being tools of propaganda. that the service doesn't deserve. >> do you know how interesting it is to flash up on the scrop. screen. >> i don't believe it's $127,000. and that is our show for today. i'm david shuster in for ali velshi. thank you for watching. hing. [ ♪♪ ] combine a high cost of living, high unemployment, violent crime, and soaring debt. and people who can leave porto rico are doing it, in numbers not seen since the big migration to the mainland.

the threat of bankruptcy is deepening woes and leaving 3.5 million wondering what to do. the trouble island is tonight's "inside story". welcome to if nds r -- "inside story", i'm ray suarez. it's been 117 years since u.s. soldiers invaded porto ryke, ending with the spanish authority in america's hands. it's a complicated relationship. today porto rico is america's failure, poorer than the poorest u.s. state, missouri, or a latin american success, providing the highest standard of living in its region. almost a sent jury ago puerto ricans were made american

citizens, the people fought in every war, and many took advantage of the free and unrestricted most between the island and the may land to make the 50 states their home. porto rico is in deep trouble. it's unclear how the island can pay its debts. juan. >> reporter: at this family home in san juan, they are making changes, the airconditioning is going off. windows are being opened, and lights dipped. all to save money on electricity charges that have risen dramatically. the family's latest bill is close to $700, in past months it's over 1,000. >> you are closing your high, eye, looking with one eye. month. >> the financial burden rising costs forced him to have difficult conversations with the family. >> you

have to talk to them about this, because you have to be conscious about it. it's not easy to get $1,000 and put it down the train for electricity. >> reporter: electricity is supplied by one company, in debt to the tune of $9 billion. the man in charge insists consumers are treated fairly. people in porto rico have the best service and price. >> that's no how people feel. they don't feel they are getting the best service. >> we are doing our best. >> reporter: problems with the electric company are part of a broader systematic failure. the economy has been in trouble for years. with

$70 billion of debt the government faces a chance of shutting down. many feel the sild nation need a workable plan of action. >> porto rico is an island that can be salvaged if those in government work together. >> we have to work fast, but the long-term interest before short-term interest. this is not political. the crisis is growing deeper, that's talk of the island defaulting. there's no sign of any external aid. >> joining me here in washington is pedro, the resident commissioner for "prime time sport." unlike other members, he's

elected to four year terms. >> thank you. thank you for inviting me. >> how did porto rico get into the fix. in excess of $70 billion for a population of three and two-thirds people. some of it is structural. some of it is related to the status we have. some of it is the result of bad decisions by government officials. but we can overcome in. porto rico has a bright future. it's not - when we talk about 72 dead. it's not that the government from porto reek joe instead. owes that amount of money. the central government owes about $30 million. out. some are facing difficulties, financial difficulties. some are healthy.

so - but, it's still a lot of debt. and we need to make sure that the government doesn't continue to overspend. we need to make sure that we incentivize the economy, because the underlying problem is through lack of growth and but there are ways to do that. >> in recent years, there has been a large lay off a full 10% of workers were given their pic slips, the zost sold the publicly owned utilities, a lot of things have already - a lot of savings have been made and still it's going to be difficult to make a big debt payment on bonds later this year. ever since the year 2000, puerto rico has been running deficits, not because of capital improvements, but we have been

spending too much, financing the difference, the shortfall. that is not good. it caused downgradeingour fed it rating in the markets. so now is difficult for the government to have access to the markets at decent prices. it's like every family spending more than it is earning, and it gets to a point where the line of credit is not available, where your credit card probably is cancelled, where your mortgage, if you are not making the payments, you could face foreclosure, and your only option would be to go to a loan shark. that is happening to the government of porto reeko. it has to operate on a month to

month, on a cash basis making sure that we are providing essential services that people need, but at the same time trying to attract new business to porto rico, no investment to porto rico. >> i'll stop you there. you've sponsored legislation, trying to get a vote, binding pleb side on the future of the island, and you support statehood. would congress take on porto rico in the current economic situation that it's in. >> well, actually, all this debt has been piled up under the current status, not as a state, not porto rico as a state. the current status failed. it doesn't work any more. and we've been under a long term

