Puerto Rico: Greece of the Caribbean?

[Valin]

Via Meadia:

11/27/12

 

California has taken some much-deserved flak on this blog and elsewhere for its woefully underfunded public pensions, and the President’s home state of Illinois has thoroughly wrecked its finances with pension stupidity, but the worst pension crisis in America is not in any of the states—it’s in Puerto Rico. The island territory has had a rough go of it lately; tax revenues have been falling as a shrinking population, a long recession, and the growth of the underground economy cut into the tax base. The government has been reduced to selling off roads and airports to raise money to cover its debts. But the biggest problem is the pension system. The New York Times (where thanks to ace reporter Mary Williams Walsh coverage of the pension crisis remains outstanding) reports:

 

The main fund, which serves about 250,000 government workers, past and present, is only 6 percent funded — a small percentage of what is considered the minimum needed for a marginally healthy pension plan — and could run out of money as soon as 2014. Another fund, for about 80,000 teachers, which is 20 percent funded, will last just a few years longer if nothing is done. Police officers and teachers in Puerto Rico have opted out of Social Security and rely entirely on their pensions.

 

It’s not clear that any help is on the horizon. Although outgoing governor Luis Fortuno had adopted an austerity plan aimed at fixing the fund, his defeat in the recent election has killed the plan, and his successor has given few signs of what he plans to do. Meanwhile, the territory’s bond ratings continue their freefall:

 

(Snip)