I. Introducing the problem

The United States of America´s fiscal policy conditions the state and territorial governments under their flag because they set up strong controls through federal funds containing strict specifications and criteria of use (Dye, T., 2004). Most of the federal funds received in these departments contain public policies already established, and do not allow flexibility for their application. The federal government points out that said control is necessary to prevent government corruption, but the truth is that said policies create a strong dependence between the recipients of those funds and the government. Puerto Rico receives a huge amount of federal funds that promote a strong feeling of dependence in the citizens of the Free and Associated State, towards the United States of America´s federal government and postpone the development of autonomic political powers. The author Antonio Méndez Ríos dramatizes said dependence stating that:

The government of the Free Associated State of Puerto Rico has received in the last ten years (1994-2003), a total amount of $25.7 billion (without including federal funds of the Nutritional Feeding Program), in contributions for public programs. This amount represents 28% of the government total income for those same years, which was $92 billion. Without these federal contributions, the government of the Free and Associated would have collapsed. If we add to this, the millionaire funds of the Nutritional Feeding Program, it gives us an eloquent picture of our federal dependence (Méndez Ríos, A., 2006).

These socio-economic data are included in the collection of volumes known as The Book of the States1 which presents Puerto Rico’s fiscal dependence. Decades of systematic fiscal dependence has turned the current Political Model of the Free Associated State into one that is extremely fragile and weak, facing the changes in the public policy of the United States of America Congress, Puerto Rico having no effective representation in it. This dependence has the consequence of the use of continuous propaganda from the local politicians, who want to please the already dependent masses with promises based on programs with federal origin funds, increasingly perpetuating dependence. It is considered that 48 to 52 percent of the population of Puerto Rico is under the level of poverty and receives some federal assistance (Blanco-Peck, R. 1988). Nowadays, it has been disclosed, through the US Census Bureau´s statistics, that the level of poverty in Puerto Rico decreased 10.7 % between the 2000 and 1990 census.

This is a situation with political, economic and social consequences. Political parties have entered into a struggle to obtain more federal funds for half the population in Puerto Rico, the one subject to dependence and poverty, without finding feasible economic solutions within this political model. The lack of employment development and acceptable salaries to cope with inflation turns dependence into an alternative for almost half the Puerto Ricans on the island. The campaigns of the two political parties that have obtained the largest amount of votes over the years, and whose revenue in private donations is higher, the Popular Democratic Party and the New Progressive Party, concentrate on promises until obtaining the highest amount of federal funds to solve Puerto Rico´s problems. These parties favor some kind of relation with the United States, whereas the Independentist Party is left behind in this type of offers, which is reflected in the number of votes received. The current model of the Free and Associated State has caused economic stagnation, product of its dependence on the United States Congress policies, and the need to place the unemployed in the public sector, creating a budget based on payroll spending and a huge government.

One of the most limiting situations of said model is the lack of international trade and relations and the obligation to participate in the expensive American trade (Berríos Martínez, 2005). As a result of the application of domestic American laws, our exports unnecessarily become very expensive, becoming less competitive; and the goods that get here cost millions of dollars more. Considering that Puerto Rico is a United States´ captive market, the impact of this imposition on our economy is hundreds of millions of dollars. A third of the business produced by the American merchant navy originates in Puerto Rico. Our island, with only 4 million inhabitants, is considered a market equal to or more important than Brazil, a country with 170 million inhabitants (Pesquera, Héctor L., 2004). If the application of the domestic laws to Puerto Rico were derogated, our country would have a 20% reduction in maritime transport costs, with a direct injection to the Puerto Rican economy of more than 220 million dollars. Besides, our export products would increase their competitiveness in international markets which would help to encourage the creation of employment on the island and to reactivate the economic activity (Pesquera, Héctor L., 2004).

The consequences of dependency are many. Among them, there are: low self-esteem, abuse of controlled substances and alcohol, crime2, low productivity and cultural assimilation3. But there are also certain political consequences that haven’t been analyzed much from the point of view of a quantitative methodological approach. The political model of the Free and Associated State was developed in 1952 and requires big changes and new political developments, extending its sovereignty to be able to face the challenges of the 21st century (Vega Ramos, L., 2000). The current “status” only works with relation to the country´s domestic affairs, without taking part in international affairs and depending on the U.S. Congress’s decisions.

