Politics & Policy

Luis Fortuño: Puerto Rico’s Scott Walker

Can he cut government jobs and get away with it?

Madison, Wis., may be the austerity debate’s central front, but San Juan is an important, if overlooked, battleground. For the past three years, Governor Luis Fortuño has been the Caribbean’s Scott Walker — and like Walker, he’s under siege.

When Fortuño began his term, Puerto Rico was an economic mess. Fifteen percent of the island territory’s labor force was unemployed. Facing a $3.2 billion budget deficit, Fortuño implemented deep cuts, slashing public jobs and salaries across the board.

The government unions erupted. Thousands of public workers protested Fortuño’s reforms on the streets of San Juan. And in five months, when Puerto Ricans head to the polls, the labor activists and their allies, the Popular Democrats, want him gone.

Fortuño welcomes the fight. Progress has been slow, he tells me over breakfast in Washington, but it has been steady. According to the Labor Department, Puerto Rico’s jobless rate is 14 percent, down from a high of 17 percent two years ago.

Jobs are coming back to Puerto Rico, Fortuño says, thanks to the improved fiscal climate and his tax cuts, which lowered the corporate rate from 39 percent to 30 percent. His push for a natural-gas pipeline is another pro-business initiative.

“I came into the Republican party in 1980, when I was a college student at Georgetown,” Fortuño tells me. “I watched Reagan turn around the country by lowering taxes and controlling spending, and I’m applying the same principles.”

A poll last month from El Nuevo Dia, Puerto Rico’s largest newspaper, shows Fortuño trailing Alejandro Garcia Padilla, his Popular Democrat challenger, by seven points, 38 percent to 31 percent. Nineteen percent of voters are undecided.

“After I suspended collective bargaining for two years and froze all salary increases, we had some pushback,” Fortuño says. “Some people called me a fascist. That’s mostly over, but there will be more attacks from the unions.”

The country’s biggest public-sector unions, such as AFSCME and SEIU, are investing in Fortuño’s defeat, organizing rallies and fundraising drives. Richard Trumka, the AFL-CIO president, has called Fortuño “anti-worker.”

“When I came into office, I could have kicked the can down the road for a little while, or I could do the right thing,” Fortuño says. “Unless we began to live within our means and cut spending, it would have been impossible for us to survive.”

Fortuño’s first trip as governor was to New York City, where he huddled with the heads of bond-rating agencies. Puerto Rico’s bloated government, he says, nearly tipped the territory’s rating to junk status. He pledged to implement reforms.

As Puerto Rico’s economy grows, and the San Juan bureaucracy continues to shrink, it’s hard to imagine how close it came to becoming America’s Greece. “People are seeing the results,” Fortuño says, and the island’s bond rating is stable.

But Fortuño didn’t stop with budget cuts. His energy policy has ignited a debate about the future of the Puerto Rican economy, which relies heavily on imported oil. Environmentalists can’t stand the proposed $450 million natural-gas pipeline.

Fortuño knows that the project will be opposed by liberals every step of the way. But focusing on the protests, he says, misses the point. According to the New York Times, “Puerto Ricans pay almost three times the national average for electricity.”

Unless Puerto Rico finds a way to lower its energy costs, Fortuño says, businesses will be hesitant to invest. Other natural-gas options have been offered by a Fortuño-appointed committee, but the governor remains supportive of the pipeline.

Education has been another key issue during Fortuño’s term. A staunch social conservative and practicing Roman Catholic, the governor has encouraged schools to teach students about character, values, and morality.

“Partnering with the Josephson Institute, we instituted a ‘character counts’ program, putting it into over 200 schools,” Fortuño says. “Bullying and violence in schools is dramatically down. It’s a better environment.”

Instead of raising taxes, Fortuño has utilized private investment to “modernize” hundreds of aging public-school buildings. “We don’t have money, so private companies are designing, constructing, and maintaining public schools,” he says.

Outside of Puerto Rico, Fortuño is largely unknown, but his profile has risen this year. His endorsement of Mitt Romney in the run-up to Puerto Rico’s GOP primary this spring was national news, and he is on Romney’s Hispanic steering committee.

“It’s going to be a close election,” Fortuño says, reflecting on the presidential contest. “The economy remains the main issue,” and Governor Romney, he hopes, will frame the race as “a choice between two distinct pathways.”

For two decades, Fortuño has been active in the Republican party. He is close with many national leaders, including  Bob McDonnell of Virginia, whom he first met in 1996 when they both worked on the party’s platform committee.

Fortuño’s strong reputation in conservative circles led to a flurry of speculation earlier this year that he might be a surprise pick for vice president. Fortuño does not expect to land on the ticket, but he will speak at the national convention in Tampa.

“I have a few ideas about who Romney should pick, but I won’t say,” Fortuño chuckles. “I know too many of them. And I have my own race to take care of.”

— Robert Costa is a political reporter for National Review.

Robert Costa — Robert Costa is National Review's Washington editor and a CNBC political analyst. He manages NR's Capitol Hill bureau and covers the White House, Congress, and national campaigns. ...

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