Nevertheless, some lawmakers feared that allowing Puerto Rico to restructure its $70 billion debt in a way that changes the seniority of the creditors – for instance, by making them all equal or subordinated to pensioners – would set a bad precedent for other US states with debt problems.
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The House on Thursday weighed a rare bipartisan bill to help ease Puerto Rico’s financial crisis and bring relief to the US territory of 3.5 million Americans.
Westerman, who sits on the House committee that initially reviewed the legislation, took to the House floor to defend the measure.
After a series of false starts, House leaders and the Treasury struck a bipartisan deal last month to remedy years of overborrowing and spending on Puerto Rico and the steady exit of young, working-age residents who could turn its fortunes around. Puerto Rico faces payments of $2 billion on July 1 and defaulted on a payment of about $400 million in May.
A rescue package for debt-stricken Puerto Rico has cleared a major hurdle in the House and now heads to the Senate just three weeks before the island is supposed to make a $2 billion debt payment to creditors.
Justice Stephen Breyer dissented, and was joined by Sonia Sotomayor, saying that “the “source” of Puerto Rico’s criminal law ceased to be the US Congress and became Puerto Rico itself, its people and its constitution”. A lengthy recession has forced businesses to close, driven up the employment rate and sparked an exodus of hundreds of thousands of people to the USA mainland. The seven members would be selected by President Obama from lists drawn up by congressional leaders, a lot of them Republicans. The gains came after an index of Puerto Rico debt climbed for eight straight days through Wednesday, the longest winning streak since November, S&P Dow Jones indices show. He said things will only get worse for people on the island.
The Senate has not yet acted, but John Cornyn, R-Texas, said earlier this week that the Senate was likely to take up the House version of the bill if it passed.
The Senate has so far not acted in this regard but it was watching the House vote closely.
It passed the House on Thursday with a vote of 297 to 127 as President Barack Obama, House Speaker Paul Ryan (R-Wis.), and Minority Leader Nancy Pelosi (D-Calif.) all lined up behind it.
Some conservatives said they would vote against the bill.
Puerto Rico officials had argued that the island could still bring charges under its own laws -something that the 50 states have power to do under the principle of state sovereignty. The next big deadline is July 1, when the island owes creditors almost $2 billion.
The law created to rescue Puerto Rico from financial crisis passed in the House of Representatives late Thursday. Schools lack electricity and some hospitals have said they can’t provide adequate drugs or care. The legislation would allow the control board to oversee negotiations with creditors and the courts over reducing some debt.
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Making a final push ahead of the vote Thursday, Ryan dismissed claims that the bill would give the island bailout powers, calling it “absolutely, undeniably, categorically false”. But an amendment proposed by Democrats to delete that provision was rejected in the house. Instead, it allows the oversight board to negotiate with creditors and avoid a lengthy, and costly, battle in court.
