“…we had a
coup d’état,” in the words of Jaime.
Who should
know, being a lawyer and an astute observer. So what happened? Well, the governor of the island called a special session
of the legislature to pass a “reform” of the teachers’ retirement system, which currently has almost 40,000
pensioners. This follows a move in April to reform the government workers
retirement system, which caused protests across the island.
It’s not
the chickens but rather the eagles come home to roost; since 1952, governments
have had two or three essential strategies to reduce unemployment. The first
was legitimate—manufacturing, especially pharmaceuticals. That Valium you mother chugged down to tide her through your terrible
twos? Thanks, Puerto Rico!
The other
modes were a little less kosher….
“He shipped
‘em all off to New York!” sputtered Mr. Fernández, when someone suggested that Luis Muñoz Marín—a close relative of the devil, in the
eyes of Mr. Fernández—had reduced unemployment.
The other
solution? Put everybody on the government payroll, give them one task to do,
and pay them substantially less than the private sector. So you had an enormous
government; if memory serves... well wait. Here’s a graphic:
So
everybody knew for years that we were heading for disaster. And thus the last governor
passed legislation that slashed 30,000 government jobs. Last April, the present governor
took the machete to the government retirement system and raised taxes. And now,
it’s the teachers’ turn.
There are
two reasons for this. First, the system is broke; here’s what the president of the Senate, Eduardo Bhatia,
had to say:
To have a
retirement system you have to square the end of the month and it is broken. For
every dollar you have to give a person who retires today there are 17 cents in
the piggy bank. The question is where the other 83 cents go, and that is the
decision we have to make as a country. Are there additional 83 cents in the
General Fund? No, not there,’ said the Senate leader.
Put it another
way—the norm is to have a plan 80% funded, we are only at 17%.
The other
factor at play? A little company called Moody’s, which has our credit rating
one notch above junk, and is watching Puerto Rico closely.
Well,
“watching” may be generous. Moody’s, in fact, has Puerto Rico quite securely by
part of a gentleman’s most prized anatomical possessions. And Cate Long,
writing for Reuters states it openly: she wrote, “Moody’s identified this reform as one of the factors that will compose its
review of Puerto Rico.”
So what
happened? The governor sent legislation to one of the two teachers’ unions on
the island, and they erupted. And as you can see in the video below, they not only
protested but broke the doors to the Senate and charged in. So soon, the entire
island was glued to their televisions, watching as hundreds of chanting
teachers gathered in the capitol.
Damage?
$55,000. One part of which may have been a senator’s chair, on which, according
to The New Day, a
child was permitted or possibly urged to urinate. Oh, and a security official
got bitten, though the attacker didn’t draw blood.
And what did
the Senate do? Well, they got the hell out of Dodge City, which in this case
meant retreating into an adjacent room, the Hall for Illustrious Ladies. They
continued the debate until seven PM, when they adjourned.
To make a
sorry situation worse, the teachers do not receive Social Security, and so
their pension is the only thing they have.
The reaction
from the guv? He came out and called it “reproachable,” which seems a bit mild,
given the damage done and the precedent it sets.
You can
argue—the teachers should have seen it coming; it was clear that the system was
unsustainable. It’s also true that we have a very expensive government,
and that our legislators make a killing, both when they’re in office and when
they come back as “advisers.” Nor does it help that—according to Mr.
Fernández—the Department of Education has the highest proportion of non-docent
versus docent personnel in the country.
The saddest
thing? According to an analysis by Joanisabel González in the print edition of El Nuevo Día, “Lo increíble es que Puerto Rico
entrará en esta nueva parte del ciclo sin garantías de que escapará a la
degradación crediticia”.
Simple
translation! Even if we do this—and the House has in the last hour just passed
the legislation—it may not be enough.
