Statehood becomes a Puerto Rico priority

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Gov.-elect Pedro Pierluisi, a member of the pro-statehood New Progressive Party, is familiar with how Congress works after serving for eight years as Puerto Rico’s nonvoting member of the U.S. House.

Tuesday’s victory by pro-statehood gubernatorial candidate Pedro Pierluisi coupled with the passage of a nonbinding referendum also supporting statehood for Puerto Rico has clearly framed statehood as one of the U.S. territory’s top priorities.

It’s now up to Washington policymakers to decide how to respond when the next Congress and new administration take office in January.

Following Tuesday’s vote, Moody’s Investors Service issued a report outlining the benefits and drawbacks of statehood for Puerto Rico.

“Admission as the 51st state would put the commonwealth on equal footing with other states to receive key sources of federal funding, especially for Medicaid, a credit positive,” Moody’s said. Funding for Medicare, the Supplemental Nutritional Assistance Program, and Supplemental Security Income (SSI) also would increase.

Moody’s said the downside would be “new federal taxing requirements imposed on commonwealth residents and businesses.”

“Statehood also could make it more expensive to lure bond investors, with future commonwealth bonds losing their historic triple tax-exempt status,” Moody’s said. “Some business investment, however, could increase due to the perceived greater political stability stemming from statehood, as opposed to Puerto Rico remaining a territory.”

Completion of a territorial debt-restructuring plan would likely be a congressional precondition for statehood. The Puerto Rico Financial Oversight and Management Board is currently struggling to complete work on a proposed central government debt restructuring plan that would help the island’s government emerge from bankruptcy.

Any plausible chance for Congress to approve statehood over the next two years would require a Democratic majority in the Senate. That remained questionable on Thursday with several Senate races still undecided with the ultimate outcome possibly not determined until after a Jan. 5 runoff election in Georgia.

Democratic presidential candidate Joe Biden and Senate Democratic Minority Leader Chuck Schumer have gone on record as supporting statehood for Puerto Rico.

But President Trump and the Republican-controlled Senate expressed opposition earlier this year to statehood legislation for the District of Columbia that passed the Democratic-controlled House on June 26 by a vote of 232-180.

Trump said Oct. 1 on Fox News that he thinks "a lot of Puerto Ricans don't want statehood."

“They’re doing better the way it has now, frankly," Trump told Fox News host Sean Hannity without explaining why. Two years ago Trump said he would be an “absolute no” on the statehood issue as long as San Juan Mayor Carmen Yulín Cruz remained in office. Cruz, a harsh critic of the president’s response to the hurricanes of 2017, did not seek reelection on Tuesday.

Gov.-elect Pedro Pierluisi, a member of the pro-statehood New Progressive Party, is familiar with how Congress works after serving for eight years as Puerto Rico’s nonvoting member of the U.S. House.

Peirluisi received 390,330 votes, or 32.7% of the ballots counted to the 376,226 votes, or 31.5% of the count received by second-place finisher Carlos Delgado of the Popular Democratic Party with 95.7% of the votes counted, according to the Puerto Rico State Commission on Elections.

He was succeeded as the territory’s nonvoting resident commissioner by Jenniffer González-Colon, who also favors statehood and won a second term in Tuesday’s election with a nine percentage point victory over her next closest challenger.

The referendum on U.S. statehood received more than 52.2% support, with 95.7% of votes counted, the Puerto Rico State Commission on Elections reported.

Statehood requires passage of enabling legislation by the House and Senate with approval by the president, but it was last done by Congress 61 years ago in 1959. The Act to Provide for the Admission of the State of Hawaii into the Union dissolved the territory of Hawaii and established the State of Hawaii as the 50th state effective Aug. 21, 1959.

The Puerto Rico Admissions Act introduced by Democratic Rep. Darren Soto of Florida and Gonzalez-Colon will need to be reintroduced after the new Congress convenes on Jan. 3. In the current Congress, the bill has 21 bipartisan cosponsors.

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