The Institute for the Development Advancement, and Equality of Puerto Rico (I.D.E.A. of Puerto Rico, Inc.) is a civic non-profit corporation; a "think-tank" not affiliated to local or national political parties, which is integrated by private sector individuals with outstanding professional and academic records, who identify, research, and develop informational positions on Congressional issues pertaining to Puerto Rico.
MR. CHAIRMAN:
I request your consent in including this statement in the permanent record of these Hearings and cross-referenced with our previous testimony as listed in the Index of this document.
MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE:
I. INTRODUCTION:
For many years, testifying before different Congressional Committees, we have repeatedly stated that a solution to Puerto Rico's status condition, and an end to our legacy of colonialism, can only be achieved by an act of mutual self-determination on the part of the Congress of the United States and We The People of Puerto Rico.
The Congress must represent the national U.S. interest by providing the governed in the territory with a sanctioned democratic process leading to self-determination, that is based upon accurate definitions for all the status options it is willing to consider. The governed must express their self-determination in an electoral process by selecting their preferred option and informing the results to the Congress.
The Senate must recognize and re-affirm in its legislation that the essential pre-condition to mutual self-determination, resides in the truthful and accurate definition of the present condition in political, territorial, and individual terms. It is imperative that all legislative initiatives include in clear terms the exact nature of the current status of Puerto Rico as well as the exact nature of the current status of Puerto Ricans. In essence, the nature of our relationship and the nature of our U.S. citizenship.
S. 472 meets these basic parameters and it has our full endorsement and support.
II. SPECIFIC CONSIDERATIONS AND RECOMMENDATIONS:
As an integral part of this legislative process of hearings, we would like to call to your attention the following areas that may warrant further consideration, as well as some specific recommendations:
A. COMMONWEALTH (Estado Libre Asociado):
1. Federal Taxation : The bill requires that if none of the other proposed status options receives a majority vote, the current condition will remain in force until further periodic consultations are held in order to attain a final and permanent political status for Puerto Rico. Under these circumstances, the question of exemption from the payment of individual and corporate income taxes must be further clarified. Proponents of Commonwealth have consistently assured the people of Puerto Rico that this option includes a permanent exemption from such obligations.
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If it is the intention of the Senate to state that such exemption actually exists and will remain on a permanent and guaranteed basis, it should be included as an integral part of the definition of "Commonwealth" that appears on the ballot. However, if the Senate is unwilling or unable to provide such prospective tax guarantees, a clarification should be made in order to prevent some voters from being misled into favoring this option as a means to avoid federal tax obligations.
2. Costs to the Federal Treasury: The General Accounting Office has not provided an updated and accurate report on the costs currently incurred by the Federal Treasury under the current status. A historic economic comparison is needed to assist in determining if such costs have been incremental throughout the relationship and in particular during the last two decades. This information should also include projections on the prospective fiscal obligations that would ensue if the current territorial arrangement it is to be prolonged.
Consideration should be given under an economic perspective, to determine if the current relationship remains in the best interest of the American taxpayer; if it fits within the concept of "shared burden" and within the scope of realities brought forth by national budgetary considerations; and if so, for what prospective length of time can it reasonably remain unaltered.
3. Effects of Renewed Regional Competition: Due to political and economic considerations, Puerto Rico's economic growth since 1960 can be largely attributed to Cuba's absence as a competitive factor in the region. To the best of our knowledge no in-depth analysis have been made to ascertain and quantify the effects that would be caused on Puerto Rico's current economic model when Cuba re-enters the democratic family of nations and thus re-assumes its traditional competitive role.
Due to the obsolescence and vulnerability of the current political-economic model, renewed competition from Cuba would be stronger on the traditional and remaining economic foundations of the territorial relationship (ie. lower wages, trained labor, tourism, manufacture and services).
A thorough economic analysis should include a projection of additional federal transfers that would be required under the current relationship in order to avoid a possible severe economic dislocation that could cause, as a secondary effect, the displacement of large segments of the population to mainland U.S.A.
B. INDEPENDENCE (Full or in Free Association with the United States):
1. Political-Economic Models: The bill should incorporate a specific definition of the political and economic models that would be implemented under these options in order to fully inform the voters about the specific independence model they would be selecting.
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As an example, it is likely that many more voters would be attracted to vote for these options if their definition include the adoption of a republican political system with a capitalist economic model than, for example, a model of independence that would include a Marxist political system and a socialist economy.
2. Investor Guarantees: Because of the historic relationship that has existed between the United States and Puerto Rico, its economy has largely been tied to mainland institutions, regulated, and guaranteed by federal law.
While we are confident that investor guarantees can be successfully negotiated during a transition period and could be addressed at a later stage, we recommend that at least a basic determination be made at this time in order to ascertain if the new independent body-politic is to be expected to provide such guarantees or if the U.S. federal government would retain the present responsibility, and if such, for how long a period.
3. Property Values: At present close to one hundred percent of residential and commercial mortgages contracted in Puerto Rico are re-sold on secondary mainland U.S. markets. At present we estimate the value of these outstanding mortgages to be in excess of U.S.$20 billion.
Most economists agree that independence will result in property devaluation. If property were to devalue to a level below the outstanding mortgages due, possible massive default could occur. Estimates should be made on the possible effects of such probability on the U.S. banking system, and should be included as part of the guarantees that the U.S. federal government or the new independent Puerto Rico government would provide at least through the period of transition.
4. Continued U.S. Military Presence: At the present time the U.S. occupies a number of military bases and installations in the territory. A determination must be made to establish if continued U.S. military presence in the new independent nation would serve the national interest.
Most leaders of the independence movement, including those that would be the most likely to govern, coincide in stating that they would be willing to negotiate continued U.S. military presence in Puerto Rico in exchange for lease or rent equal to the total amount of federal transfers to Puerto Rico at the time sovereignty is acquired.
