Former member, U.S. House of Representatives; currently governor; holder of a law degree from the University of Virginia and a bachelor’s from Georgetown; Reagan Republican; 50 years old. With credentials like these, one might conclude quickly I am referring to one of America’s higher-profile 2012 Republican presidential contenders. No; at least not yet.
The man described by the above resume is the energetic and telegenic Luis Fortuño, currently in the middle of his first four-year term as Puerto Rico’s chief executive. Although Fortuño is still largely unknown outside Puerto Rico, the phenomenal successes he already has achieved to bring the island’s previously sour economy back to life, is certain to raise his reputation and his image nationally – as well it should.
Government leaders from President Obama and Speaker John Boehner on down would serve themselves — and the people they represent — well to study and learn from what Fortuño has done in just his first biennium in office. He has not dallied. He has not wrung his hands in pity. He has not tried to “jump start” Puerto Rico’s economy with government “stimulus” monies. He has not wasted time blaming his predecessors. What he has done is to confront the fiscal mess he inherited in January 2009; put together a multi-faceted plan to turn the economy around; worked with the legislature; and, in his words, “stayed the course.”
The “Puerto Rico miracle” is no mirage.
How bad was the situation facing Fortuño in the fall of 2008 even before he took office? Bad enough that Puerto Rico’s credit rating was near “junk bond” level; requiring Fortuño to travel to New York to meet with investment community leaders to urge them not to reduce the island’s rating even further. Puerto Rico’s budget deficit stood at $3.3 billion — at nearly 44% of revenues, worse than any of the 50 states. There was not even enough cash to meet his first payroll. One big reason for this predicament was the sheer size of the Commonwealth’s bureaucracy – nearly 70% of the budget was eaten up by government employee salaries and benefits.
Puerto Rico’s fiscal turnaround since January 2009 has been nothing short of remarkable.
The huge budget deficit has been reduced significantly; as a percentage of revenues it has dropped from nearly 44% to less than 11%. Government employment rolls have been reduced dramatically – by 17,000 and continuing to fall. Defined benefit pension plans have been closed out; the number of government agencies has been slashed; and the overall budget has been chopped a full 20%.
As a direct result of Fortuño’s work, Puerto Rico’s bond rating with Moody’s has leaped from Baa3 to A3; the highest it has been in 35 years.
Fortuño is hardly resting on his laurels and basking in the limelight. Recognizing that high taxes harm an economy rather than help it, he recently signed into law significant individual and corporate tax reductions. Corporate rates have been cut 11% and the former, seven-tier tax structure simplified to three lowered rates. Individual rates have been slashed an average of 25%, and will reach nearly a 50% reduction over the next several years.
In a unique effort to help ensure the government continues to behave in a fiscally responsible manner, future tax cuts will depend on the government continuing to meet targeted goals, including cuts in operating expenses. Every one of the island’s taxpayers will have a stake in making sure those goals are met.
To help ensure Puerto Rico’s long-term fiscal viability, Fortuño has been instituting a strong public-private partnership for schools, airports, and other facilities; and implemented a successful housing initiative. The formerly Byzantine government permitting process has been dramatically reformed. And the beat goes on.
How do you spell “success” in politics? How might you spell “future” for the GOP? Same answer to both questions — “Fortuño.”
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