An Interview with Luis Fortuño, Former Governor of Puerto Rico
Luis Fortuño is a Puerto Rican politician. He served as the tenth Governor of the Commonwealth of Puerto Rico from 2009 to 2013, and as the President of the New Progressive Party of Puerto Rico. Prior to becoming governor, Fortuño worked as the Secretary of Economic Development and Commerce of Puerto Rico from 1994 to 1997, and as the territory’s Resident Commissioner from 2003 to 2005. Fortuño received a Bachelor of Science in diplomacy from the Edmund A. Walsh School of Foreign Service at Georgetown University and a law degree from the University of Virginia. He now works in Washington, D.C. as a partner for Steptoe & Johnson LLP.
The Politic: For our readers, can you tell us more about the major events and challenges you faced during your term as Governor of Puerto Rico and what key policy actions you took to face them?
Luis Fortuño: When I became governor, Puerto Rico was in dire straits. The budget deficit was $3.3 billion. But on top of that, there were also other debts. We were facing a cash flow deficit of over $4.2 billion. Just to give you an idea, Puerto Rico had essentially been losing its capacity to generate economic activity. If you have been following the discussions regarding the oversight board, the fiscal plan that was introduced by the government gives you an idea of how between 2000 and 2008, the payroll cost went up by 63%. At the same time, collections were going up by one percent. It was completely unsustainable. We had to lower different areas of the budget, including payroll and otherwise. If you go to page 11 of that fiscal plan, it shows you that in 2008, the public debt went up by 131%. From $26 to $60 billion. This is not just bonds, but other debts. If you owe money to lenders, if you owe money to public corporations, debt is debt. So, starting in 2006, the economy entered negative territory. We had to make very immediate and tough decisions to avert a crisis where we would have to shut down the government and close schools. That was the biggest challenge that we faced.
The only time that the economy has been in positive territory in the past decade has been a year and a half between 2011 and 2012. We got the economy growing again. It was tepid growth, but that’s better than losing steam by 2 or 3 percent per year. And we were closer and closer to balancing our budget. But that took a lot of tough decisions, and we went through very difficult times.
TP: Absolutely. We definitely established that Puerto Rico is facing an unprecedented debt crisis. As you have mentioned, the current governor, Ricardo Rosselló, has had his plan approved by the federal oversight board. What do you think are the pros and cons to the current governor’s fiscal plan, and do you think it will achieve its goal of pulling Puerto Rico out of the debt crisis over the next 10 years?
LF: I know it was approved with amendments, and to be honest I haven’t had a chance to read through it. What I hope for, and that’s what I can tell you, is that it will be a plan that will bring back credibility to the island, that will allow the island to balance its budget, promote economic growth, and fourthly will allow for the island to actually access the municipal market again at reasonable rates. So hopefully that will be the end result of this, but it’s actually evolving; it’s happening as we speak.
TP: Changing gears a little bit, on June 11, Puerto Rico will have a plebiscite on whether or not to petition for statehood. What do you expect to be the outcome of the plebiscite, and do you believe that Congress will acknowledge it, should Puerto Rico vote in favor of petitioning for statehood?
LF: This year, Puerto Ricans celebrated the 100th anniversary of the granting of citizenship by the U.S. government. The founding fathers intended territorial status to only last so long. Since Puerto Rico has become a territory, it has been more than 100 years, since 1898. It is time for the U.S. Congress and the people of Puerto Rico to decide this as soon as possible. It has been proven over and over again that territories’ economic performance always underperforms compared to the economic performance of the parts of the country that are fully integrated, like states. I am hopeful that at some point this will be addressed, and that the people of Puerto Rico will also decide that they want to assume full responsibilities and benefit from the lessons of full-fledged American citizenship.
TP: Do you believe that statehood would help Puerto Rico speed up the process of pulling out of its debt predicament?
LF: Definitely. Again, it has been proven over and over again that territories underperform the sections of the country that have been fully integrated. So, yes, I believe that it will be quite beneficial for the residents of the island to fully participate with the rest of the citizens in the fifty states. But you can only benefit if you are full-fledged state.