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This paper points out the need to carry out quantitative investigations in the analysis of the United States of America´s public fiscal policy in Puerto Rico. Dependence in Puerto Rico has created a conservative political-economic consensus with material and consumption values, very similar to those prevailing in the American citizens, something that has a direct impact on Puerto Rico´s general elections. Leader Carlos Romero Barceló4, in his book La Estadidad es para los Pobres, clearly stated that the transfers of federal funds were the base to benefit the poor in the condition of federal state (estadidad) (Romero Barceló, 1972). This annexationist philosophy, based on the almost complete dependence of the federal funds, has caused much damage in Puerto Rico and serious social, political and economic problems (Blanco Peck, R., 1988). The limitation of the national powers as a result of the action of another metropolis is the particular condition of the Puerto Rican people, who see the limitations to its capacity to manage the huge difficulties of a global process, given as a representation of the natural evolution of the capitalist system, as well as the efforts of the single international domain exerted by the United States. Puerto Rico does not have the sovereignty that is essential to operate in the economic scenario, according to our best interests and our determinations about development. Our economy depends on factors or decisions alien to our participation.

In order to make real progress towards a sustainable development process, Puerto Rico needs to recover the capacity of political decision, which is now in the hands of government in Washington. It is essential to count on ambassadors in the international and regional organizations, for the political and economic development of Puerto Ricans. Decades of an almost complete domain from the Americans have developed a psychological dependence in a large sector of the Puerto Rican people. Trade almost totally controlled (98%) by the United States merchant navy, one of the most expensive in the world, creates even more dependence on the American goods. American companies control Puerto Rican domestic trade almost completely.

My core argument is that the policy of keeping an extreme dependence on the funds coming from the United States of America has a direct impact on the political parties´ system and Puerto Rico´s electoral behavior: the higher the amount of funds is, the stronger the support for the political parties that support annexation of Puerto Rico to the United States. Decades of systematic fiscal dependence turn the current Model of the Free and Associated State into a very fragile and weak one. This paper intends to corroborate this scientifically through inferential statistics.

II. Background of the Investigation

This investigation is a review of previous papers performed with concurrent methodologies. In the next lines, I will explain, in general, what they were about. The data of a 1978 study were compiled and analyzed by the author5. In that study, the correlation was performed with the percentage of federal funds in Puerto Rico´s budget (independent variable X) from 1944 until 1976, and the percentages of votes for the parties which support the annexation of Puerto Rico to the United States of America (dependent variable Y). The intention of said correlation was to prove that the increase of federal funds in the budget was directly related with the increase of votes in favor of the political parties that support the annexation to the United States. At that time, Lic. Carlos Romero Barceló supported the “Estadidad para los Pobres” and he even wrote a book about this issue. Dependence on federal funds had been used consciously to increase the pro-American feeling in Puerto Rico, and therefore, the sympathy for the parties that support the annexation of Puerto Rico to the United States of America as another federate state. In 2006, the study was updated using a “time series analysis” (14 electoral years), which consists of a correlation between the percentage of federal funds intended for the budget of the Free and Associated State for each electoral year, since 1952 until 2004, and the percentage of votes obtained by the political parties individually, using Pearson ® Correlation Coefficient (Hernández, Fernández y Baptista, 2003). Besides, a Z test was used to compare the results of this study compared to another one performed in 1978 by the author, with 9 electoral years (1944 -1976), in order to observe changes between both studies (McCall, R., 2001). Now, in 2009, the investigation is updated again, with data from 1952 until 2008. The same methodology is used to see previous hypotheses in detail (1978 and 2006 study).

III. Conceptual framework and methodology

Much has been written about the quantitative approach, and its significance in the study and analysis of statistics in political science, and its need in the complicated task of government´s decision-making, that should be deployed in the changing 21st century. However, there are still some resistances from traditionalist sectors that understand that the qualitative methodological approach should be the only one to be applied in behavior sciences and the study of public services administration. It is necessary to clearly establish that both methodological approaches are needed to analyze and study the different tasks, affairs and programs existing in the public service. The qualitative approach, on most occasions, is useful for the elaboration of the administrative and political theory. On the contrary, the quantitative approach provides us with tools to check these theories, in program assessment and decision-making. Both approaches supplement each other and there should not be methodological disputes between the supporters of each one (Hernández, Fernández y Baptista, 2003).

