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.
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Duffy has described the current political climate in Washington as “hyperpartisan” in the past but heralded the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) as a true compromise.
The House on Thursday passed legislation to tackle Puerto Rico’s debt crisis, as Congress took a large step towards addressing the economic and humanitarian crisis enveloping the island.
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. Schools lack electricity and some hospitals have said they can’t provide adequate drugs or care. Pierluisi, is supporting the bill despite opposition from other lawmakers on the island.
The House-passed bill contains few, if any, controversial additions from the committee version.
The Senate’s No. 2 Republican, John Cornyn of Texas, said if Congress doesn’t act there will be a demand for a taxpayer bailout.
Critics may throw up roadblocks and, at minimum, slow the legislation down.
Democratic presidential candidate Bernie Sanders, I-Vt., said the rescue package would “make a awful situation even worse”.
Ahead of the vote, some bondholder groups tried to pick off conservatives with the argument that the bill is unfair to creditors and tantamount to a bailout for the territory. But the U.S. Treasury, which has been leading the charge in pushing to have all U.S. territories included in the PROMESA bill, continues to argue that if some territories are included and others are left out, bondholders, who see the bill as a way for the federal government to allow Puerto Rico to legally not pay its debt – a notion that has greatly diminished Puerto Rico’s standing in the bond market – could sue the federal government.
A new Oversight Board for Puerto Rico would be created if the bill becomes law, with the seven members being appointed by President Obama by the end of September.
The Puerto Rican government started relying on those bonds so heavily that its debt quickly outpaced the island’s ability to pay them off, resulting in more than $72 billion in debt previous year.
Some leading Democratic senators have voiced concerns about provisions, including one that potentially could reduce the minimum wage for young Puerto Ricans.
“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 vote could possibly be a close vote, given a lot of the politics and what’s happening right now, but the legislation itself is absolutely essential”, said Eric LeCompte, executive director of Jubilee USA, an advocacy network focused on global public debt relief. “We can not allow this to happen”. The House voted 297 to 127 in favor of the legislation, on June 9, 2016. Republicans and Democrats worked together and were able to get this legislation passed.
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He said, “I would love if we could say, ‘The Puerto Rican government, you guys have to do a better job of managing your debt.’ Guess what?”
