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article imagePuerto Rico debt problems could set off crisis in the U.S.

By Caroline Leopold     Jun 30, 2015 in Business
Puerto Rico's governor says the country cannot pay the $70 million in debt, which sets the stage for a potential financial crisis in the United States.
The governor of Puerto Rico made a televised speech on Monday that the country cannot pay back more than $70 billion in debt. A debt default could set the stage for an unprecedented financial crisis in the United States.
Governor Alejandro Garcia Padilla said Puerto Rico needed to postpone for several years its debt payments.
“This is not about politics,” said Padilla. “It’s about math.”
In an analysis in the Wall Street Journal, Puerto Rico has not taken sufficient measures on its own to narrow the debt. The country has a high proportion of government employees, who are earning far more than the average $20,000 per year for other Puerto Rican workers. However, Padilla pledges that he will not lay off any government workers.
The White House's response to the governor's statements was that it will not bail out Puerto Rico. White House spokesperson, Josh Earnest, said that federal officials are, however, committed to working with the island on its financial problems.
Puerto Rico's refusal to make debt payments could rock the municipal bond market and lead to higher borrowing costs for governments across the United States.
More about Puerto rico, puerto rico debt, governor padilla, Alejandro Garcia Padilla
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