TP: I wanted to talk briefly about healthcare. You have been an opponent of the Affordable Care Act and have advocated for its repeal. I’m curious as to what you make of the American Health Care Act, or the Affordable Care Act replacement that was unveiled by House Republicans last week? How do you think specifically American health care policy affects people on the island?
LF: Sure. To begin with, the people of the island do not participate with the Affordable Care Act. So that’s a big difference from the residents in the fifty states. The territories have a set fee, or an amount that is transferred to the territories, to be used for their Medicaid program. When the Affordable Care Act was approved and implemented in the fifty states, Congress used that legislative vehicle to assign initial funds in the next nine years. But Puerto Rico does not participate with the ACA. It does not hurt or benefit one way or the other. Puerto Rico is treated differently, and actually worse, under either [plan] than the states. In terms of how this can be improved, I think what we have today, with ever increasing insurance costs and unnecessary involvement by bureaucrats in that relationship between the patient and the doctor, has to change. I believe in empowering local communities as much as possible, and in that sense if the end result of this legislation is empowering local communities I believe these patients will do better. For example, if you end up with some sort of block grant where each state tends to their needs according to their conditions. The situation in North Dakota is very different from the situation in New York. And that’s why I believe that the funds should be allotted to local communities. By the same token, I believe that we all have a responsibility to those that cannot fend for themselves. They must be assisted by the state if NGOs cannot help. That’s why you have Medicaid, it evolved into ACA but it’s Medicaid, which dates back to 1965. And somehow, if you have pre-existing conditions, you should not be denied coverage, you should not be discriminated against financially. Secondly, those under 26 years old should one way or another be able to be covered by the parents’ insurance. But we’ll see what comes out of this. I don’t know what the result will be, but if local communities are empowered I think that’s positive.
TP: Thank you. Looking more broadly, Donald Trump has marked his 50th day in office. So far how would you evaluate the administration as a whole? Specifically, what has he done so far that you support and what do you hope to see him do in the future? What has happened so far that you disagree with?
LF: As much as I believe that our borders need to be secured, I don’t think you need to label any specific group one way or another. I thought that the first executive order on the ban was poorly drafted and misguided. I believe in protecting the border, but that first draft was poorly drafted. In terms of things that I believe are positive, I support what’s being done in terms of regulatory process. I believe that during the last few years, the overregulation of every industry is making the U.S. less competitive. I believe, again, in empowering local communities and not bureaucrats in Washington. There is discussion at this stage on two important initiatives, one to upgrade our infrastructure and I think that’s badly needed. There is talk of doing this with full participation of the private sector. I can tell you that public-private partnerships have worked well in Puerto Rico, but they must be correctly designed and negotiated correctly. Secondly, there’s talk on tax reform, and I believe that the U.S. needs tax reform. The U.S. has the highest corporate tax in the world and it’s forcing businesses out of the U.S. I think we can simplify our tax system and lower taxes, and I hope that will be the case eventually. There is legislation for a new internal revenue code, so hopefully that will take place.
TP: How has life been different for you now that you’ve moved from the island to Washington, D.C. to be a partner at Steptoe & Johnson? Would you like to move back to the island some day?
LF: I go to the island all the time. My whole family lives down there: parents, in-laws, brothers, sisters, nieces, and lots of friends! I go down there quite often. I would love to spend even more time down there. In terms of what I do at Steptoe, I’ve gone back to what I did most of my professional life. I was a corporate lawyer most of my professional life, but I’m going back with a different platform. And I do a lot of work in Latin America and different countries, and I enjoy that. As far as Spain and Korea, and I enjoy doing that. So professionally, it has been quite an experience. You have to work hard, but I don’t mind working hard. It’s what I’ve done all of my life.
TP: What advice do you have for Latinos who want to get involved in politics?
LF: The first thing I would say is: get educated. Don’t miss ANY opportunity to get a good education. Work hard, whether it’s high school, college, or grad school. Once you have completed that, regardless of which party you belong to, get involved. Start in your community and work from there. It doesn’t have to be political; it can be through community organizations. But get involved.