Congress Split Over Puerto Rico Debt Rescue Bill, Likely Won’t Meet May 1 Deadline
In a span of 24 hours, U.S. lawmakers went from cautious optimism to public opprobrium of a rescue bill to assist cash-strapped Puerto Rico.
The House Committee on Natural Resources abruptly delayed Thursday's meeting because of provisions in the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) that committee Chairman Rep. Rob Bishop, R-Utah, said created "uncertainty in both parties."
"This legislation needs bipartisan support, but members need time to understand the complexity of the issue and the ramifications of any proposed changes," Bishop said during the committee's opening statements on Wednesday.
Congress favors legislation curving the island nation's massive $72-billion in debt, but the bill has drawn bipartisan criticism, from Democrats for being too controlling and from some conservatives who believe PROMESA essentially serves as a bailout.
Puerto Rico on the Brink of a Bailout
Ranking committee member Raul Grijalva, D-Ariz., used his opening statement Wednesday to remind lawmakers of Puerto Rico's vulnerability.
Grijalva cited a Centers for Disease Control and Prevention report warning that one of every four residents could contract the Zika virus within the next year, and that local hospitals would not have funds or basic resources to treat patients. The congressmen said Puerto Rico is incapable of a dependable fiscal plan going forward, arguing that Wall Street hedge funds prefer it stay this way.
"These vulture funds are now aggressively campaigning against a solution to help the island relieve some of its debt. They are more interested in padding their profits than ensuring the well-being of American families suffering in Puerto Rico," Grijalva said.
"As Members of Congress, we have to decide who comes first - vulture funds and others who steadfastly refuse to join other investors in a good faith, compromise solution, or the American people."
Several Republicans believe Puerto Rico can restructure its debt payment plan without U.S. government assistance. They worry about ramifications on American taxpayers if the Treasury allocates billions of dollars, and wonder whether it will do anything for Puerto Rico's long-term economic health.
As Heritage Action for America Vice President Dan Holler put it, PROMESA offers no direct financial bailouts to creditor or to Puerto Rico.
"The new draft does not maintain legal continuity or promote much needed economic growth," Holler told Latin Post. "This is not a constructive, conservative solution to Puerto Rico's problems."
The conservative political advocacy organization released a brief on April 1 urging lawmakers to keep three priorities in mind; no bailouts, promote reforms in public administration, and maintain legal continuity. The latter partially refers to bankruptcy proceeding that would allow Puerto Rico unpunishable default on payments.
"Congress does not have to solve all of Puerto Rico's problems, but it can take limited steps that improve economic conditions and promote negotiated restructuring," the brief read. "In a limited approach, Congress could shelve the Oversight Board for the time being and leave bankruptcy law alone."
Payment Deadline Looms
Puerto Rico owes creditor Government Development Bank $422 million on May 1, but Thursday's setback assured payment won't be made in time.
In her weekly news conference, House Democratic leader Nancy Pelosi, D-Calif., said the deadline was still possible but still has "serious concerns" over influence creditors may have over restructuring decisions.
On Wednesday, House Speaker Paul Ryan, R-Wisc., reminded Republican leaders that special interest groups want PROMESA to fail.
"Many big-money interest groups on Wall Street know this and have put a lot of money towards sabotaging this legislation in order to force a last-minute bailout upon Puerto Rico, putting U.S. taxpayers on the hook for their bad loans," Ryan said. "They call this a bailout, because they know it is not. And a bailout is what they want."