminated 
all incentives for new or expanded business operation and investment in 
Puerto Rico. As of today, Puerto Rico has no Federal incentive to 
create new jobs, and those that apply to companies already doing 
business on the island are set to expire in the year 2005.
  The negative consequences of the decisions taken in 1993 and 1996 are 
clear. The phase-out of these incentives is having disastrous effects 
on Puerto Rico's economy. In the last 4 years, more than 18,000 jobs 
have been lost in the manufacturing sector as a direct result of the 
phase-out, and Puerto Rico has not been able to attract significant new 
economic investment.
  The vast majority of these jobs are moving out of the U.S. 
jurisdiction to countries like Malaysia and Singapore. Employment and 
wages from American companies are a critical part of Puerto Rico's 
manufacturing sector, the most important sector of Puerto Rico's 
economy.
  The results of the phase-out are clear. Today we enjoy a balanced 
budget and a rather large surplus, but my people in Puerto Rico do not 
have the jobs. While the taxpayers in the U.S. have earned tax relief, 
so, too, have Puerto Ricans, who sacrificed during efforts to balance 
the budget and grow the Federal budget surplus. It is time to provide 
my constituents with tax relief through incentives for further 
investment and job creation in the Tax Code.
  The challenge is to develop a sustainable stimulus for employment-
generating investment in Puerto Rico. The Puerto Rican economy operates 
under U.S. standards that are far above those of our main competitors 
in the global marketplace. Our workers are well trained and educated, 
are very productive; but we need new tools to continue to grow our 
economy and be competitive again. Well-designed, sustainable tax 
incentives will level the playing field and permit us to compete.
  Congress has been there for Puerto Rico in the past. In 1976, 
Congress enacted the special tax exemption under section 936 of the 
Internal Revenue Code. This was part of an effort to attract U.S. 
companies to Puerto Rico to create jobs for island residents.
  I am here today to ask my colleagues to support a new economic 
stimulus

[[Page 3407]]

package for Puerto Rico. Since the phase-out of the 936, economic 
growth in Puerto Rico has averaged 20 percent less than that of the 
United States. There has been an unprecedented loss of high-paying 
manufacturing jobs. No other U.S. jurisdiction has lost manufacturing 
jobs at such an alarming rate.
  Recently layoffs are hurting workers and families in Puerto Rico. 
During the first 2 months of this year, leading U.S. companies like 
Intel, Coach, Sara Lee, and Phillips Petroleum have cut production and 
in some cases closed plants in Puerto Rico. These reductions alone will 
cost over 5,000 jobs, in addition to the 18,000 we have already lost. 
Today over 10 percent of the labor force in Puerto Rico is unemployed.
  Some cities in Puerto Rico have been particularly hard hit by lost 
jobs. The average annual pay in Puerto Rican cities ranges from $16,000 
to $19,000, while the national average is over $34,000 per year. More 
than half of the population of Puerto Rico falls below the U.S. poverty 
threshold.
  As I stated earlier, one of the reasons Congress eliminated the tax 
incentives for the U.S. companies in Puerto Rico was to balance the 
budget. Now we are faced with a surplus. I ask for your support in 
efforts to provide necessary and deserved relief for Puerto Rican 
workers and families.

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