The methodology used in this study about “time series analysis ” that consists of a correlation between the percentage of federal funds intended to the budget of the Free and Associated State per electoral year, since 1952 until 2008, and the percentage of votes obtained by the political parties individually, using the Pearson ® Correlation Coefficient (Hernández, Fernández y Baptista, 2003). Besides, a Z test was used to compare the results of this study with another one performed in 1978 by the author, about 9 electoral years (1944 -1976) to observe changes between both studies (McCall, R., 2001). The electoral data were obtained in the State Commission of Elections and the budgeting data, in the Library of the Office of Management and Budget of Puerto Rico. The Pearson Correlation Coefficients were calculated using the Internet program “Vassar Statistics” and Z test, using the formula from the book “Fundamental Statistics for the Behavioral Sciences” by Robert McCall. Pearson coefficient was calculated to establish whether there is a relation between the percentage of federal funds in Puerto Rico´s budget (independent variable X) and the percentage of votes per political party along 14 electoral years (dependent variable Y) (Pedhazur, E.J., 1982). Under normal conditions and null hypothesis, the statistical test is:

 

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IV. Hypothesis, Data Analysis and Results:

The 1978 study only analyzed the impact of federal funds on the budget with the percentage of votes received by the political parties that favor Puerto Rico´s annexation to the United States of America and not its impact on the parties that favor independence and the condition of free state. The 2006 study analyzes the impact of the percentage of federal funds in the budget, on the three political ideologies above mentioned. Consequently, three Pearson correlation coefficients had to be calculated for each of these ideologies above mentioned. Below, appears Table 1-1: 2006 Study Data: Percentage of Federal Funds in Puerto Rico´s Budget per percentage of ideologies in Electoral years from 1952 to 2004. In this table, statistics are separated from the federal funds included in the budget of the Free and Associated State per electoral years. Furthermore, it includes the results of the political parties grouped by the preferred political “status” ideology and the Pearson correlation coefficient, together with other linear regression statistics. These statistics were used in the analysis of the hypothesis test of this quantitative study.

Presentation of hypothesis and calculation results per party

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 Calculation of Z to compare the correlations of the 1978 study between the percentage of federal funds and the percentage of votes obtained per parties and the correlations of the 2009 study:

Jour 74 - Art Puerto Rico - pag 90

The null hypothesis is accepted at .05 significance level. The correlations of the 1978 and 2009 studies do not show statistically significant changes between both correlations. The effect of federal funds on annexationist votes has continued for three decades, from 1950 up to date. The percentage of federal funds in Puerto Rico´s budget still favors the percentage of annexationist votes in the general elections. See R = .64 of this study. Said R (R2 = 41.6) explains the 42% of the votes of the annexationists parties; being the federal budget, a very important variable for said parties. Also see Table 1.1 in which the percentage of votes of annexationist parties in 1952 was 12.9% and 52.8% in 2008.

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Hypothesis of the autonomist parties:

Ho: Z = 0

(There is no difference between the correlation calculated in the 1978 study between the percentage of the federal funds  in the budget and the  percentage of votes  of the autonomist parties and this 2009 study).

Hi: Z is not  = 0

(There is a  difference between the  correlation calculated  in the 1978 study between  the percentage  of federal funds in the budget and  the percentage of votes  of the autonomist parties and this  2009 study).

Rules for Z:  The significance level is .05 in a non directional test, Table A. Critical values of the Normal Curve Z=1.96 (McCall, R., 2001).

If -1.96 < Z < +1.96, Ho is not rejected.

If Z < -1.96 or if Z > +1.96, Ho is rejected.

 

Calculation of Z to compare the correlations of the 1978 study between the percentage of federal funds and the percentage of votes obtained by the autonomist parties, and the correlations of the 2009 study:

 

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The null hypothesis is accepted at .05 significance level. The correlations between the percentage of federal funds and the votes received by the autonomist parties in the 1978 and 2009 studies are very similar and do not have statistical differences. The percentage of federal funds in the budget of Puerto Rico´s administration adversely affects autonomist parties. From the fifties up to date, each four-year period in which the budget receives an increase in federal funds dramatically affects autonomist funds. See R= - .72 in this study. Said R (R2= .51) explains 51% of the autonomist votes. Also see Table 1.1, where the percentage of votes of the autonomist parties in 1952 was 64.9% and in 2008, it was 41.3%.

 

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Hypothesis of the independentist parties:

Ho: Z = 0

(There is no difference between the  correlation  calculated  in the 1978 study  between the  percentage of the  federal funds  in the budget and  the percentage of votes of the  independentist parties, and 2009 study).

Hi: Z is not  = 0

(There is a difference between the  correlation calculated  in the 1978 study between the  percentage of the federal  funds in the  budget and the  percentage of  votes of the  independentist parties, and this 2009 study).

Rules for Z: The significance level is .05 in a non directional test, Chart A. Critical values of the Normal Curve Z=1.96 (McCall, R., 2001).

If -1.96 < Z < +1.96, Ho is not rejected.

