Free the F.A.L.N. 16!! Jude Wanniski September 7, 1999

Memo To: Carlos A. Romero-Barcelo [D-PR At Large]
From: Jude Wanniski
Re: Ease up, Carlos

I was sorry to see that you have been critical of President Clinton's decision to grant clemency to the 16 F.A.L.N. members who have been in federal prison for almost 20 years for committing acts of political terrorism on behalf of Puerto Rican independence. Yes, of course you have been a leading champion of statehood for most of your life -- as Mayor of San Juan when I first met you in 1976, then as two-term Governor of Puerto Rico, now as the Commonwealth's resident commissioner in Washington. But considering the fact that none of the men were convicted of acts of violence that harmed anyone, I think you are being just a bit hard-nosed. You almost seem to be flaunting your statehood credentials by insisting these independistas serve out the 40-50-year terms they were handed -- when they sought to show the purity of their motives by refusing to defend themselves against the terrorist charges brought against them. I of course agree that when men resort to terrorism to achieve political ends when they have failed at the ballot box, they deserve long prison terms. But if they were to renounce violence as President Clinton insists they do before granting clemency, the sentences they have served clearly have been punishment enough. I'm frankly ashamed of those Republicans who have been posturing in the same way you have, showing how tough they are without bothering to put the clemency in any context. Many are the same people who argued vociferously against release of Nelson Mandela from prison in South Africa, on the grounds that he was still a communist!

A successful political terrorist, remember, goes down in the history books as a "freedom fighter." The F.A.L.N. grew out of the same frustration with the problems Puerto Rico imported from the United States because of its Commonwealth status. I still remember my very first minutes in Puerto Rico, when as an editorial writer for the WSJournal I decided to make the trip to find out why the unemployment rate had shot up to more than 20% in January 1976. I assumed it had to do with the tax system, but I was shocked when I found out how right I was. I asked the taxi driver on the way into the Caribe Hilton from Munoz Marin Airport what he thought of the tax system. He told me instantly: "It is bad. It encourages divorce." I soon found out why, which is why I sought you out after making no headway with Governor Rafael Hernandez-Colon.

First, Puerto Rico was tied to U.S. monetary policy, required to use the dollar as its currency and unit of account. When President Nixon went off the gold standard in 1971, the mainland inflation was bad enough, but it swelled much faster in the Commonwealth because the maturies in your debt structure was so much shorter. Lo and behold, practically anyone making a salary was inflated into the upper bracket of your country's income-tax, 70% at a threshold of roughly $12,000. Then I discovered the true horror stories! The Hernandez-Colon administration, with its links to the Democratic Party, had commissioned James Tobin of Yale to study the island economy and make recommendations on how to improve its performance. Tobin got $120,000 for the poison he served up, big money back in those days. The Big Poison was his recommendation that you impose a 10% surtax ON TOP OF THE CONFISCATORY RATES IN EXISTENCE. Another taxi driver termed this surtax "La Vamparita" as he pinched his Adam's apple with his forefingers, "The Little Vampire."

And what about encouraging divorce? I'm not sure, but I think it was the Tobin Report that recommended husbands and wives be required to file a joint return. In other words, with the husband already in the 77% Vampire Bracket, his wife would have her first dollar of income taxed at that rate. I almost cried when I realized how innocent you guys were back in those days, thinking you were getting the best advice money could buy when you went to a Professor of Economics at Yale who had been a member of John F. Kennedy's Council of Economic Advisors, and was soon to be awarded a Nobel Prize in economic "science."

Carlos, remember what it was like in San Juan in January 1976, when I persuaded you at our first meeting that you should run for governor AGAINST LA VAMPARITA? And when you did, you won in a landslide, carrying with you into the national legislature the statehood party -- loosely aligned with the mainland GOP -- that had not been in the majority for almost 40 years. Puerto Rico was one of the most dismal places I had ever encountered. There was not a smile on the island, except for little kids. On every street corner in San Juan there was at least one prostitute. The only way a family could make ends meet was to have one of its better-looking daughters walk the streets of the underground economy, where there was no "Vampire Bracket."

Remember, Carlos? If you don't, go back and read Chapter 12 of my book, The Way the World Works, a chapter I called "Experiment in Puerto Rico." It was because of my trip to Puerto Rico, Carlos, that I decided I had to write the book. The Tobin Textbook on how to destroy an emerging economy still is the standard manual at the International Monetary Fund and World Bank, but at least I helped pull Puerto Rico out of that awful snakepit in which I found it. Things were so desperate that you defied your party establishment in running as a tax-cutter -- four years before Ronald Reagan did it!! Alas, after four years, you became establishment again, with no more interest in economic growth, only statehood, when only economic growth will get you statehood. I told you that a hundred times on my myriad trips to San Juan. Don't deny it, Carlos. In 1984, the man you beat in 1976, Hernandez-Colon, got in touch with me, and he became the champion of lower tax rates, ousting you from the governorship. And I cheered.

Puerto Rico is now a much happier place, a much more prosperous place than it was in 1976. I'm sure you can find a hooker around one of the casinos, but they are gone from the streets. The girls who would have been there are working as teachers or nurses or even bankers, and if they are married, they don't have to file a joint return. I'm proud of what I accomplished, Carlos. If it were not for me, God knows where Puerto Rico would be. The only alternative would have been the F.A.L.N. You see why I sympathize with them? All they knew was that for some unknown reason there was a hideous connection to the United States that was savaging the ordinary people of their island economy. They didn't want to get rich through their criminal acts. They wanted to be released from a paternalistic Uncle Sam who handed out welfare checks as long as the population behaved itself. The key to breaking that paternalism was your finest moment in 1976. In a few years, the F.A.L.N. was a memory. The men in jail continue to say they do not regret what they did. At the time of their protests, looking back, you can see why, can't you? Ease up, Carlos. Do me the favor you never did for me in return for the favor I did you. Change your mind. Send the prisoners a copy of this letter, ask them to renounce violence, and tell the President to go ahead with the clemency, regardless of whatever the First Lady wants to do.