WASHINGTON – After weeks of delays, House Republicans are moving ahead with legislation to help Puerto Rico manage $70 billion in debt.
A revised bill introduced late Wednesday would create a control board to help manage the U.S. territory’s financial obligations and oversee some debt restructuring. Though it is the third version of the legislation, those objectives remain unchanged.
House Natural Resources Committee Chairman Rob Bishop, R-Utah, has led negotiations on the bill and has worked closely with House Speaker Paul Ryan, R-Wis., congressional Democrats and the White House. The aim has been to write legislation that could pass both the House and the Senate before Puerto Rico defaults on a $2 billion debt payment due July 1.
The committee could vote on the bill as soon as next week.
Bishop originally introduced a bill last month, but cancelled a scheduled committee vote after objections from both parties. Since then, he has worked closely with Ryan to win over conservatives who worry it might set a precedent for financially ailing states and Democrats who say they are concerned the control board will be too powerful and favourable to creditors.
The new version of the bill has concessions to Republicans, Democrats and members who want to make sure that Congress has the utmost say in who sits on the board.
Bishop had hoped to introduce the legislation last week, but said Wednesday that the delays centred around how members of the seven-member board would be appointed.
Under the new bill, President Barack Obama would select all but one of the board members from lists provided by the four Republican and Democratic leaders of the House and the Senate. If Obama does not choose from those lists, the members must be confirmed by the Senate. Lawmakers have been working to ensure that the bill is written so that Obama can’t easily reject those nominees and the board is chosen quickly.
The final bill also removes a controversial provision that would have transferred federal land on the nearby island of Vieques to the government of Puerto Rico — a major concession to Democrats, whose votes may be needed when the bill reaches the House floor.
The new version retains a provision to allow the Puerto Rican government to lower federal minimum wage requirements for some younger workers, which Democrats have also objected to.
Under the legislation, the control board would require the Puerto Rican government to create a fiscal plan, including directing the territory to provide adequate funding for pensions. The island has underfunded public pension obligations by more than $40 billion.
Creditors have expressed concern that they would take a back seat to the pension obligations, while the Obama administration has pushed to make sure that pensions are also a priority.
Bishop has said the aim of the legislation is to make sure they are all paid.
“We’re not in the process of picking winners and losers in this, and that’s why you have the board in the first place, so they can make an orderly process of that,” he said last week.
Puerto Rico has been mired in economic stagnation for a decade, and more than 200,000 people have left Puerto Rico in the past five years, reducing the island’s tax base. Financial problems grew worse as a result of setbacks in the wider U.S. economy, and government spending in Puerto Rico continued unchecked. Borrowing covered increasing deficits and bonds were sold on special terms.
Some Republicans on the Natural Resources panel have been skeptical of the bill. Ads that have aired nationwide claiming the legislation amounts to a financial bailout, even though the bill has no direct financial aid, have complicated that effort.
Ryan has strongly supported the bill, and has made clear that he would not support any sort of a bailout. But he has said that the government may eventually have to bail out the territory if Congress doesn’t take steps now to help the island avoid economic collapse.
Puerto Rico’s representative in Congress, Pedro Pierluisi, issued a statement after the bill was released that it is “moving in the right direction.” He opposed previous versions of the legislation.
“I hope every member of Congress will bear in mind that the collapse of the bill could mean the collapse of Puerto Rico’s government,” said Pierluisi, who is running for governor of the territory. “History will judge us harshly if we do not act swiftly and wisely.”
The Senate has not yet acted on the issue, and Senate Majority Leader Mitch McConnell has said the chamber is waiting for the House to act. But McConnell has provided input to Bishop’s panel during negotiations, potentially making the bill’s eventual path through the Senate a bit smoother.
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