Citizens are anxiously awaiting the famous first 100 days of both administrations (federal and state), which should define what should be a four-year period of global and local challenges.
Governor-elect Jenniffer Gonzalez's ideological affinity with President-elect Donald Trump (pictured) could help align the local government's visions with those of the national government, according to the author. (Evan Vucci)
Finally, the electoral issue and the political turmoil we have lived through during the past months came to an end last Tuesday, November 5, and today we already have the new political-governmental map clearly defined. The time has come for the elected governments, local and national, to start appointing their respective work teams, and to define the actions they will carry out as of January 2025.
Citizens await with anxiety and interest the famous first hundred days of both administrations (federal and state) that should define what should be a quadrennium of challenges at the global and local level. On the international level, it will have to be seen if indeed, the new Trump administration imposes new tariffs on China and Mexico, which may generate inflation in the domestic market, and to see if foreign policy will be able to end the conflicts in Ukraine and the Middle East. On the domestic front, measures to balance the budget and contain the fiscal deficit will have to be seen.
With control of both legislative chambers there should be understandings for the nation to have a formal budget, and there are high expectations regarding economic performance and the soft landing of the economy. Stock indexes reached historic highs following Trump's victory, as an omen that they envision better management of the economy.
The effects of potential cuts in federal spending
As I have stated in other columns, at the local level, the incoming government's biggest challenge will be to accelerate the reconstruction work and optimize the use of the federal funds allocated. It is a tragedy that only 15% of the billions allocated to the Island have been used to repair the destruction caused by Hurricane Maria in 2017.
On this issue, we run the risk that in the face of the disasters caused in the state of Florida and the lack of funds faced by the Federal Emergency Management Agency (FEMA), funds allocated to the island will be used to support the reconstruction of the disasters in that state. Beyond the reconstruction funds allocated to the island, one of the essential points for the incoming administration is to understand the serious fiscal challenges facing the federal government, with an astronomical debt and a fiscal deficit of historic proportions.
The overwhelming victory of the Republicans over the Democrats in the last elections has given them a mandate to implement radical changes on many issues, including fiscal issues, and therefore, it should come as no surprise to anyone that they are beginning to implement cuts in discretionary spending such as nutritional assistance, health care and housing.
In these areas, Puerto Rico annually receives substantial allocations of money, which benefits thousands of low-income citizens and sustains the respective industries. Puerto Rico annually receives $15,068 billion in discretionary funds, which is almost 50% of federal transfers and has a huge multiplier effect on the economy. It is urgent to have contingency plans to mitigate the possible effects of cuts by the new Republican administration, especially when a large part of the expectations for economic growth on the island have been based on reconstruction funds and the sustainability of discretionary aid.
I am very concerned that the citizenry, particularly the neediest economic sectors, are not prepared for possible benefits coming from the federal capital, and the effects on the food, health, housing and university industries.
The importance of aligning local economic policies with a republican vision
Governor-elect Jennifer Gonzalez's ideological affinity with the new president and congressional leadership can be an asset to the extent that the economic policies to be implemented locally are aligned with the Republican vision for the nation after 2025. That vision is clear, promote economic freedom and reduce bureaucratic barriers that affect the free market. The Republican vision is a faithful believer that it is the private sector and not the government that should lead economic growth. We will have to see if at the local level we will be able to adapt to this economic vision. Will there be the will to reduce government and end government paternalism?
In “rice and beans”, the incoming government must put an end, once and for all, to the anachronistic problem of obtaining permits to provide efficiency in the development process. Second, just as Republicans believe strongly in tax cuts, the new administration must find ways to reduce tax rates and ideally implement tax reform with the support of the Fiscal Board.
Third, Republicans are not very sympathetic to dependency and the welfare state, and thus the new administration has a great opportunity to promote economic policies that discourage welfare dependency. It is urgent that the new government promote the transition to work for people who can work as a true social reform aligned with republican philosophy.
In other more complex but important issues, we will have to see how the local government harmonizes the measures to mitigate the Global Minimum Tax to what the Trump administration decides on this issue, as well as the local strategies to attract to North American soil or to the region the manufacturing operations that today are in Asia.
In this new government cycle, we will have possibilities of success to the extent that the local government and entrepreneurs understand the new environment and focus energy and strategies on the new national and global political and economic realities.
This article was originally published in Spanish in El Nuevo Dia.
