Creating the ability for a control board that can usurp the authority of the territorial legislature and work with its creditors may be in the best interests of the longtime territory, U.S. Rep. Darin LaHood said, noting that similar efforts had taken place in Washington, D.C., in a way that have benefitted the district’s fiscal structure.
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The bipartisan vote for the territory came in at 297-127 for the legislation. One of those conservatives, Rep. Dave Brat (R-Va.), said Tuesday that the bill was “channeling Stalin”.
The bill, which was passed to the House after the Rules Committee rejected opening it up to a number of major amendments on Wednesday, plans to empower a federal oversight board appointed by U.S. President Barack Obama to negotiate debt restructuring on behalf of the island. “We can not allow this to happen”, Ryan said in a floor speech just before the bill passed.
While the bill was meant to deal with only the Puerto Rico debt restructuring, it originally contained language tying the creation of debt restructuring oversight boards to all the territories. To assist the island in maintaining discipline in its fiscal policy, the legislation provides for the creation of a financial control board to oversee spending. Puerto Rico has already missed several payments to creditors while a lengthy recession has forced businesses to close, driven up the unemployment rate and sparked an exodus of hundreds of thousands of people to the US mainland.
“The difficulties facing the island are substantial and the blame for them can be spread from San Juan to Washington, DC to Wall Street”, Velazquez said in a statement issued hours before the vote.
“The Senate should act expeditiously to review and vote on this measure, so the President can sign the bill into law ahead of the critical July 1st debt payment deadline”, said White House Press Secretary Josh Earnest after its passage. From the conservatives’ side, it was argued that it would not be fair for bondholders, and from Democrats side it was said that the control board under the legislation has too much power. In early July 2016, Puerto Rico has a $2 billion payment to make on outstanding debt which it can not now meet. Indeed, without PROMESA, taxpayers will inevitably be forced to bailout Puerto Rico in the near future.
Puerto Rico Gov. Alejandro Garcia Padilla said Thursday that he didn’t like the plan but it is the least harmful alternative for Puerto Rico.
During oral argument in January, a majority of justices appeared to side with the Obama administration, which argued that as a territory of the United States, Puerto Rico can not try the gun dealers after federal courts have acted.
A clause in the bill under which the Puerto Rican government will be allowed to provisionally reduce the minimum wage for young workers was opposed by democrats and labor unions.
Puerto Rico’s representative in Congress, Pedro Pierluisi, attended the meeting and said he is supporting the bill despite opposition from other lawmakers on the island.
Like U.S. states, Puerto Rico can not declare bankruptcy.
The White House praised lawmakers for passing the bill, saying it was “not perfect” but an important step in addressing challenges on the island, where some public services have been curtailed.
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Rep. Sean Duffy of Wisconsin, a Republican who sponsored the bill, fought back against the idea that the legislation is a bailout of any sort.
