ATTACHMENT D

Source: U.S. Department of Commerce, Bureau of the Census, "U.S. Trade with Puerto Rico and U.S. Possessions."

[The following material was submitted by Dr. Richard Weisskoff, Iowa State University, see p. 18 for the oral statement of Dr. Weisskoff:]

THE FOOD STAMP PROGRAM IN PUERTO RICO: AN APPRAISAL

(By Dr. Richard Weisskoff)

THE PROBLEM

(1) The Food Stamp Program in Puerto Rico currently absorbs $70 million per month and reaches 1.9 million people of a population of 3.2 million. That is, Puerto Rico with 1.5 percent of the U.S. citizens takes 11 percent of the total U.S. Food Stamp budget.

(2) Since the extension of Food Stamps to Puerto Rico in July 1974, the U.S. has spent over $3.6 billion. The current programs have been running over $800 million per year.

(3) Within Puerto Rico, the Food Stamp Program has had an impact far greater than expected by the enabling legislation. According to the 1980 Population Census, 58.8 percent of Puerto Ricans are enrolled in the Food Stamp Program. According to a 1975 USDA study on Puerto Rico, 75 percent of the families are eligible under the rules. In other words, the share of the population already on Food Stamps is high and may become higher yet.

(4) Puerto Rico has become the "Food Stamp Economy" par excellence, with Food Stamps as the major welfare program and the remainder of the economy thriving on the indirect "benefits" as they transacted throughout the economy, as in retailing, wholesaling, transport, and other services.

(5) Other effects of the Food Stamp Program in Puerto Rico are:

(a) Destroy subsistence economy and force workers into the cash and 'clandestine' economy

Before Food Stamps, no major U.S. welfare program had been extended to Puerto Rico without stringent limits. Hence, even the very poorest people in Puerto Rico who had maintained themselves by growing their own food, also worked seasonally in menial, low-paying jobs in order to survive in the cash economy.

By providing the Food Stamp subsidy to these workers, informal cash wages have been forced lower for those who still need money earned "under the table" in order that their poverty status not be jeopardized.

(b) Stifle work incentive and bid up the "legal" wage

Food Stamps provide a cushion to low-wage rural workers to quit work altogether and to refuse to work except for a higher wage than previously earned, if their earnings are to be recorded. Together with (a) above, we find a "schizoid" wage structure: a lower wage for the clandestine workers and a higher wage for the formally' employed.

(c) Sustained high rates of unemployment

With the arrival of Food Stamps in Puerto Rico, the unemployment rate has risen from an annual average of 12 percent to nearly 20 percent for every year since 1974. The official "participation rate" (those adults seeking work) has fallen from 45 to 42 percent. Thus, between the "unemployed" and those who have given up seeking employment, nearly two-thirds or 65 percent of adults are not working; only 35 percent of adults are actually working.

(d) Absence of nutritional information on native foods; promotion of imports The family, now with cash-or, rather, food stamp-income, obtains its food through stores-the import-laden depot-which now porvides the basic diet, based on foods made available from the monopolizing importers and distributors. This "new" diet may be more nutritious. If so, this is fortuitous, since no information is provided to the family to aid it in comparing the nutritional values of the local, home-grown foods and the store-available imported ones. The resulting consumption patterns are thus the consequence of advertising and tradition, not of any new information which comes along with the Food Stamps.

(e) Destruction of the Rural Economy through Food Stamps and Increases in F.S. Participation

The last years have seen an acceleration of the disintegration of the rural economy which has been termed the "exchange" economy, subsistence, "selfsufficiency", home-food, garden plot, or minifundia. The abandonment of the small family plots has led to a stable and high dependency on Food Stampswith no alternatives in sight!

(f) Other Economic Collapses Increase Food Stamp Participation

As the legal minimum wage has, for political reasons, been raised to Federal levels (it is currently $3.10 per hour), labor-intensive industry has abandoned Puerto Rico for even poorer lands, such as Taiwan, Korea, Haiti, and South Africa, for example. (Over 2,000 plants remain most highly-mechanized and polluting). The large agricultural plantations producing sugarcane, cigar tobacco and coffee have shut down too with the competition from the more cheaplyraised commodities from other poor areas of the Third World. The final collapse of the family-plot, food-producing farmer has thrown an even further burden onto the Food Stamp Program and onto other Federal programs-such as CET.. agricultural subsidies, road projects, and government services.

In other words, the Food Stamp Program has had thrust upon it the task of rescuing a collapsing economy, an economy which is collapsing for a variety of reasons, many of which long precede the Program and many of which have intensified by the very rescue operation itself!

(g) Puerto Rican Solutions not Forthcoming

The absence of the Puerto Rican Government's own comprehensive Development Program has thrown an increased burden on the Federal programs-like Food Stamps. Puerto Rico's response to its own economic difficulties has been to continue the very policies that have resulted in the crisis (tax-exemptions to corporations, further industrial promotion, tourism, out-migration, mass sterilization) plus a series of questionable and dangerous agricultural "experiments" (ricegrowing using Texas technology!), costly subsidies to ongoing-activities, such as sugarcane, and the simple aggrandizement of the government bureaucracy. This bloating of the public sector as the employer of both first-and-last resort, includes the Food Stamp administration of the Food Stamp program, which is built on and responds to Party loyalty and hierarchy. This party loyalty, in the end, carries as well its own economic loyalties. Thus, the largest "income-generating" sectorgovernment service becomes a tool for both its own economic and political perpetuation, an excuse and an obstacle to the introduction of truly productive activity, and an instrument of electoral politics.

(h) Federal Response to Puerto Rico not Coherent

There has never been a coherent Federal (read, "colonial") policy toward Puerto Rico. The Congress has extended various programs to Puerto Rico, depending on circumstances, pressures, funding, lobbying, responses to crises or prosperity. The Food Stamp "extension" to Puerto Rico represents yet another legislative whim, whose effects were unstudied and unanticipated. It fits in no policy framework, other than that appropriate to and consistent with U.S. Food Policy. It is irrelevant whether or not U.S. policies are designed to meet the needs of the people affected by the Program in Puerto Rico.

Eschewing colonies, America has never had an above-board, coherent set of principles by which it treats its relations with its "outlying territories." However, the Commonwealth status accorded by the Congress to Puerto Rico has resulted in making Puerto Rico no less a ward of the Congress than before. The Commonwealth economy is collapsing, and the Food Stamp Program, writing itself in for other purposes has become the life-jacket.

The recent Federal response has taken its usual form: commissioning another study, this one the grotesque "Economic Study of Puerto Rico," released in December 1979 in 1079 pages. Less than a year later, there is talk of updating that study! To summarize, Puerto Rico's incorporation into the U.S. Food Stamp Program has taken on a more permanent and all pervasive nature. Despite the intentions of the Act and our cognizance of the other trends long operating within the Puerto Rican economy, the Food Stamp Program has weakened and continues to weaken