The House easily passed bipartisan legislation on Thursday to address the crippling debt crisis in Puerto Rico, on the same day the Obama administration said it supports the bill and wants it to become law.
The bill, months in the making, is a product of a three-way negotiation between Republicans and Democrats in the House and Senate, and the White House. The bill calls for setting up a control board that will have the authority to restructure the island’s $72 billion in debt.
“Today the House acted to prevent Puerto Rico’s fiscal crisis from escalating to a humanitarian catastrophe,” said House Resources Committee Chairman Rob Bishop, R-Utah, a key negotiator. “This legislation provides Puerto Rico with tools to impose discipline over its finances, meet is borrowing obligations and build a new economic foundation.”
The bill passed with majorities in both parties, 297-127, and now heads to the Senate, where it could face opposition from some Democrats. Sen. Bernie Sanders, I-Vt., who remains in the Democratic primary race, said he is opposed to the bill.
The bill would create a five-member oversight board that would have considerable authority to steer Puerto Rico away from the management policies that helped create its large debt.
Congress and the president will appoint members of the board, which would also be empowered with the authority to facilitate debt restructuring if necessary. But the plan would not provide the Chapter 9 bankruptcy protection that the Puerto Rico government and many Democrats had been seeking.
Opponents of the legislation on the Republican side said they feared it would open the door to fiscally struggling U.S. cities or states to seek a federal bailout. But proponents insist the legislation is narrowly crafted to avoid “spillover” into other parts of the United States.
Puerto Rico is a United States territory and Congress has the authority over the island’s legislation.
Without the bill, Speaker Paul Ryan, R-Wis., said Thursday, Puerto Rico would sink further into a financial crisis that would eventually require a federal bailout. Puerto Rico owes a massive debt on July 1 that it is unable to make.
“The bill applies only to territories, not to states.” Ryan said during a speech on the House floor before the vote. “I also want to point out the Puerto Rican government is not getting off scot-free. Not at all. It has not served the Puerto Rican people well. It has spent money recklessly for decades. So this legislation will make sure the government balances its budget and passes reforms that will grow Puerto Rico’s economy.”
