Zakaria proposes 'grand bargain' on Puerto Rico's debt

(CNN)Fareed Zakaria floated the idea of a "grand bargain" between the federal government and the people of Puerto Rico to resolve the country's economic crisis.

During his 'What in the World' segment of his weekly show on Sunday, he explained how the deal could work.
"The federal government should commit a large, multi-year, multi-billion dollar program of investment, should restructure Puerto Rico's debt and repair the island's infrastructure."
"In return, after conditions get normal, the leadership of the commonwealth should also make some difficult economic reforms" he said.
    Zakaria pointed out that many of these reforms have already been proposed by economist Anne Krueger. They're geared to making the island more business-friendly to bring back jobs, increase the tax base and stop the outflow of people.
    Krueger's proposals include reducing the cost of electricity and repealing the Jones Act, which has made shipping goods to the island more expensive.
    Her most controversial proposal involves lowering the minimum wage, implementing welfare reforms and lowering benefits to make Puerto Rico more competitive compared with other Caribbean economies.
    Right now, according to Krueger, the head of a family of three earning the minimum wage on the island brings home roughly $600 less than if they were on welfare, deterring people from seeking work.
    Zakaria's segment was in reaction to a tweet sent by President Trump on September 25, when Puerto Rico was still reeling from Hurricane Maria. Trump's tweet read "Texas & Florida are doing great but Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble.."
    Zakaria acknowledged that the tweet was "graceless" given the devastation, but he said the President was correct that the island was in deep economic trouble even before the hurricane struck.
    "Hurricane Maria may offer the single greatest opportunity to rebuild the island -- but it will take a grand bargain to pull it off" he concluded.