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Opinion for The Latino Newsletter

Puerto Rico’s economy has spent decades on life support, sustained by a constant infusion of federal dollars. Disaster aid, Medicaid block grants, nutrition assistance, and dozens of niche programs now total roughly $40 billion a year—more than 40% of the island’s entire output. What began as emergency relief has hardened into a permanent subsidy, crowding out enterprise and weakening civic accountability.

Senate President Thomas Rivera Schatz captured the dilemma with one blunt claim: the best social program is a job. The statistics bear him out. Only about 45% of working-age residents in Puerto Rico participate in the labor force, compared with more than 60% on the mainland. Those who do work earn an average of $18 an hour in San Juan, barely half the national figure. The gap is no mystery: when Washington functions as paymaster of last resort, productive investment becomes optional and wage growth stalls.

Imagine, then, an unthinkable scenario: Congress flips the switch and the federal transfers stop. The first weeks would sting, but the shock would ignite five dormant engines of renewal.

1. Fiscal honesty. A balanced budget without outside cash would force politicians to confront arithmetic they have long avoided: pension liabilities, redundant agencies, and unsustainable debt service. Transparency and tough choices would become survival skills, not talking points. Investors reward credible books. Cheaper capital would follow.

2. Regulatory freedom. Cash-strapped governments cannot afford bureaucratic friction. Losing transfer income would accelerate the partial licensing reforms in Law 3-2025 into a full deregulation sprint—online permitting, automatic recognition of professional licenses issued in any U.S. state, and mandatory sunset reviews. Every hour shaved off compliance is an hour returned to productive work.

3. A larger workforce. When income-tested subsidies are eliminated, able-bodied adults enter the labor market. The experiences of Estonia after 1992 and New Zealand after 1984 show that labor-force participation can increase by 15 points within five years. For Puerto Rico, that would mean roughly 300,000 additional workers—enough to power a construction boom and lure near-shored manufacturing from the mainland.

4. Municipal reinvention. City halls that can no longer rely on federal matching funds would privatize waste collection, transit, and segments of the power grid. Where ideology once blocked public-private partnerships, necessity would push them through. Performance-based contracts would lift service quality and stabilize local tax bases.

5. Health-care realignment. Without a Medicaid block grant, hospitals would pivot to a contributory, value-based insurance financed by payroll premiums and employer mandates—similar to Singapore’s model. Doctors would stay because reimbursement would come from local payers on predictable schedules, rather than uncertain federal flow-throughs.

Skeptics warn of starvation and shuttered clinics, yet the current subsidy model is already starving the future. The exodus of young professionals, the chronic wage gap, and a political culture fixated on congressional appropriations are direct by-products of dependency. The island imports far more than it exports and then waits for Washington to paper over the imbalance.

A post-transfer Puerto Rico would, for the first time in more than a century, confront the discipline every successful economy embraces: produce or decline. That may sound harsh, but adulthood often does. Better a short, bracing shock that forces reform than the slow drip that dulls ambition and corrodes civic muscle.

The path is clear. In the first 90 days, launch an emergency deregulation blitz. Within a year, adopt a flat territorial income tax paired with a modest value-added tax to replace today’s patchwork levies. Market new “Island Renewal Bonds” to the diaspora for infrastructure finance. Tie wage subsidies to productivity gains, not headcounts. And publish monthly dashboards —including labor participation, new business registrations, and median wages— so citizens can assess progress for themselves.

Federal transfers were intended to serve as scaffolding. They have become shackles. Cutting the cord is not cruelty. It is liberation. When the support lines go dark, Puerto Rico will rediscover the most reliable social program ever devised: the ingenuity and industry of its own people, finally unleashed.

About the Author

Javier Ortiz, with over 30 years of experience in technology, business, and the public sector, leads investment technical due diligence and innovation at Falcon Cyber Investments.

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What We’re Reading

ICE in Puerto Rico: From NPR, “No one knows exactly how many immigrants are living without legal status in the U.S. territory of Puerto Rico. Rebecca González-Ramos, ICE's top investigator on the island, estimates it's about 20,000, and since January, it's been her job to track down and deport every last one of them.”

Marcelo Gomes da Silva Released: From The Boston Globe, “Six days after federal immigration officials detained Milford High School student Marcelo Gomes da Silva on his way to volleyball practice, a federal judge ordered his release Thursday, and Gomes was able to reunite with his family and friends in an emotional scene.”

The Latino Newsletter welcomes opinion pieces in English and/or Spanish from community voices. Submission guidelines are here. The views expressed by outside opinion contributors do not necessarily reflect the editorial views of this outlet or its employees.