Comments From The Chemo Couch: 6 – Lessons From Puerto Rico To Pima County

“Power tends to corrupt, and absolute power corrupts absolutely.” -- John Dalberg-Acton

In the aftermath of Hurricane Maria’s devastation of the Caribbean island of Puerto Rico – a US colony since 1898 – there are lessons for Pima County, and for the rest of the nation, about how crony capitalism puts communities at risk.  Researching reports from The Intercept, USA Today, Washington Post, Pima County Memoranda and other online sources, a picture of “incentives” to corporations emerges which should be a cautionary tale for the nation.

Much is being made about Puerto Rico’s staggering $74 billion debt and $53 million in unfunded pension liabilities.  Washington says the debt should be wiped out, but offers Puerto Rico more loans for more debt.  While there are arguments that the debt grows out of a glut of government employees, high electricity rates and reckless spending, the fact emerges that the debt crisis that is strangling the shattered island was, in fact, made in Washington.  And half the Puerto Rican budget goes to service the debt, and not for the public good.

It’s non-partisan, with both “Demoncrats” and “Republikooks” united to throw taxpayer dollars at giant corporations.  Tax breaks for companies moving to Puerto Rico were started in 1921, and starting in 1976 corporate profits earned there were IRS tax-free.  The tax breaks transformed a mostly agrarian society to a manufacturing power, led by Big Pharma companies like GlaxonSmithKline and Bristol-Myers Squibb.

Congress decided to phase out those tax breaks in 2005, and many of those companies who had been attracted there up and left, initiating a major recession.  Military bases were closed costing the economy hundreds of millions of dollars more a year.  Unemployment zoomed; half of the 3.5 million people lived below the poverty line.  Politically-motivated cuts in Medicaid payments forced more borrowing to maintain the health care system.  With no jobs, about 10 percent of the population left the island over the last decade.  While Puerto Ricans cannot vote for president because they are not a state and only have a non-voting representative in Congress, they have the rights of all U.S. citizens and are free to travel to the mainland and stay.

When people leave, however, there is a smaller and smaller tax base from which to service the debt, so Puerto Rican politicians tried their own “incentives” – 100 percent income tax exemption from taxes on dividends and interest for wealthy individuals and, of course, more breaks for business.

Hedge funds, some in secrecy, took over the debt and are now lining up to claim a share of the aid promised by Washington.  The Boston-based Baupost Group, for instance, holds about $1 billion of the debt through a shell subsidiary hidden from public view.  Their chief, Seth Klarman, is a major donor to the Massachusetts GOP but supported Hillary Clinton in the last election.  Bipartisan.  Both friends of Goldman-Sachs.

The estimated damage to the island, which still lacks electricity and running water in most areas, will take $40-50 billion to repair.  Washington’s inadequate response is mostly more debt with no set interest rates, with loans that can be cancelled by the Department of Homeland Security and the Treasury Department.

CLOSER TO HOME

Puerto Rico is an example of crony capitalism, an unholy alliance of politicians and corporations whose only loyalty is to the Bottom Line.  While Pima County doesn’t face hurricane threats, the tax breaks and taxpayer dollars being put out to attract companies to this area can be just as devastating to workers and their communities.

Much has been made of bringing Caterpillar to town with incentives.  Never mentioned is that to do that, Caterpillar closed a plant in South Milwaukee, laying off 900 people in a community of 2500 families.  You don’t have to do the math to imagine the impact.  Home Goods similarly closed a warehouse to open one in Tucson.  These companies shop around, playing one community against another, seeing who will put out the most taxpayer dollars – with no guarantees they will stick around when the incentives expire.

Raytheon is a major Pima County employer, and our County Leaders go out of their way to make them happy – at taxpayer expense.  The Sonoran Corridor, designed to link I-10 and I-19 and County Administrator Chuck Huckelberry’s vision of I-11 through the Avra Valley, was turned down by voters in the 2015 bond election.  No matter the will of the people, planning for the “auxiliary interstate” in violation of Pima County’s own policy against an interstate bypass, 2007-343, goes forward huckledebuck.  Did I mention that Raytheon posts billion-dollar profits regularly? And that the promised 2,000 “new” jobs won’t bring the corporation up to previous employment levels?

A player in Pima County is real estate developer Don Diamond, who raised over $16,000 for Board of Supervisor’s Chair Sharon Bronson, a close ally of Huckelberry, when she faced a serious election challenge.  Diamond’s land holdings are routinely bought at county expense to create “buffers” for Raytheon and Davis-Monthan Air Base.  And the Sonoran Corridor has been convoluted to provide a free access highway to his planned 3000-acre Swan Southlands development.

