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Latino Politics in the U.S.

Latino Politics in the U.S.
Kendall-Hunt, 2012 (2005)

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Sunday, March 27, 2011

Smokes and Mirrors: Gov. Luis Fortuño Lying to Conservatives

Smokes and Mirrors: The Lies and Distortions of Puerto Rico’s Governor Luis Fortuño

“Credibility alone must determine whether propaganda output should be true or false”
------------Joseph Goebbels

In this interview with the host of Reason, a right wing conservative organization, Gov. Fortuño gave a rosy perspective of his efforts to bring fiscal stability to Puerto Rico’s finances. He failed to mention the employee protests, the turmoil at the University of Puerto Rico and the cuts in public financing of public higher education. He fulfilled Goebbels principle of seeming credible in telling his lies, but the people of Puerto Rico know better.

• Cut spending in last two years.
Only cut 42% of what he originally had promised, majority came from employees that were fired ($697.9 million) See New Center Analysis at

• Gave money back to the people. Cut taxes
Increased some taxes, multinational companies, 4% and increased its revenues by $1 billion or 85% of its original objective. New Center says they did better increasing revenue than in cutting expenses, a totally different effort than the one he told the host of Reason.

• Bond ratings are up (still lowest in the U.S. and considered risky

• 44% of revenue, I am picky but it was actually 42% according to Standard and Poor

• 17 per cent unemployment, 14 per cent now.
It’s actually 15.7 per cent according to the Planning Board Economic Indicators January 2011.

• Windows to encourage workers into early retirement
Which places the retirement system in even more danger than it is, since there is an actuarial deficit which will bring the system into a crisis as early as 2016, no longer than 2019. The money paid out to early retirees and the smaller income into the system received from employees and the government will increase the gap between what needs to be paid and the reserves. Francisco Catala has a great article on this in Republica May 3, 2010.

• First time in 20 years taxes were cut

Gov. Fortuño is referring to cuts made under the administration of Gov. Hernandez Colon. This financial mistake created an economic crisis that led his administration to sell the Long Distance Phone company, then a publicly owned firm. Then Gov. Pedro Rossello, facing a fiscal crisis sold the extremely profitable Puerto Rico Phone Company which cut a source of revenue for the Puerto Rican government. In 1975 James Tobin, winner of the Nobel in economics suggested Puerto Rico should reform its tax structure and increase taxes, too many exemptions for corporations and later in 2006, Brookings study included a tax expert who suggested the same problem with Puerto Rico’s tax structure.

• While it is true that the structural deficit was reduced from $3, 306 billions to $2,143 billions on the other hand, this was done using non recurrent funds (ARRA Obama’s one time financial aid of $6,800, of which $3,300 was used to provide subsidies to tax payers and $3,500 for unemployment insurance. According to the analysis of the report the government gave to the bond agencies, examined by CNE they already have spent 63% of the ARRA funds. COFINA issues $9,200 billions in bonds (more debt) 2009-10 to pay some operational costs, pay debts, Stabilization Fund, Local Stimulus Fund, $1 billion is still unspent. The public debt of Puerto Rico has increased from $52, 947 billion in 2008 to $63,366 billions in February 2011. An increase of $10,419 billions more or 19 per cent increase!!!!

What will happen when these funds are used? Things will be worse than they were since the labor force is smaller, fewer people will be paying taxes (including the more than 17,000 that were let go (voluntarily or not). There are 28,000 fewer people employed in construction, 17,000 in retail commercial establishments, and 27,000 less in manufacturing. No wonder people are leaving, while Nero is playing his fiddle the island is sinking!

• New Party for Progress?

Gov. Fortuño is so ashamed of his party name (New Progressive Party) that he changed it to the New Party for Progress. The word progressive is anathema in tea party circles so he avoided being associated with it. Did he ask for permission to the party executive committee?

Smokes and mirrors, that is what this is all about . . .

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