If Z < -1.96 or if   Z > +1.96, Ho is rejected.

Calculation of Z to compare the correlations of the 1978 study between the percentage of federal funds and the percentage of votes obtained by the independentist parties, and the correlations of the 2009 study:

 

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The null hypothesis is accepted at .05 significance level. There are no statistical differences between the correlations of the 1978 and 2009 study. The percentage of federal funds in Puerto Rico´s budget dramatically affected the independentist parties during the fifties and the early sixties. After 1964, other independent variables have affected the independentist movement.

The federal funds in Puerto Rico´s budget are not statistically correlated with the votes for the political parties that favor independence for Puerto Rico. However, as the federal funds increased, the votes towards independence were reduced, but not statistically significant. The negative impact of the federal funds occurred during the 1960´s and 1970´s together with institutional division and divisionism.

Comparative hypothesis between annexationist parties and autonomist parties:

Calculation of Z to compare the correlation of percentage of federal funds in the budget and the percentage of votes for the annexationist parties, and the correlation of percentage of the federal funds in the budget and the percentage of votes of the autonomist parties:

 

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The null hypothesis is rejected at 0.1 significance level. The result of Z = 2.89 shows an exaggerated difference between the annexationist correlation (R = .645) and the autonomist correlation (-.718), both with the independent variable of the percentage of federal funds in the budget of electoral years from 1952 until 2008. The federal funds have much benefited the percentage of votes of annexationist parties, and at the same time, have damaged the percentage of votes of the autonomist parties significantly.

 

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X = (independent variable) percentage of federal funds in the budget of the Free and Associated State of Puerto Rico per electoral year from 1952 until 2004.

Y1 = (dependent variable) percentage of votes obtained by the political parties that support the Free and Associated State.

Y2 = (dependent variable) percentage of votes obtained by the political parties that support the Annexation of Puerto Rico to the United States of America.

Y3 = (dependent variable) percentage of votes obtained by the political parties that struggle for Puerto Rico´s Independence.

Table 1.1 shows the electoral years from 1952 until 2008 and the electoral results per political ideology based on the status preference: supporters of the Free State, estadistas (supporters of the condition of federal state) and independentists. Most of the political parties in Puerto Rico support any of the “status” alternatives, because this dilemma has not been solved yet and it is the socio-political “gap” that mainly divides Puerto Ricans (Inglehart, R., 1977). Said table also shows the distribution per electoral year of the federal funds allocated to Puerto Rico´s budget, regardless additional federal funds received in the agencies, programs, projects and town halls of the Free and Associated State of Puerto Rico. This means that dependence is greater than what is introduced in this study and difficult to calculate, especially since 1952.

Conclusion

The mere existence of independentist parties and/or movements in this political economic and social system is extremely difficult. The current fiscal model of the Free and Associated State is elaborated to eliminate and control any independentist movement and it comes from the Congress of the United States and its budget policy. The most powerful nation-state in the planet controls the finance of the Free and Associated State of Puerto Rico, and this has impacting electoral consequences that are analyzed in the present article of quantitative investigation. Dr. Edwin Irizarry Mora (Secretary of Economic Affairs of the PIP) explains Puerto Rico´s dependence from the point of view of the Puerto Rican Independentist Party:

Foreign trade dynamics is particularly interesting in the Puerto Rican case, when the issue of dependence is discussed. In spite of the fact that the highest flow of transactions is of imported and exported goods, in the field of service purchases, the account “capital yields” gathers the profits obtained by the residents of the rest of the world in the Puerto Rican economy. In 1999, these profits increased to $23,599 million. This is, in the judgment of many people, the most significant consequence of the dependence of Puerto Rico´s economy with relation to the United States of America´s economy: the huge outflow of funds in the form of benefits taken out of the first and given to the latter.

In the case of the relation with the United States government, one of the proofs of the dependence is “the operative spending of the federal agencies in Puerto Rico”. Although the figure for the year 1999 was only $823 million, the fact that this account keeps a growing pace, indicates the growing presence of the American government and its different branches in Puerto Rico´ s domestic affairs. The colonial implications of this intervention are evident.

In the subject of US federal government transfers, the individuals are the sector that perceive the most funds, although it must be highlighted that most of said transfers are accrued; that is, our people receive them because they render a service (the case of veterans) or because for many years, they have paid a large part of their salaries with the purpose of eventually receiving a pension (social security or any other). During recent decades, only a third of these transfers could have been considered as granted (vouchers for food, scholarships for university students, etc.). In other words, in this case, the form taken by dependence destroys the myth that we, Puerto Ricans receive mostly handouts or assistance from the United States government. Of course, this analysis excludes federal transfers received by the government of Puerto Rico, but, similarly, it does not consider the increasing flow of transfers (public as well as private) that go from here towards the funds of the Federal Treasure.