Then there’s World View’s $15 million incentive to launch a KFC sandwich to the edge of space.  Big whoop!  And they didn’t even launch it from the Tucson “spaceport!”  And giving $100,000 to American Airlines because not enough people used the Tucson-to-New-York flight?  They had over $10 billion net profit in the last two years.  Really – how much is enough?

While there seems to be plenty of taxpayer dollars to keep companies happy, when it comes to repairing roads used by ordinary residents, they want a special sales tax to finance the work.  Cronies, by definition, take care of each other – and the public pays for it all.

I’m reminded of what Republican president Herbert Hoover said when he tried and failed to enlist corporations to help end The Great Depression:  “The only problem with capitalism are the capitalists—they’re too damn greedy!”

ABOUT COMMENTS FROM THE CHEMO COUCH:  I am nearing 80 years of age and am taking chemo for multiple myeloma, an aggressive and incurable blood cancer that attaches itself to my ribs and spine and sucks the calcium out so that a sneeze breaks two ribs.  That keeps me close to home.  After several months of treatment it seems the chemo is slowing the cancer down, but it all leaves me with little energy and a lot of time to think.  And I think a lot, and because I’m a writer I want to put what I think into words for others to read.  Give them something to think about too, about local and national politics, about nature, community, history, and maybe even about facing the end of my time on this earth.  I am grateful to John and Lori Hunnicutt and the Arizona Daily Independent for carrying my opinionated stories, and hope these columns will get readers thinking.  I am a trained researcher and do diligent research to present facts and avoid name-calling.  Hopefully we will all learn something we didn’t know and will talk to each other about it.  Right or Left, we have more in common than we are often willing to admit, and dialogue is, perhaps, the only thing that can save democracy in America.                                                                                               — AVL

8 Comments on "Comments From The Chemo Couch: 6 – Lessons From Puerto Rico To Pima County"

  1. Puerto Rico, just like Pima County, became dependent on the slop of the government trough, just like today’s progressives, i.e., liberals, socialists/communists, continue to preach. And when the slop in the trough stopped flowing, the dependent pigs were incapable to feed themselves.

    And just like Puerto Rico, Tucson/Pima County is one of the poorest in the nation, following their ‘progressive’ utopia agenda with more government, no growth, no jobs and no future.

  2. Albert, thank you for your column today and you are right the swamp is very deep and it spreads over a lot of the country. It needs to be drained quickly but I don’t know if it ever will. I think the voters still vote the party line despite abysmal failures like DC, Chicago, Tucson and the entire state of California. Once in office, unless you are a total fool, you will continue to get elected propagate the swamp. Witness John McCain, Mitch McConnel, Robert Byrd and the rest. What a shame.

  3. The best thing that could happen in this Country would be if every left wing nut in office was voted out. Reduce the corporate tax rate which is higher than any other Country to bring them back here, and fix the peoples tax rate so everyone is paying their fare share.

  4. PR voted to leave the nation – or – territory status – they stayed in a close vote. When Medicare changes were enacted in the USA, PR simply turned their head and said ‘no not me’… then complains of the collapse of government funded medicine (I still blame LBJ for this entire mess, along with Viet Nam the other leftist war that divided the nation to where it is today, we’ll be seeing this as the JFK killing reports start hitting the news in days )- PR likes the trough indeed – and those that fill the trough love to point fingers at anyone who slows the flow.. the ‘give it to me now – I’m entitled left’ hey man you to slow man.. I want the power now. The PR military range for bombing from aircraft and ships to practice was closed at the demand of the PR people – the bases left ? Whaat happen where’s the money.. I do hate to say it but much of what happen in PR came from PR’s people wanting their cake and eating it too. The disaster was well underway before the storm was a storm. Just as California… and Pima County is learning this same lesson – the open theft of money to build the Balloon launch facility the perfect example of the elitist left just taking the money and running for pet project at the taxpayer expense. Will the swamp be drained… I don’t think in advance of the nation destroying itself from within much like PR.

  5. Another area where crony capitalism is rampant is that of very unreliable renewable energy. Most of those companies would not exist without a government handout.

  6. PR wants to show who they are to the world – dig out of this mess – do something to show the world who PR is and what ‘they can do as PR’… everyone loves an underdog.

  7. All that drivel, whether factual or not, and not one suggestion. If you do not offer a solution, it is mere mental masturbation.

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