House Republicans and Democrats reached a rare, election-year deal with the White House to try to rescue Puerto Rico from 70 billion in debt as millions of Americans in the cash-strapped U.S. territory struggle with the loss of basic services.
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LOS ANGELES (AP) Democratic presidential candidate Bernie Sanders is breaking with the Obama administration and House lawmakers over a plan to restructure Puerto Rico’s $70 billion in debt, saying the legislation would make “a awful situation even worse”.
The Puerto Rico Oversight, Management and Economic Stability Act is supported by the White House, according to The Hill, as well as top congressional Democrats like House Minority Leader Nancy Pelosi, Republican House Speaker Paul Ryan, and Hillary Clinton, Sanders’ rival for the Democratic Party’s presidential nomination. More than 200,000 people have left Puerto Rico in the past five years, as the island’s financial problems worsened after setbacks in the wider USA economy. Treasury Secretary Jacob Lew, who was also involved in negotiations, has called the legislation a “fair, but tough bipartisan compromise”. Two government agencies have been under a state of emergency, and the economic crisis has forced businesses to close, driven up the employment rate and sparked an exodus of hundreds of thousands of people to the USA mainland. Puerto Rico’s governor used a state of emergency this week to protect one public agency from lawsuits.
“I am urging the Senate Democratic Caucus to make it clear to the Republican leadership that this legislation is unacceptable and will not be supported by Senate Democrats”, Sanders wrote in a letter to his colleagues in the upper chamber.
In his letter, Sanders warned that the control board would have the power to cut the budget, slash pensions and take other measures. Sanders said the legislation “looks out for the needs of Wall Street vulture funds first and foremost”.
Ryan say the bill is the only way to avoid an eventual bailout of the territory.
Bondholders, including hedge funds, have lobbied to make sure the legislation ensures their rights as creditors are held up by the control board. “We must not balance Puerto Rico’s budget on the back of children, senior citizens, the sick and the most vulnerable people in Puerto Rico”.
House Resolution 5278 – also known as the Puerto Rico Oversight, Management and Economic Stability Act – demands a restructuring plan that “must be ‘in the best interest of creditors, ‘ not in the best interest of the 3.5 million USA citizens living in Puerto Rico”, Sanders said, adding that “this legislation looks out for the needs of Wall Street vulture funds first and foremost”.
Puerto Rico’s Democratic primary is on June 5, with Sanders and Clinton competing for 60 delegates.
Sanders criticized the bill for allowing GOP leaders to “to determine the fate of Puerto Rico by handpicking a majority of the control board’s members, while the people of Puerto Rico would be in charge of choosing none”. The Puerto Rican government has underfunded pensions by more than $40 billion. Gov. Alejandro Garcia Padilla said Monday that he set aside $209 million to help pay interest linked to that debt.
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The Vermont independent said the control board consists of seven federally-appointed officials, which would be given the authority to oversee the territory’s finances.
