It’s not hard to understand why Congressional Democrats are for bailing out Puerto Rico or changing the law to allow it to file for Chapter 9 bankruptcy.

Puerto Rico is a testament to everything is wrong with Democratic governance. It is overtaxed with a minimum wage far too high for local economic conditions. It is corrupt, inefficient, broken down and heavily indebted to public-sector unions and their lavish pensions.

ADVERTISEMENT

Its outsized government-induced costs mean it can’t attract business, which explains why it has the lowest labor force participation in the western hemisphere. The numbers no longer work, and, absent intervention, Puerto Rico will be forced to make the fiscal and structural reforms it should have made decades ago.

But it’s harder to figure why some Republicans want to join in on this. Didn’t their last round of bailouts – which gave us eight years of Barack ObamaBarack Hussein ObamaJuan Williams: Buttigieg already making history Obama condemns attacks in Sri Lanka as 'an attack on humanity' Trump hits Romney for Mueller criticism MORE – teach them anything?

No, if Puerto Rico wants to recover from its Greece-like financial predicament – it owes $73 billion it can’t repay and began last week to default on some bond obligations – it needs to do so the old-fashioned way: by trimming government, cutting taxes, luring businesses and putting its people to work at reasonable wages.

They could hold the next Winter Olympics on all the slippery slopes that would be created if Puerto Rico was awarded a bailout or, as others have suggested, allowed to go bankrupt under Chapter 9.

The bailout implications are obvious. Puerto Rico is mired in debt in no small part because of ridiculously generous pensions awarded to public sector unions. It is bound by law and its constitution to meet these obligations, but, as they say down at the ATM, the funds are not available.

A bailout would mean the same obligations would re-appear next year and the year after and the year after that. Are we prepared for annual bailouts?

For that matter, Puerto Rico’s public sector is hopelessly bloated. A bailout would mean everyone keeps their public job, but entrepreneurial types and those who have finished college will continue to leave this economic basket case for the mainland. So, again, are we prepared to do this every year?

Bond traders – at least a fifth of whom hold Puerto Rico’s bonds – want a bailout and not a bankruptcy. They saw the haircuts their colleagues sustained in Stockton, Calif., and Detroit, and they want no part of that. But Puerto Rico’s bonds are below investment grade, which means the geniuses of Wall Street knew they were taking substantial risks when they put their money and that of their investors into these bonds.

If there is not the occasional failure to deter such risk-taking, then it becomes not risk-taking but a gold-standard, Washington-backed investment with uncommonly high yields. They won’t like it if Puerto Rico renounces its debts and undergoes fiscal reform, but they will survive.

Chapter 9 is not appropriate for a number or other reasons. First, it is designed for municipalities, and Puerto Rico is not a municipality. Putting it under this rubric sends a signal to others similarly unable to meet their public pension obligations, such as California and Illinois, that this course may be available to them.

Also, as Detroit is learning, it is not a cheap alternative. It cost Detroit $178 million just to pay for the legal fees and other professional services needed to go bankrupt – and Puerto Rico’s debt is three times the size of Detroit’s. And now, its economy suffers and the cost of borrowing is far higher and will be for the foreseeable future.

Some suggest the government of Puerto Rico file for Chapter 9 and try its luck in court on this. But that would mean even more legal fees, more delay in reforms and more money needed to eventually address the situation.

Others have suggested appointing a control board similar to the one that took over the District of Columbia’s finances in the 1990s and allowing for Chapter 9. But the strength of the control board idea is the ability to act swiftly and decisively for reform and to do so without excusing any debt. None of this would be the case under Chapter 9.

The way out is to privatize Puerto Rico – to shift its emphasis from public sector employment to private sector gains. Its minimum wage is the same as on the mainland, which means it is utterly uncompetitive with its competitors in the Caribbean. That needs to be changed to reflect market conditions and attract private investment.

Also, let creditors make their deals. They went in, supposedly, with eyes wide open. Now, they can bargain for what they get back and insist on structural reforms that, again, decrease the prospect of this all being repeated in a year or two or five.

Kevin Williamson at National Review says Democrats want to save it only to help their cronies on Wall Street and that the right course is to let Puerto Rico default and let its investors fight for their share of what’s left and insist on the reforms that must come.

He also says Puerto Rico has “something like an island-wide commitment to screwing its creditors.”

That’s something the young and irresponsible do. It’s time for Puerto Rico to grow up.

McNicoll is a conservative columnist and freelance writer based in Alexandria, Va. He is a former senior writer for The Heritage Foundation and former director of communications for the House Committee on Oversight and Government Reform.