Answer to Puerto Rico’s Debt Woes? It’s Complicated

Puerto Rico is in something of a jam at the moment. On Tuesday, Standard & Poor’s downgraded Puerto Rico’s debt to junk status. The move intensified Puerto Rico’s cash squeeze. How it deals with the issue is complicated by the fact that in 1901, not long after the United States acquired Puerto Rico in the Spanish-American War, the United States Supreme Court ruled that the Constitution did not apply in Puerto Rico because the island was a territory and not part of the union. The ruling left the island in a kind of legal limbo. And there Puerto Rico has remained. It is not a state. So you might think it could file for Chapter 9 bankruptcy, just as Detroit and Jefferson...