Absent from their proposed equation are the costs borne by the U.S. federal government incurred in providing for the defense and security of Puerto Rico. Is the new nation going to provide for its own defense? If the United States going to be requested to continue providing it, and if so, will this cost be in lieu of (or in addition to) the rent or lease expected for its continued use of its own military bases and installations?
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5. Extended Statutory U.S. Citizenship: The language of the bill under current consideration makes a provision that would allow the current Puerto Rican statutory citizens to choose to retain their U.S. citizenship while residing in the new independent body-politic of Puerto Rico.
It appears that it is the intention of the Senate to determine that "birth in Puerto Rico or relationship to a person with statutory United States citizenship by virtue of birth in Puerto Rico is not a basis for United States nationality or citizenship".
However, the current language of the bill appears to be vague enough to have given rise to the speculation that it leaves ample "loopholes" which may defeat its intended purposes. For example, it is presumed that the right to travel stateside would be unrestricted, so women about to give birth could conceivably travel to any state of the Union and the born child would automatically acquire U.S. nationality and citizenship by virtue of birth in the United States.
If language on the continued statutory U.S. citizenship is not made more specific, we recommend that the Senate evaluates whether or not the United States is willing to accept the responsibilities and liabilities that would ensue. If not, language should be developed that would perhaps restrict travel or include a minimum residency requirement in the U.S.
U.S. citizenship is of such paramount importance to the overwhelming majority of the people of Puerto Rico, that any disposition regarding its nature and/or continuity should be clearly expressed in order to avoid misinformation and speculation that could be utilized to confuse voters unto totally false premises and choices.
In addition, we recommend that the issue of Puerto Rican statutory citizens that reside in any state of the Union be addressed separately so that those wishing to continue residing in the United States are allowed to retain their U.S. citizenship. Perhaps, the Senate may want to consider developing a provision by which these statutory citizens (having proven a pre-determined minimum period of continued residency in the United States) can apply for a process of "naturalization" by which they could make a transition from their current statutory U. S. citizenship to a permanent "14th Amendment-guaranteed" citizenship.
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C. STATEHOOD:
1. General Accounting Office Report: The General Accounting Office produced a partial economic report estimating the potential costs of the statehood option to the Federal Treasury based upon individual contributions not taking into consideration other sources of potential revenue such as business and corporate taxes.
The U.S. Treasury Dept. determines the income derived from each state of the union by estimating all potential sources of revenue, not just individual (personal) income taxes. These same standards should be applicable to any tax revenue projections that are made to determine the economic impact of Puerto Rican statehood.
In addition the G.A.O. report failed to offset the additional costs of statehood with other sources of revenue that have already begun to accrue as a result of the phase-out of Section 936 of the Internal Revenue Code. It is our recommendation that the G.A.O. be requested to revise this report taking the aforementioned facts into consideration as well as any others that may have been omitted.
2. Property Values: Precedents in Hawaii, Alaska, and every territory that has become a state, lead economists to conclude that statehood will bring to Puerto Rico an immediate and dramatic increase in the value of property and other physical assets. These increased values will result in proportionate additional sources of tax revenue, and have not been included or projected in the economic studies submitted by the GAO, or (to the best of our knowledge) fully quantified by any other governmental or non-governmental sources of information.
D. GENERAL PROVISIONS:
1. Periodic Consultation: S.472 (Sec.3) states: "(2) to ensure that the principle of self-determination is respected and that the residents of Puerto Rico are afforded the opportunity freely to express their wishes with respect to resolution of the status of Puerto Rico based on the options for permanent self-government described in section 2, a referendum on the future political status of Puerto Rico shall be held in accordance with this Act every 4 years thereafter, but not on or within 180 calendar days before or after the date of a general election."
It is of extreme importance that any legislation that is considered in the Senate leading to self-determination an eventual and permanent self-government retains this section. However, the Congress may consider avoiding the given impression that it is prospectively bound and committed to permanently await a unilateral majority decision on the part of the people of Puerto Rico. In order to avoid this impression, we strongly recommend that this section be amended to read as follows:
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"(2) to ensure that the principle of self-determination is respected and that the residents of Puerto Rico are afforded the opportunity freely to express their wishes with respect to resolution of the status of Puerto Rico based on the options for permanent self-government described in section 2, a referendum on the future political status of Puerto Rico shall be held in accordance with this Act every 4 years thereafter, but not on or within 180 calendar days before or after the date of a general election. The Congress of the United States does not subordinate its sovereign power by this Act, and under the "territory clause" retains the option to act unilaterally at any time in the national interest of the United States".
2. Voter Education: It is our continued recommendation that in addition to the voter education provisions already included in S.472, the Senate consider the appointment of a national bi-partisan panel of experts that would assist in voter education and also serve as arbiters in any disputes in the interpretation of the definitions and provisions of this Act.
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INDEX OF CONGRESSIONAL TESTIMONY
A. U.S. HOUSE OF REPRESENTATIVES
1. Native American and Insular Affairs and Western Hemisphere Subcommittees, Joint Hearings, Washington, D.C., October 17, 1995.
2. House Interior and Insular Affairs and Insular and International Affairs Subcommittees, Washington D.C. or San Juan Puerto Rico, May 22,1986; July 17, 1986; March 9,1990; July 13, 1993; and May 24,1994.
3. House Natural Resources Committee, Mayaguez, Puerto Rico April 21, 1997
B. U.S. SENATE
1. Energy and Natural Resources Committee, San Juan, Puerto Rico, June 17, 1989.
See the Oral Testimony of Arturo J. Guzman.
See the Supplemental Testimony of Arturo J. Guzman.
See related articles by Arturo J. Guzman.