Consequently, beyond the indications of official statistics about our economy, the harshest dimension of dependence is the socio-economic, the one that has to do with our people´s future and their chances to make claims (Irizarry Mora, E., 2004).

Extreme dependence has negative social, political and economic effects for the people of Puerto Rico and their future as a nation – sovereign state. This erodes and hurts our nature of Caribbean – Latin American people (Blanco-Peck, 1988).

Dependence creates a socio-economic situation of low-esteem, lack of identification with national values and symbols, confusion about patriotic loyalty, increase of a culture based on dependence, poverty and crime. A country´s socio economic and political development refers to a harmonious, integral and complex distribution of the economic growth and social achievements, and to a political, social and monetary independence with reference to said growth. It also comprises a change in social attitudes and in the production and trade techniques. Similarly, private and state institutions are independent of the country´s political, economic and social variables. These changes generate a modification of social behavior that will be the base for integral development. This process combines the increase of economic indexes (indexes of production, productivity, gross territorial product, income per capita) and the modification of social and economic structures (Lucas, Robert, 1988).

The results of this study clearly point out the harmful impact of extreme dependence from federal funds on autonomist parties (free state supporters) and independentists in Puerto Rico; and in addition, the systematic strengthening of the parties that favor annexation by said funds. Dependence has eroded the support to the autonomist and sovereignty supporter forces in Puerto Rico, and has increased the annexationists (in favor of the condition of federal state, estadistas), creating dependentist supporters who perceive annexation as their only solution when faced with unemployment and the collapse of the economic and political model of the Free and Associated State of Puerto Rico established in 1952 and never politically amended or renewed.

 

Bibliography

Dye, Thomas, Understanding Public Policy, 11th edition, Prentice Hall, 2004.

Hernández Sampieri, R., Fernández Collado, C. y Baptista Lucio, P. (2003), Metodología de la Investigación, Interamericana Editores, McGraw-Hill, 3rd Edition, México, DF.

McCall, R.B., Fundamental Statistics for the Behavioral Sciences, Wadsworth/Thomas Publications, 8th Edition, Belmont, California, 2001.

Mèndez Ríos, Adolfo, Semanario El Expreso De Puerto Rico (1 to 7 March 2006), Edition 484.

The Book of the States (El libro de los Estados), published by the entity known as The Council of State Governments.

Pesquera, Héctor L. Descolonización económica, 6 April 2004, Red Betances. http://redbetances.com/articulo.php?id= 16

Blanco Peck, Richard, Political Party Identification in Puerto Rico, doctoral thesis, Florida State University, 1988.

Blalock, Humbert, Social Statistics, McGraw-Hill, 1979.

Inglehart, Ronald, The Silent Revolution: Changing Values & Political Styles among Western Publics, Princeton University Press, 1977.

Stevens, J., Applied multivariate statistics for the social sciences (2nd ed.). Hillsdale, NJ: Lawrence Erlbaum, 1992.

Pedhazur, E.J., Multiple regression in behavioral research. New York: Holt, Rinehart, & Winston, 1982.

Meier, K. and Brudney, J., Applied Statistics for Public Administration. 5th. Wadsworth Publishing, 2002.

Romero Barceló, Carlos, La Estadidad es para los Pobres, 1972.

Berríos Martínez, Rubén, Un Mapa para la Ruta, 2005.

Vega Ramos, Luis, La Nación En Asociación: Síntesis Puertorriqueñista for El Siglo, XXI (1st Edition), 2000.

VassarStats: Statistical Computation Web Site

(2006): http://faculty.vassar.edu/lowry/VassarStats.html

Irizarry Mora, Edwin, Algunas Manifestaciones de la Dependencia: Internet, 2004: http://www.independencia.net/topicos/econo5.html

Lucas, Robert, "On the mechanics of economic development”, in Journal of Monetary Economics, No.22, 1988.

 

Notes

1 Publication of the entity known as The Council of State Governments (El Concilio de Gobiernos Estatales).

2 Source: Puerto Rican Police. Data chart at: www.tendeciaspr.com

3 Program of Assessment of Need of Services for Substance Abuse, Administration of Mental Health Services and against Addiction, Government of Puerto Rico.

4 Annexationist and former governor of Puerto Rico.

5 The period of time during which I was a student of the doctoral program of the political sciences program of the State University of Florida in the city of Tallahasse.