The court voted 8-1 that Congress had the power to exclude them from a benefits program that's available in all 50 states and the District of Columbia.
The verdict brought rage in Puerto Rico and disbelief among campaigners.
Ocasio-Cortez, whose father's family came from the island, made her anger clear.
"2022 Imperialist Neo-colony Vibes: when my cousins can be drafted into war by a government they don't even have a right to vote for and denies them benefits, yet that same gov can exploit their land into a tax haven for crypto billionaires & tax evaders," she tweeted.
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The justices supported President Biden's administration in inverting a lower court's ruling that a 1972 decision by Congress to exclude Puerto Rico from the Supplemental Security Income (SSI) program violated a U.S. Constitution that requires that laws apply equally to everyone.
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The ruling denies benefits to 300,000 people on the Caribbean island who otherwise might qualify. The federal government has said an expansion covering Puerto Rico would have cost $2 billion a year.
"Enough of this colonial status that discriminates against us and affects our quality of life. The only and the best solution is statehood," Pedro Pierluisi, Puerto Rico's pro-statehood governor, said.
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Puerto Rico's status is a split issue on the island, with some preferring to remain a territory while others push for statehood or even independence from the United States.
The judgment, authored by conservative Justice Brett Kavanaugh, found that Congress acted validly under a constitutional provision letting lawmakers treat territories differently than states.
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Kavanaugh said a ruling extending benefits to Puerto Rico could have "far-reaching consequences" imposing additional financial burdens on its residents - including requiring them to pay federal income tax, which they do not currently do.
"The Constitution does not require that extreme outcome," Kavanaugh wrote.
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Liberal Justice Sonia Sotomayor, whose parents were from Puerto Rico, was the sole dissenter. Sotomayor pointed out that as the island does not have voting representation in Congress, its people cannot depend on Congress to recognize their rights.
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Congress passed the Promesa law in 2016 to create a federally appointed fiscal board tasked with restructuring the island’s $72 billion debt crisis after U.S. laws arbitrarily excluded Puerto Rico from the federal bankruptcy code and prevented them from using Chapter 9. The move has resulted in strict austerity measures.
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Statehood supporters have claimed that the law and the board would vanish if it becomes a state, but witnesses at the hearing said that the U.S. can impose any conditions it wants in order to allow a statehood transition, including keeping Promesa and the board.