Confronting problems is painful politically, and so kicking such cans down the road is a Beltway tradition. Why endure pain in the here-and-now when delay is an option that just might dump the given problem onto the next incumbent?
A good question indeed. But a better one is: Given that not all policy interventions prove advantageous on net — I betray no secret when I report that policymakers often get things wrong — might not can-kicking into the future sometimes be better than dubious “solutions” adopted under the pressures of the moment?
Well, yes; the absence of government action can be better than ill-advised government action. The latest illustration of this eternal truth is Senate Bill 1774, which would amend federal law to make Puerto Rico government corporations eligible for Chapter 9 bankruptcy retroactively.
A bit of background: Puerto Rico is the third-largest issuer of municipal bonds in the U.S., with debt now totaling about $73 billion. Legislation enacted by Congress in 1984 prevented it and its various municipal agencies and bureaus from using Chapter 9. That has had the effect of reducing the interest rates that they have had to pay because purchasers of the bonds had greater resulting confidence in repayment. Moreover, Puerto Rico and its various borrowing units have been granted a nationwide tax exemption for their bonds — a preference bestowed upon no U.S. state — thus reducing Puerto Rico’s borrowing costs even more.
You can read the rest of the article at The Hill. It will be available here on January 11, 2016.
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