12/5/17 – Puerto Rico
Two hurricanes devastated the Commonwealth of Puerto Rico.
Here’s what’s happening behind the headlines.
Destruction was nearly absolute. There was no virtually no electricity. Drinking water was scarce. An estimated 300,000 will eventually flee this island of three-and-a-half million.
There are two steps Washington should immediately take.
First, indefinitely suspend the Jones Act for Puerto Rico.
The Jones Act is a nearly 100-year old law that requires all maritime trade between U.S. ports be carried-out on U.S. flagged merchant ships, built in the U.S., owned by U.S. citizens and crewed by Americans. This law literally creates a monopoly. And increases costs.
Suspending the law would create competition thereby lowering the cost to import needed material and supplies.
Second, implement tax incentives.
Section 936 was added to the U.S. tax code in 1948. It gave tax advantages to U.S. subsidiaries in Puerto Rico and U.S. territories. This encouraged businesses to operate in Puerto Rico where energy, supply and shipping costs are much higher than the mainland. Section 936 ended in 2006 by legislation signed into law by President Bill Clinton 10 years earlier. 2006 is also when the Puerto Rican economy began its dramatic slide.
Take these steps and give Puerto Rico two important tools to rebuild.