“If we’re going to help Puerto Rico escape bankruptcy, we should also be helping the 90,000 coal miners in Ohio, West Virginia and elsewhere who are also suffering the effects of the coal bankruptcies”, Sen.
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“This is the best and possibly the only action we can take to help Puerto Rico”, Senate Majority Leader Mitch McConnell said on the Senate floor.
House Democratic leader Nancy Pelosi, who has voiced criticisms of the bill, said a failure to pass PROMESA would mark “a tremendous win for the unscrupulous hedge funds that have held this bill up for six months demanding to be first in line over the needs of the people of Puerto Rico”.
The legislation is needed because Puerto Rico, like all USA states and territories, can not declare bankruptcy under federal law.
If and when the bill passes the final vote, Obama and party leaders will appoint officials to an oversight board, which would oversee Puerto Rico’s restructuring (if one is deemed necessary) and its economic recovery plan. Separately, Treasury Secretary Jacob Lew lobbied Democrats to back the package in a last-minute bid to secure the votes and help the US territory with its crippling $70 billion debt. The potentially significant information advantage provided to the Treasury, which has actively pursued a specific legislative agenda in the U.S. Congress, arises from unexplained confidentiality agreements between Treasury and some component units of Puerto Rico’s government. They pay our taxes, they fight in our wars. The territory’s government would have to create a fiscal plan and submit budgets to the board.
Some Democrats have complained about the makeup and operation of the oversight board that would be appointed by Washington as well as provisions demanded by House Republicans that potentially could lower minimum wages for some younger workers. I do not like that it doesn’t add a mechanism to make our economy grow, but what is the alternative right now? “We need the bill yesterday”.
Some Democrats backed the bill unenthusiastically.
Democratic Sen. Bob Menendez of New Jersey and Sen. A vote on the measure is scheduled on Wednesday. Bernie Sanders, I-Vt., are both strongly opposed to the bill, saying the control board would be too favorable to creditors and ignore ordinary Puerto Ricans.
In the days before the vote, some bondholder groups worked to turn senators against the bill, arguing it doesn’t sufficiently protect creditors and is tantamount to a bailout for the territory. The Senate is expected to start voting on the bill toward the middle or end of the week.
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That puts Reid and Senate Democrats in a tough spot if they push debate past the Friday deadline, then they could be blamed for any repercussions in the territory. The lawsuits that have been filed against the island will not be stayed absent any legislation, but there’s no reason to think that these will be adjudicated anytime soon or that they will create any undue pain in the island in the near future. Doing so may result in civil and/or criminal penalties.
