Big winner on economic stimulus and jobs is ... Puerto Rico?

The island territory has been able to add a high number of new jobs per capita. But the stimulus comes at a time of political struggle between public and private labor in Puerto Rico.

By , Staff writer

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    A demonstrator holds a sign that reads "Zero layoffs" in Spanish during a protest last month in San Juan, Puerto Rico. Thousands of protesters gathered in the island's financial hub in a rally against Gov. Luis Fortuno and the proposed layoffs of public employees.
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Not having a voting member of Congress doesn’t seem to have hurt Puerto Rico in its quest for jobs and economic recovery.

In the middle of a four-year-long recession, the self-governing US territory has managed to add 17,000 new jobs for a grand total of over 4,000 per million residents, putting the Puerto Rico third behind Washington and Montana in jobs created by the federal stimulus bill, according to a Monitor analysis of new stimulus figures released by the White House.

President Obama on Saturday morning pointed to the success of the $787 billion stimulus program, saying it has “saved or created” about 1 million jobs from Alaska to, well, Puerto Rico.

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"As I've said many times, it took years to dig our way into the crisis we've faced. It will take more than a few months to dig our way out. But make no mistake: that's exactly what we will do," the president said in his weekly radio address.

To be sure, the success of Puerto Rico’s stimulus effort backs up the White House’s promises of fairness and lack of political patronage in doling out grants. But beyond the macro-economic news, the figures also shed some insight into the package’s transformative powers and how the Puerto Rico model could well test Washington's ability to fundamentally change and improve local, state, and regional economies.

In many cases, state-by-state stimulus job creation has been driven by specific circumstances, such as the cleanup of a decommissioned nuclear power plant driving job creation in Washington State.

In Puerto Rico, school bathroom repairs, road rebuilding, and public housing renovation are among the key job-drivers.

But more critically, the stimulus is playing heavily into the push by Gov. Luis Fortuno to reverse the island’s poor economic fortunes and chart a new economic future, including hopes of creating 200,000 new jobs by 2013. Part of the plan is to use stimulus funds to pare down a bloated public work force and focus on private-sector job-creation.

But after anti-privatization protests on Oct. 15 where protesters wore masks of Fortuno’s face while brandishing fistfuls of money, union leaders say it’s becoming clear that the stimulus money has become a political pawn used to lay off public employees. It's an issue they plan to raise with the Obama administration .

“The government is betting that the reduced spending, combined with $6.5 billion in combined federal and local stimulus funds, will be enough to get the territory back on solid footing,” CNN reports.

Consistent with Obama’s cautious message this morning, job losses will likely continue near-term in Puerto Rico, and it’s far from clear whether the nearly 17 percent unemployment will come down substantially as the shakeout of the public payroll continues. Coming on the heels of 7,000 public sector workers laid off in March, another 10,000 government employees will lose their jobs by January, nearly erasing job gains from the stimulus.

The US territory is entering its fourth year of recession with a $3.6 billion deficit -- the largest per capita in the US, putting its credit rating at nearly junk bond status.

Puerto Rico originally asked for nearly $22 billion in stimulus funds for projects. That’s been whittled down to $6.5 billion, $2 billion of which has been spent so far. While the territory’s job gain is 115 percent higher than the national average, they've come at a relative bargain: Puerto Rico is spending $490 per person compared to a national state average of about $516.

So how has Puerto Rico done so well for itself? There’s little doubt that, despite its lack of representation, politics has played at least some role.

For example, powerful Rep. Charlie Rangel (D) of New York, chairman of the House Ways and Means Committee, reminded Americans of Puerto Rico’s importance when announcing that the island’s US citizens would get tax breaks like all other Americans from the stimulus package.

"Both compassion and economics obligates us to remember the ties that bind the United States with Puerto Rico and our territories," said Mr. Rangel in a press release earlier this year. "The key to this recovery -- short-term and long-term -- rests on how well we can work together to stimulate all aspects of our economy."

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