Well, this one snuck out of left field, and we are paying attention. The House today voted on a bill allowing for a referendum to be held in Puerto Rico to determine if it would like to change its status with regard to it's standing in the federal government. Normally one would expect somewhere requesting to apply for statehood would make a headline or two. We'd have to hire on someone to add a star to the flag.

Currently Puerto Rico is a "commonwealth". It maintains semi-autonomous status under the protection of the United States. There are many benefits to this arrangement. All residents are US citizens, and as such they enjoy the full compliment of social services supplied by the federal government. Any perk enjoyed by a resident of Cleveland or Houston is enjoyed by the people of Puerto Rico.

As they are not a state, residents do not have a voting representative in the Senate or the House, though they do have a delegate who is popularly elected. This delegate represents the interests of the island, in much the same way as a full member of congress does. It is the job of the delegate to wheel and deal for their share of federal pork (which tastes excellent with black beans and fried plantains). The current delegate is Pedro Perluisi (D).

This issue comes up every few years as a matter of course. The procedure is essentially the same every time. Two referendums are held. The first is a simple yes or no vote to the question "Do you want to change the political status of Puerto Rico?". If a majority vote yes, then a second referendum is held which allows for one of three choices to be selected - statehood, independence or commonwealth. The vote is limited to those born on Puerto Rico, as a means of making it a voice of the indigenous Puerto Ricans.

Commonwealth generally wins as it has many advantages over either statehood or independence. If independence were chosen, Puerto Rico would become a country, and give up all federal benefits. If they were to choose statehood, they would be obligated to fulfill the mandates that the federal government issues to the states. Most of the time it pays for Puerto Rico to remain as it has been since we received it after the Spanish American War.

This time is a little different. The economy of Puerto Rico has been hammered by the global recession. It's main industry is tourism, and for the most part the hotels are remaining ghostly quiet. That translates to the restaurants, cantinas and other tourist related businesses.

The second biggest employer on Puerto Rico is the territorial government. It is a heavily bloated government that actually makes the state government of California look like responsible stewards of the public trust. Patronage and waste are hallmark traits of the system which is as world class as the vaunted Chicago machine or Tammanny Hall of old NY. That is not meant to be insulting to Puerto Rico any more than it is to the cities of Chicago or NY. It's just what government does.If you pick up a snake, you're going to get bit.

Normally the island is so flush in federal funds and tourist dollars that this doesn't matter. In the current economic climate, federal funds are not enough to offset the crumbling of the tourist sector or the flight of employees from the private sector to "safe" jobs in the territorial government. Puerto Rico recently shed 30,000 public employees as a means to stop the bleeding of funds. Many businesses have closed, and the ones that have not are not putting on new workers. The thought of increased federal funding through becoming a state is much more palatable to the local population that is in pain.

It is also an attractive and useful trinket to the Obama administration. Puerto Rico is solidly democrat, and statehood would provide President Obama with six new Democrat members of the House of Representatives. Puerto Rico would also send two brand new Democrat senators to DC, effectively restoring super-majority status to the Democrats - even if temporarily. President Obama would be helped in 2012 by at least 8 guaranteed electoral votes. Plus it always looks good to have a President add a new star or two to the flag.

We can see a push coming up to advance this issue before 2012, but the process will take too long to affect the 2010 mid-terms. The referendums, once scheduled will be spread over several months to give competing sides time to drill their message home via advertising. Should the referendum favor statehood, Puerto Rico would have to apply for statehood. The Constitution of the United States provides for admission of new states in Article 4. Generally Congress requires some conditions before granting statehood. Both the proposed state legislature and the US Congress must consent to the formation of a new state. Congress can deny granting statehood for any number of reasons, not the least of which would be taking on the shaky finances of the territory in a more direct manner.

Common Sense Dictates

While it is usually the case that people as individuals wish to come to the United States, it is a much more rare thing for a region to decide to become a state. We are hearing both the right and the left spin this as a political game. The right sees Obama shenanigans behind every decision. The left is justifying that view in it's vocal appetite to get more Democrat voters while not actually doing anything substantive to help those voters. Groups as diverse as various ethnicities, the poor, the middle class, small business owners, union workers, environmentalists, oil companies and financial institutions have all been pandered to when their support was needed or useful, and routinely put through the ringer when that group is no longer particularly useful. To be fair, the Republican side still is not very eloquent in it's solutions, and panders in it's own way.

Ultimately, it is up to the people of Puerto Rico to decide their fate - not President Obama. This is old hat to many of them. We at TPP believe that the people of Puerto Rico will decide this issue in the manner that they traditionally have - remaining as a commonwealth. It really is the best deal for them. We hope that this process only becomes political within Puerto Rico, and does not turn into the spin circus that has become the norm on every issue from healthcare to financial reform. The culture of Puerto Rico is primarily Hispanic, so the temptation of the spin-meisters will be to portray the debate over statehood being a racial thing. That is how Arizona is playing out. It does not need to be, and it is not. Puerto Rico will decide what it wants, and the US Congress will decide what it wants. It would be ironic if Puerto Rico decided against statehood because they feel that the federal government is too dysfunctional to suit their needs - but it would make common sense.

RLB