Lawmakers are now expected to miss a May 2 deadline to pass legislation that would provide a pathway for Puerto Rico to restructure its staggering debt, but there is bipartisan optimism a deal will come soon after.
The first of the month marks the day Puerto Rico is expected to default on a $422 million debt-service payment that it lacks the funds to pay.
Republicans and Democrats say they are tweaking legislation that would eventually provide the U.S. territory with the ability to restructure $72 billion in debt, but not in time for that deadline.
The House leaves next Friday for a week-long recess, and it do not return until Tuesday, May 10.
“Armageddon will not hit on May 2,” said the author of the pending bill, Rep. Rob Bishop, R-Utah. “It would be a whole lot better to have it done before May 1. Maybe some people realizing how significant the issue is on May 1 would be helpful as far as moving the bill.”
The bill would install a control board authorized with restructuring power and tasked with steering Puerto Rico out of a funding crisis many Republicans believe is due to runaway government spending.
The legislation stalled earlier this month thanks to opposition from both Democrats and conservative Republicans. Democrats are withholding support while the Obama administration helps tweak the restructuring title of the bill. GOP conservatives say they opposed the it because it offers the island nation a form of Chapter 9 bankruptcy protection.
Bishop blamed an advertisement that calls on lawmakers to oppose the bill as a big reason why it’s stalled. The “no bailout for Puerto Rico” spot has been running continuously on television, warning that the congressional deal in the works “grants Puerto Rico unprecedented bankruptcy protections and you pay for it.”
Republican leaders told the Washington Examiner they have been educating conservatives on aspects of the bill, which they say is not a form of bankruptcy. GOP leaders believe they will eventually be able to redraft it and win majority support from both parties.
In an interview this week, Bishop, who is chairman of the House Resources Committee, told the Examiner “it is always possible” a bill could be ready in the coming week, but admitted it’s unlikely.
“It’s a learning process, and that is what we are doing,” Bishop said. “The longer we wait the worse potential danger there is.”
Republicans say a more significant deadline for dealing with Puerto Rico’s debt is in July 1, when a $1.5 billion debt payment is due.
House Speaker Paul Ryan, R-Wis., set a deadline for legislation by the end of March. Despite the delay, he believes they are essentially on target.
“The Resources Committee is working on the technical aspects on how the restructuring will work with the Treasury Department,” Ryan said. “I think they’re doing very well, and we just want to make sure we get it right.”
