Puerto Rico has spent decades on overspending government programs and funding them by selling of bonds. Friday it is a certainty that the island government will default on at least a portion of $1Billion in bonds that come due. The Puerto Rican Constitution requires available funds be used to pay off priority debts but that will leave most bond holders with nothing.
The island is paying the price (or not paying it depending how you really look at it) for decades of foolishness. An absurd pension system was used as a carrot to entice way too much of the population into government work and even that is not being guaranteed.
This is the start of a long painful pathway for Puerto Rico and is a small view of what awaits the United States in general in a few years at current overspending levels.