Senate Minority Leader Harry Reid, D-Nev., demanded that Republican leadership take up legislation to alleviate Puerto Rico’s debt crisis before the 3.5 million Americans in the U.S. territory suffer a “humanitarian crisis.”
“I was told that in the island of Puerto Rico there’s a shortage of suitcases, luggage, because people are leaving that little country,” Reid said from the Senate floor on Thursday. “Most of them are coming to Florida. They’re desperate. Many have said that the dire state of Puerto Rico’s economy could become a humanitarian crisis.”
Puerto Rico owes $73 billion in debt that federal law prevents the local and territorial government from discharging through bankruptcy. Negotiations about repaying the bondholders have stalled as Puerto Rico’s government hopes that Congress will pass legislation changing that law, but it’s a thorny problem for lawmakers concerned about setting a precedent for future state-level debt crises.
Reid wants Senate Majority Leader Mitch McConnell to back legislation that would allow Puerto Rico to declare bankruptcy. “Any legislation that does not include a federal process that allows Puerto Rico to adjust its debt would not be a real solution for Puerto Rico’s crisis,” Reid and 45 other Senate Democrats wrote to McConnell on Wednesday. “Restructuring legislation would not cost the federal government a single penny and would instead save U.S. taxpayers from the growing cost of inaction.”
The territory’s creditors made the loans in part because the island is not allowed to declare bankruptcy, though, and so Reid’s proposal would change the terms of the loan retroactively. Congressional Democrats wanted the law changed in the omnibus spending bill, but Republicans refused.
“Puerto Rico’s fiscal crisis is a problem that is not going away anytime soon,” House Speaker Paul Ryan, R-Wis., said in a statement following the passage of the year-end spending bill. “While we could not agree to including precedent-setting changes to bankruptcy law in this omnibus spending bill, I understand that many members on both sides of the aisle remain committed to addressing the challenges facing the territory.”
Ryan told various House committees to come up with a solution by the end of the first quarter of the year, but it’s not clear what policy they’ll propose. And, in the event, the presidential primaries could alter the political calculus. Puerto Ricans go to the polls on March 6, in an election featuring three Republicans senators who need every delegate they can get.