recession. we have to understand that puerto ricans are americans, yet they are not tweeted the same as fellow citizens, they can hop on a plane and come to the states to get a better deal, to find jobs, opportunities, and be treated fairly in federal programs that are important for a quality of life, let's said medicaid, medicare. >> i upped your point entirely. coming back to my question, would congress agree to take on an island in this kind of financial shape? >> a couple of years ago the g axe o did a study about the fiscal impact of statehood. if it happens for portio ricco. it basically concluded that this is a win, win situation. that on the one hand, the federal government would be

spending more in porto rico programs. on the other hand corporations and individuals will be paying taxes, taxes which we are not paying now. we only pay taxes. >> thank you very much for coming by on "inside story". good to talk to you. >> thank you. the current economic crisis and the future status of the island divide the two main political parties. the rival of the progressives is the popular party for the governor. he gives his view of the gathering crisis. the troubled island is tonight's "inside story".

>> we were drugged water boarded, dogs they throw at you the whole book. >> the youngest person ever held at guantanamo bay >> a guy would go for a few days you'd hear screaming he would come back a destroyed person you can only imagine what happened to him... >> accused of killing an american soldier at 15... >> i start hearing americans and their screaming and i thought, umm i'm just gonna throw this grenade... >> after 13 years, he's now out on bail

an exclusive interview guantanamo's child - omar khadr only on al jazeera america welcome back to "inside story". tonight we are focussing on the troubled island of porto rico. after more than a century under the u.s. flag, the commonwealth is divided over how to respond to its profound economic challenges and the nature of its relationship to the united states. should it petition to become the 51st state or remain what it is now, an associated free state. here is erica pitzi. >> reporter: for the united states, porto rico is a spoil of law, a u.s. territory with the defeat of the spanish, it is not a state. puerto ricans are citizens who an serve in the military, but cannot vote for president if they live in porto rico. the limbo coupled with economic troubles forced thousands to

head to the states. like marion and brian, who moved to the miami area, where they own a restaurant. they have been in the states for eight years, but remember what they left behind. >> it was very hard to leave the island, or your country, and start all over, and everything has to be progress since we arrived. i don't have family, you miss the family and the beach. >> i know if porto rico has independence. people will return and help porto rico become successful with the independence. independent. >> opinions are divided whether it should be a u.s. state, independence. in congress, there was a push for statehood writing:

. >> in 2012, puerto ricans made their own voices heard. they agreed they wanted to change the status. when asked what it should be. : despite the debate, american politicians eyed the island of capital. like the presidential candidate jed bush, recently abdicated for statehood during a visit. >> porto reeko should have a vote on statehood. if i have influence on who the next president will be, let's leave it at that. i'll do everything i can to use that influence to be able to get congress to respect the will of the puerto rican people. >> what would happen if porto

rico gained statehood? >> the island would have more power, gaining two seats in the senate and five in the house of representatives. washington would collect billions in income and taxes, but given the depressed economy with unemployment nearly double that of the united states, money and politics may be the biggest hurdles on the road to statehood. other way most puerto ricans change. >> the notion of puerto ricans continuing to be a colony in the 21st century is a problem. i think the crisis is an indication of the need to change course in a dramatic manner joining us from the puerto rican capital is the former capital. -- prime minister.

thank you for joining us. your party historically opposed statehood. it's a party that ushered in the era of politics. what do you base on? >> i'm convinced that statehood is not a good alternative for porto reeko and the united states. for economic and cultural and identity issues. first we talk about the economics. porto rico's economy is developing. the united states is the most developed and strongest economy in the world. if we become a state. that means you'll have to impose upon porto rico the tax system of the most developed economy in the world. if you impose the taxed system of a developed economy to a developing economy, you'll destroy the economy. the gao story, the resident commissioner that was

mentioned. bail it says na if it comes to stay, all the companies will love porto ricco, and said that the small business sector, the local business sector will be the one. they'll be the boreden of the 51st state. that will destroy the economy because it won't give economy. to me, it's dealing with a crisis right now. i know it's the concern of the show today. what's the alternative. the popular party does not support statehood. what should be the relationship for the home island and the united states. going ford from here. >> i think we need a new economic deal between porto rico and the united states. but in which porto rico, instead

of asking for more federal transfer, money, welfare, will ask for the tools, to give them the flexibility to make the decision, the same way to make the decisions, tracking investment with the island. so you can have the tools for economic development. that's what i call it. it means basically means that in order it be a citizen, you don't have to be forced to comply with every rule. the problem is raised, when congress makes decisions, they make decisions about the u.s. economy. again, this is a developing economy, with high unemployment rate, low wages, and in that sense, we need the flexibility. it's not on alternative. it kills the sector. we believe you involved taxation

