SAN JUAN, Puerto Rico–The gridlocked members of the congressional Supercommittee should grab President Obama and decamp to a tropical island. Specifically, they should visit Puerto Rico, where a courageous leader is using free-market reforms to reinvigorate this recently moribund U.S. territory.
We are clearly pro-growth, says Republican Governor Luis G. Fortuño. And we do not apologize for that.
Fortuño last Tuesday hosted a delegation of conservative luminaries who floated into San Juan aboard the Holland America Lines MS Eurodam, site of National Review magazines latest Caribbean cruise.
Fortuño was inaugurated on January 2, 2009, just 18 days before Obama. Since then, these two officials have marched in opposite directions, with opposite results.
We were closer to the abyss than most states, Fortuño says. When I came into office, we were facing not just the worst recession since the 30s, but the worst budget deficit in America, proportionally. We were literally broke. We did not have enough money to meet our first payroll. We had to take out a loan to do that. At that point, my wife asked me if we could ask for a recount.
So, unlike the free-spending Obama, and G.W. Bush before him, Fortuño declares: We cut expenses.
Fortuño gave himself a 10 percent pay cut. He trimmed his agency heads salaries by 5 percent. That bought him the credibility to chop overall spending by 20 percent. He booted some 20,000 government workers, through attrition as well as layoffs, saving $935 million. (Compare that to Bush-Obamas 11.7 percent hike in federal civilian headcount since the Great Recession began in December 2007 excluding temporary Census jobs.) Fortuño has shifted remaining government workers from old-fashioned, statist, defined-benefit pensions to modern, market-friendly, defined-contribution plans.
Ranked No. 51 in 2009, behind each of the United States, in terms of deficit-to-revenue, Puerto Rico now is 15th, with the $3.3 billion deficit Fortuño inherited (44 percent of revenues) now macheted to $610 million (7.1 percent). Fortuño reforms, including merging government agencies, led Standard & Poor’s to upgrade Puerto Rico’s credit rating for the first time in 28 years. S&P, of course, famously downgraded U.S. sovereign debt last August, an historical first. Meanwhile, Americas national debt screamed past the $15 trillion mark on Wednesday.
Fortuño has sliced taxes. The corporate tax rate plunged last January 1 from 41 percent to 30, en route to 25 percent in 2014. He cut average individual tax rates by one quarter this year and in half within six years.
You needed to obtain an average of 28 permits and endorsements to do anything, Fortuño says, regarding regulatory relief. You had to go to 20-plus different agencies to do that. Today, you go to one agency, and you get your permit there, or you can go to PR.gov, and get it online.
We have created a better business climate, and it shows, Fortuño explains.
A five-year property-tax holiday and the scrapping of capital gains and death taxes have helped push existing home sales up 35 percent this year (while they fell 7.9 percent on the Mainland) and new home sales soaring 92.2 percent (as they sagged 9.9 percent up north).
CVS, Nordstroms, Pet Smart, P.F. Changs, Saks Fifth Avenue, and Victorias Secret all are opening in Puerto Rico. Theyre coming in brand new, for the first time, ever, Fortuño says. Honeywell and Merck are expanding manufacturing facilities. Venezuela’s Banesco is the first new bank to open in Puerto Rico in 13 years.
We are moving in the right direction, Fortuño smiles. We are creating jobs in the private sector, not in the public sector, the way we should be. So, we can keep lowering taxes.
Ronald Reagan and Margaret Thatcher are among Fortuño inspirations. Volumes by and about those visionaries grace Fortuño’s bookshelves. A small sign on his desk replicates one in Reagan’s Oval Office. It explains Luis G. Fortuño’s success, begs Washington to listen, and simply says: It CAN be done.
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