The Clamor Against The Government

by John Marino

August 12, 2005
Copyright © 2005 THE PUERTO RICO HERALD. All Rights Reserved.

. Everywhere one turns in Puerto Rico today, there are rising costs and the threat of more, job insecurity and bad economic news, and a chorus of voices that rails against the government and tries to protect a wide variety of special interests, from government workers to bankers, from suburban commuters to special community and public housing residents.

The situation points up what just what could be the root of Puerto Rico’s problem: the whole island has been taken over by special interests. And they have so multiplied that they touch every strata of society, whose members are benefiting, in one way or another, from official government favoritism.

Unions, whose strength is overwhelmingly fortified by its representation of government employees, are screaming about plans to cut working hours or exact layoffs among public employees. They have even broken off budget discussions with the Acevedo Vilá administration over its voluntary offer to public workers: cut your hours by 20 percent and we‚ll give you a 15 percent salary reduction, and maintain all your other benefits.

Never mind that the offer is a good deal for workers who want a little more time on their hands, especially because they can reduce the hours anyway they choose, spreading out the reductions over a five-day work week or simply working four days a week. And never mind that the large public bureaucracy, and its bloated payroll, is the main obstacle to the government‚s fiscal financial health, not to mention its efficiency. The unions are telling their members to not even consider it, all because the executive order containing the offer changed the "panorama" of current budget discussions, whatever that means.

There are other typical targets of government largess as well. Anyone who has driven by a public housing project has noted the state of its vehicle fleet, much more stylish, perhaps, but otherwise matching the quality of the fleets used by government bureaucrats and lawmakers. Then there are all those inflatable swimming pools seen this summer, with some holding up to 1,000 gallons of water, all covered under the nominal flat water rate paid by the residents.

Economically challenged residents who have somehow been left out of the public housing alternative have benefited from the $1 billion special community initiative, which undertakes housing improvements, infrastructure projects and community programs in 686 "poor" communities throughout the island.

But in Puerto Rico, everybody is guisando, which roughly translates to "taking advantage of the situation."

Many island manufacturing plants pay nearly no taxes and benefit from other incentives. Yet they are screaming that the first water rate hike in years will cause plants to close.

Bankers and brokers are equally miffed about the proposed tax on financial institutions, and a large swath of the business sector is against the increase in the capital gains tax. Local merchants, meanwhile, are dead set against a sales tax.

But while the business community has taken the government to task over its vast bureaucracy, it too benefits from it. Despite the huge government payroll, the depths of government inefficiency are nonetheless brought lower by the huge contracts to the private sector to perform tasks ostensibly pertaining to the government workforce.

So despite having a resident public relations staff, the government Tourism Company will hire outside PR experts. Likewise, private lawyers contracted by the Justice Department perform work one would assume would be performed by agency attorneys. From the most powerful financial institutions and manufacturers to local car dealers and farmers, every industry benefits from government contracts.

Meanwhile, University of Puerto Rico students are threatening to strike against a long overdue tuition increase, and UPR medical interns and residents successfully protested and undertook job actions for increased wages.

Even at my neighborhood hangout, the musicians from the island’s fine symphonic orchestra are arguing over pizza and beers and rum and fried chicken about the impact of the bleak government financial situation on their livelihoods, which like everything else, is partially dependent on government funds.

This chorus of voices is evidence of the ferocity with which the island’s multitudinous special interests will protect their own.

But it’s also ample evidence that the no matter what moves the gigantic commonwealth government takes, there will be wide-ranging repercussions.

The government is considering an array of new taxes, tax increases and other fees, such as increased utility rates. So far, there has been precious little attention given to the potential inflationary effects that these combined moves will have and what harm they could cause the island’s economy.

The growing chorus of voices against most of these moves should not stop the government from taking some tough decisions. But the voices do argue for a careful, holistic approach to implementing the revenue increases and cutting back on government expenses.

So far, the government’s plan appears devoid of the thoughtful implementation it requires.

John Marino, Managing Editor of The San Juan Star, writes the weekly Puerto Rico Report column for the Puerto Rico Herald. He can be reached directly at: Marino@coqui.net

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