up in that sector and the middle class. independence is not an alternative. the relations and the economical relationship. doing nothing is not an alternative. i'm not supporting status quo. what i think is we need to establish a new economic states. back in 1952, when it was enacted, we established a political relationship with the united states. the economic terms of the relationship were never revived. i think it's a unique opportunity to sit back. sit down with the white house, and come up with a new alternative to preserve the elements, it's important to both. development. >> we are close to running out of time.

until the big questions are settled, looks like the island could lose more people, and they are people that could stay and build the country. >> i agree. in terms of short-term solutions, we need to bring the government to the table. porto reeko is responsible, but we have to recognise a demand from congress, they are partly responsible. we mentioned that for many, a tax incentive to attract investment to the island. that was repealed by congress in 1997. facing out in 2006. it was a u.s. government decision to deprive porto rico of tools, had at that time, and nothing was exchanged for that. i think they'll deal with 2 billion dead, that is putting a lot of pressure in the government and the whole economy.

we need to bring the united states to the table, and find a solution. the former governor of porto rico joined us. difficulties of running porto rico were not knew. in many days they go back to the island's earliest days under americaning control. -- america's control. there's a shocking book based on generations. we'll be joined by the author next on "inside story".

welcome back to "inside story", we have been looking at the troubled island of porto rico, where many are faced with high death, unemployment and living. a book "war against puerto ricans", looks at the relationship between the former spanish company and the u.s. government.

the author joins us now. you have been listening to leaders of the two parties, is porto rico's trouble a product of something much older, a relationship that always hobbled the economy to favour american interests interests. >> well, there are historical precursors, i appreciate the opportunity to broaden the condesk. when the united states occupied porto rico, the largest hurricane of the century devastated in the following year, rather than sending in support, in the following year, it was declared that currency had to be turned in, and they devalued the porto rican currency by 40%. that was in the next year. the year after that they instituted the hollander act.

it presented graduated property taxes on every island. when they had to look for capital because of monetary devaluation, a hurricane, the american colonial bank offered predatory loans with no laws. the composite of all of that is a series of hits. it results in the farmers losing their forms so quickly that within 30 years, the united states owned over 80% of aridable land. it would allow it to occur, and you'd avail of opportunities. let put it in conference for a current situation. over the last five years. we need to incident vis the economy. there's a lack of growth.

i'm sorry, that's a tragic job. this is 117 years. porto rico is a stifled economy. what happens when you ask about happening, it's overspending. that's how we got into the debt of the we got into the public debt and no the junk bond status. wall street told two groups that if they afflicted the austerities, they fired 22,000 government workers, eliminated health benefits for teachers' pensions, rolled back pensions across the boards. raised gasoline taxes twice in a near. inflicted higher property, and recently, two weeks ago, an 11.5% sales tax, evil, on the island. if you do all of this, wall street said we will not downgrade your debt to junk bond status.

>> well, porto rico in good faith did what they were told, like a good colonial entity, what did wall street do, like a good master. they did what they wanted. they declared junk bond status, thereby raising the interest on requiring a new set of austerities on the porto rican public. at the same time that the united states is availing itself of act 22, which gives a 20 year tax exemption on dividends, interest, capital gains income on all individuals going to the island and plunging money done. >> i'll jump in there. just because you are almost out of time. it doesn't sound like you think that porto rico under the current circumstances can dig itself out of a problem. quick answer please. >> we have to eliminate the law. that's a way of creating 50,000 jobs. problems is that unions and

companies will lobby against it. the two parties in porto rico are not part of the solution, they are part of a problem. they gave a statement that they need to build tools. immediately. >> that requires that only u.s. ships service porto rican talks. film-maker, historian, author of "war against all porto ricans, revolution and terror in the economy." thank you for being with us. i'll have final thoughts on a little country and a superpower. stay with us. >> on hard earned, inspiring new beginnings... >> these workers got the fight in them, they just don't know it. >> facing up to old demons... >> i am really really nervous... >> lives hanging in the balance... >> it's make or break... i got past the class... >> hard earned pride... hard earned respect... hard earned future... a real look at the

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