If you want to see welfare-state socialism in action, go to bankrupt Puerto Rico. ‎Let’s hope Bernie Sanders’ voters are paying attention to what their worker paradise dreams turn into in real life.

Puerto Rico is a financial basket base with the island’s $75 billion debt now eclipsing 100% of its output. The government is already in technical default, and San Juan says it may not be able to make its next $422 million payment on May 1 and then another $2 billion payment that comes due this summer.

House Republicans are trying to rescue Puerto Rico from calamity. It is a territory of the United States and as such should not be abandoned by the feds — even though Puerto Rico is mostly a victim of its own financial and fiscal negligence and overspending.

A House bill would create a financial control board to take charge of Puerto Rico’s finances and budget affairs. This a de facto bankruptcy for Puerto Rico. Such a model ‎helped the Districdt of Columbia ‎recover when it was in a similar financial crisis. A control board also worked well in managing Detroit’s bankruptcy. The financial control board is NOT a cash taxpayer bailout of Puerto Rico, which is what the PR government wants, as do many Democrats in Congress’s.

Every class of bondholder would take a haircut under this solution. Even the PR Government Obligation bonds that carry “full faith and credit” guarantees are now selling on the market at a discount of about 70 cents on the dollar. The market knows Puerto Rico cannot fully repay its obligations and is pricing bonds accordingly.

If anything good comes of this debacle it is that the hope that bond traders will finally start to realize that government bonds are NOT risk free. The oversight board should be mindful of the legal rights of bondholders, who have first claim on revenues and assets. These rights should not be subordinated, for example, to the political power of the government unions, as happened with the Obama administration bailout of auto companies.

The control board should be given authority to renegotiate the government unfunded pension liabilities, which are in the tens of billions of dollars due to mismanagement and over-promises. Pensions must be dramatically scaled back to ensure the government’s ability to provide its vital public services, like schools, roads, and public safety.

Finally, the control board must get a buy-in from the PR government. ‎Liberals are denouncing the economic life raft House Speaker Paul Ryan is offering with preposterous charges like “colonial subjugation.” Minority leader Nancy Pelosi complains that the control board is “undemocratic” because the board would be empowered to override the PR legislature whose reckless borrowing and spending created the crisis in the first place. These charges are utter nonsense.

Let the democratically-elected PR legislature vote on whether it will accept board control. Congress should make clear that the alternative is NOT a federal bailout. If Puerto Rico votes yes to the control board, the process of solving the financial crisis begins immediately. If the legislature votes no, then Washington will have to wash its hands of the matter and allow PR to deal with its financial insolvency on its own. Good luck with that.

Finally, Congress should move to make the whole island an enterprise zone with low tax rates, regulatory relief, and exemption from other federal laws that inhibit growth. Without growth and enterprise, it is doubtful Puerto Rico will ever fully recover from the financial turmoil that reigns today. The goal should be to covert Puerto Rico from a dependent welfare state to ‎the Hong Kong of the western hemisphere.

Mr. Moore is an economic consultant ‎with Freedom Works and a Fox News contributor.