Think Strategically: One Nation, One Voice
The Bureau of Labor Statistics reported Dec. 8 that total nonfarm payroll employment increased by 228,000 in November versus the 200,000 expected. The key drivers of job growth were in professional and business services, manufacturing and healthcare. This better-than-expected report added 117.69 points to the Dow Jones Industrial Average, which closed near record levels at 24,329.16.
Additionally, the unemployment rate remained unchanged at 4.1 percent as did the total number of unemployed people at 6.6 million.
Total employment growth has averaged 174,000 per month thus far this year, compared with an average monthly gain of 187,000 in 2016, which results in a 6.45 percent reduction in absolute terms.
Federal Tax Reform update
Both the U.S. House and Senate announced the members of the conference committee to resolve the differences in their respective tax bills, a vital protocol in the process since both lawmakers and their staffs have been working around the clock to agree on the final version of the bill. Considering that both bills contain many similarities, the committee will spend time reaching agreements on just a few critical issues.
This fact may result in Republicans accepting provisions they may otherwise oppose, such as the corporate tax rate of 22%, which is both an opportunity and a threat for Puerto Rico. As in the past, conference committee negotiations will be very fluid, and a final bill is expected by next week. As of press time, Puerto Rico’s interests were not protected in the Tax Reform.
Where is the $4.9 billion loan from the federal government?
More than two months after Hurricane Maria crushed Puerto Rico, its central government still has not seen any of the $4.9 billion from the short-term loan approved along with the disaster-relief package passed by Congress in October. With the P.R. Electric Power Authority (Prepa) and P.R. Aqueduct & Sewer Authority (Prasa) making enormous investments to repair the electrical grid and restore the water supply, respectively, the funds approved by Congress would allow Puerto Rico’s reconstruction to continue without any more delays.
Final Word: One Nation, One Voice
As was reported by Caribbean Business, Gov. Ricardo Rosselló responded to an invitation made by Senate President Thomas Rivera Schatz, House Speaker Carlos “Johnny” Méndez and Resident Commissioner Jenniffer González along with the party leadership and the mayors to meet this past Sunday in the Legislature.
Before the meeting, there were two positions within the party as follows:
- To have Puerto Rico designated as a domestic jurisdiction for tax purposes, which is favored by the Senate & House leadership and the resident commissioner.
- To have Puerto Rico entirely exempted from the taxes, which is favored by the governor and his team.
The principal issue with the position that favors treating Puerto Rico as a domestic jurisdiction is that it does not protect the current base revenues that the local Treasury receives from the controlled foreign corporations (CFCs) that do business in Puerto Rico. However, the argument from those who favored the change was that it was inconsistent with the New Progressive Party’s pro-statehood view.
The governor’s view is that Congress must exempt CFCs from any taxes to protect the base revenues Puerto Rico receives from the manufacturing sector, which contributes 47.3 percent of gross domestic product (GDP).
After the meeting, the consensus reached by the leaders of the executive branch, mayors and legislators was in favor of complete exemption from the taxes, a position Rosselló had favored.
The agreement occurs just as the U.S. House and Senate Conference Committee is to begin harmonizing their positions on the federal Tax Reform and a significant delegation from Puerto Rico, including the governor, will be lobbying in Washington, D.C. to ensure the island’s interests are protected.
Manufacturing contribution is 47.3% of GDP
One Nation and One Voice is a crucial concept that often eludes Puerto Rico in most discussions, with people wondering why our leaders do not appear to work together for our common good.
If the aftermath of Hurricane Maria taught us anything, it is that uniting resources and working for the common good is the only way to survive any crisis. The time has come to put a stop to fighting petty issues that are not relevant at this juncture and to honestly start to work together for the benefit of all our people. We genuinely believe the possibility of losing 200,000 additional jobs, 47.3 percent of our GDP and nearly $2 billion in revenues must be a great incentive to work united.
In conclusion, teenage poet and motivational speaker Mattie Stepaneck said it best: “Unity is strength…. Where there is teamwork and collaboration, wonderful things can happen.”
One Nation…One Voice….
–Francisco Rodríguez-Castro, president & CEO of Birling Capital, has over 25 years of experience working with government, multinational and public corporations.