I bring this up because you may have noticed that Puerto Rico has been devastated by Hurricane Maria. The commonwealth’s nonvoting member of the House of Representatives told the Associated Press, “The devastation in Puerto Rico has set us back nearly 20 to 30 years.” More reports suggest the magnitude of the devastation:
Trump doubled down on that explanation later in the day. While it is true Puerto Rico is an island, it is also true it isn’t that far away and shipping relief supplies can make a big difference.
Here’s where deregulation might be useful. As Nelson Denis noted in the New York Times a few days ago, there’s a dumb, outdated piece of legislation that has crippled the Puerto Rican economy for decades:
After World War I, America was worried about German U-boats, which had sunk nearly 5,000 ships during the war. Congress enacted the Merchant Marine Act of 1920, a.k.a. the Jones Act, to ensure that the country maintained a shipbuilding industry and seafaring labor force. Section 27 of this law decreed that only American ships could carry goods and passengers from one United States port to another. In addition, every ship must be built, crewed and owned by American citizens.Almost a century later, there are no U-boats lurking off the coast of Puerto Rico. The Jones Act has outlived its original intent, yet it is strangling the island’s economy….This is not just about recovering from Hurricane Maria. It is also about Puerto Rico’s long-term future. If the Jones Act were suspended, consumer prices would drop by 15 percent to 20 percent and energy costs would plummet. A post-Jones Puerto Rico could modernize its infrastructure and develop its own island-based shipping industry. Indeed, the island could become a shipping hub between South America, the Caribbean and the rest of the world. This industry would generate thousands of jobs and opportunities for skilled laborers and small businesses. On an island with official unemployment over 10 percent (but actually closer to 25 percent), this would energize their entire workforce.
The Jones Act has been an albatross around the Puerto Rican economy for decades, costing the island an estimated $1.7 billion in lost commerce every year since 1990. It was a contributing factor to the commonwealth’s fiscal crisis last year.
During times of emergency, the Department of Homeland Security can suspend Jones Act requirements. DHS did that very thing after Harvey hit Texas and Irma hit Florida. Unsurprisingly, many members of Congress have requested the same for Puerto Rico in the wake of Maria.
Reuters reports that DHS isn’t having it:
The Trump administration on Tuesday denied a request to waive shipping restrictions to help get fuel and supplies to storm-ravaged Puerto Rico, saying it would do nothing to address the island’s main impediment to shipping, damaged ports. …On Monday, U.S. Representative Nydia M. Velázquez and seven other representatives asked Elaine Duke, acting head of Homeland Security, to waive the nearly 100-year-old shipping law for a year to help Puerto Rico recover from Hurricane Maria. Gregory Moore, a spokesman for Customs and Border Protection, an office of Homeland Security, said in a statement that an assessment by the agency showed there was “sufficient capacity” of U.S.-flagged vessels to move commodities to Puerto Rico. …Puerto Rico has long railed against the Jones Act, saying it makes the cost of imported basic commodities, such as food, clothing and fuel, more expensive.
The HuffPost’s Jennifer Bendery reports that DHS decision-making on this issue might be less than optimal:
Asked for comment on Puerto Rico having to pay twice as much for supplies at a time when it is economically and geographically devastated, [DHS spokesman David] Lapan said the department has not analyzed the potential cost savings of waiving the Jones Act “since that is not material to our decision-making.”
This seems like a huge policy miscue, particularly for an administration that ostensibly wants to deregulate more. Sen. John McCain (R-Ariz.) has written a letter to the acting DHS Secretary about waiving the Jones Act. He makes some valid points:
It is unacceptable to force the people of Puerto Rico to pay at least twice as much for food, clean drinking water, supplies and infrastructure due to Jones Act requirements as they work to recover from this disaster. Now, more than ever, it is time to realize the devastating effect of this policy and implement a full repeal of this archaic and burdensome Act.Hurricanes Harvey, Irma and Maria have ripped through our southeastern coasts and islands, incurring hundreds of billions of dollars in repair and lost production cost estimates. Each of these disasters has and will require substantial emergency cleanup, reconstruction supply, and rerouting efforts, all of which rely on an expedient and functional transportation system. We must treat this emergency relief with urgency — every day that business owners are unable to recover their assets and account for lost business, the economy will retreat even further into devastation.
I fear the Trump administration will resist this move because when push comes to shove, it prefers protectionism over deregulation.
The people of Puerto Rico will pay the price.