John Oliver and Lin-Manuel Miranda Break Down (and Rap About) Puerto Rico's Debt Crisis

John Oliver
Puerto Rico is $70 billion in debt, and there's not much they can do about it. YouTube

John Oliver's message during the feature segment of Sunday's episode of Last Week Tonight was simple: Puerto Rico is totally screwed. The island territory that most of us associate with rum, parades and Jennifer Lopez is buried under a mountain of debt, and its 3.5 million citizens may be in mortal danger. The poverty rate is 45 percent, and last year around 80,000 Puerto Ricans left their economically ravaged home to come to the United States. How it reached this point is complicated, but fortunately John Oliver is really, really good at explaining things.

Tax Breaks Were Given to Businesses That Moved to P.R. Instead of Overseas

Because Puerto Rico is part of the United States but not really part of the United States, the island has been privy to a number of legal loopholes. In the 1970s, the U.S. government gave businesses tax breaks to move to Puerto Rico instead of overseas. This turned the island into a manufacturers' paradise. At one point, it housed 89 pharmaceutical plants.

Congress Phases Out These Tax Breaks to Offset Cuts on the Mainland

All of a sudden, Puerto Rico lost half its manufacturing jobs. The government's response was to start issuing municipal bonds, which, as Oliver puts it, are kind of like IOUs. To ensure enough bonds would be bought to buoy the economy, the Puerto Rican government deemed the bonds triple tax exempt, meaning whoever bought them would not have to pay taxes on them. Puerto Rico also wrote it into their constitution that paying certain bonds off would often take precedence over basic public services. As a result, the country sold a lot of bonds, especially to Wall Street.

Puerto Rico Became Addicted to Selling Bonds, Which Meant More Debt

Because the market for the municipal bonds was so strong, Puerto Rico just kept selling them. As former governor Luis Fortuño says, "It was a lot easier to just go out and borrow as opposed to making tough decisions."

To make matters worse, because of an inexplicable provision (seriously, no one can explain why the provision exists), Puerto Rico cannot file for bankruptcy. They are stuck with their debt.

Puerto Rico Tries and Fails to Lure Wealthy Businesspeople to Create Jobs

In an effort to bring more business to the island, the Puerto Rican government exempted newcomers from capital gains tax. The measure was expected to create 50,000 jobs in 18 months. It only created 5,800. Meanwhile, $420 million in potential tax dollars remained in the pockets of businesspeople.

People Suffer

The only thing left for Puerto Rico to do is cut government programs, even going so far as to shut the power off in hospitals. This has caused an estimated one doctor per day to flee the country for better working conditions. This wasn't good news when the Zika virus overtook the country earlier this year. In addition to hospitals, more than 150 schools have been shut down in recent years, and sales tax was raised from 7 percent to 11.5 percent, higher than it is anywhere else in the United States.

There May Be Hope

The United States government is creating a bipartisan bill that would allow Puerto Rico some room to negotiate with their creditors. There has been a big campaign to stop the bill, though, and it's likely funded by—you guessed it—the hedge funds that own Puerto Rico's debt.

As Oliver concludes, "Three-point-five million Americans are facing a dire crisis right now, and the clock is ticking. Their next debt payment is due on May 1, and in the short term they need relief for hedge fund lawsuits and an opportunity to try to restructure their debt."

"We need to start treating it like an island of American citizens whose fate is interwoven with ours," he added.

To help drive home his message, Oliver enlisted the creator and star of Hamilton, Lin-Manuel Miranda, to spit a few rhymes for the cause. Miranda is the son of Puerto Rican parents and has spoken before Congress about the island's economic crisis. Here's what he had to say on Last Week Tonight.

My family is from Puerto Rico, the tropical destination
Where you can spend your Washingtons, the spot where you vacation
The commonwealth with not a lot of wealth, the not-quite nation
The 70-billion-dollar topic of conversation
Hoping to God that John Oliver's comic dissertation
Resonates with the Congress that got us in this situation
Along with suicidal tax incentive declarations
Yeah, we'll pay your bonds first, close the hospital, fuck the patients
This is an island, 100 miles across
A hurricane is coming and we're running up a loss
We got here through a million misguided loopholes
That giveth and take away businesses and poop in our soup bowls
They crapped in yours, they crapped in mine
And somewhere down the line
Strom Thurmond's ghost busted a cap in a chance at Chapter 9
The great debate over statehood has to wait
It's like Rose and Jack on the Titanic asking, "When's our next date?"
The ship is sinking we have to say and pay shit that matters
Then we'll figure out our Facebook relationship status
Will they or won't they? It's Friends's Rachel and Ross
We have to help our island, just 100 miles across
To recap:
Three-point-five million American civilians are on the hook for billions
Vulture funds are circling and lobbying for payouts
There's nothing left to tax or cut, we're stuck, we need a way out
Allow them to restructure, there's no structure for what happens
If you let this crisis play out, when May is less than a day out!
It's nonpartisan
The hard part is in convincing Congress Puerto Rico matters
So their heart is in the fight for relief
Not a bailout, just relief
A belief that you can pass legislation just to ease our grief
Paul Ryan, I'll come sing Hamilton at your house
I'll do-si-do with Pelosi and wear my Hamilton blouse
Your citizens are suffering, stop the bleeding, stop the loss
Help Puerto Rico, it's just 100 miles across

If that doesn't get your attention, nothing will.