The House is finally expected to hold a hearing and a vote next week on legislation to address the debt crisis in Puerto Rico, but opposition from both parties means it won’t be easy to advance the plan to help the struggling U.S. territory.
Lawmakers unveiled a bipartisan “discussion draft” late last month that has already drawn criticism from House conservatives and only tepid approval from Democrats, who say the plan has “significant problems.” The first draft required immediate changes in order to avoid possible legal challenges, further delaying consideration of a bill that House Speaker Paul Ryan promised would be ready for considering by the end of March.
An updated draft measure is expected by Monday, ahead of a planned Wednesday hearing in the House Natural Resources Committee, which claims jurisdiction over the matter.
“Efforts to refine the committee’s discussion draft continue,” said House Natural Resources Committee Chairman Rob Bishop, R-Utah. “All parties are working in good faith as we finalize responsible legislation that helps solve the crisis and protects American taxpayers.”
The House bill would create a five-member oversight board that would have considerable authority to steer Puerto Rico away from the management policies that are at least partly to blame for the more than $70 billion in debt the territory owes. The board would also be empowered with the authority to facilitate Puerto Rico’s debt restructuring if that is deemed necessary.
The bill would not provide the Chapter 9 bankruptcy protection that the Puerto Rico government and many Democrats had been seeking, but Republicans say the bill is a compromise aimed at helping Puerto Rico, and sparing taxpayers.
“The House is committed to a responsible path forward that tackles Puerto Rico’s structural fiscal problems while protecting American taxpayers from footing the bill,” House Speaker Paul Ryan, R-Wis., said in a statement.
While the bill includes ideas from both parties, it’s also getting criticism from both parties.
The conservative Republican Study Committee, whose membership makes up a majority of the Republican conference, issued a statement critical of the provision that would allow the forced restructuring of Puerto Rico’s debt.
“The RSC has taken a clear position that unilaterally changing the rules to address Puerto Rico’s fiscal irresponsibility is the wrong approach,” said committee chairman Bill Flores, R-Texas.
Conservative and taxpayer watchdog groups also criticized the debt restructuring plan, and said it would require changing bankruptcy laws and set a precedent for a territory whose debt crisis stems from mismanagement and overspending.
National Taxpayer’s Union President Peter Sepp said the draft measure would give debt holders no choice in the restructuring process, and that taxpayers would end up paying the price, as they did when Detroit and other municipalities filed for Chapter 9 bankruptcy protection.
“The process has not served taxpayers adequately at all, especially in recent times,” Sepp told the Washington Examiner.
Democrats are also balking at the plan.
Minority Leader Nancy Pelosi, D-Calif., said the control board the draft calls for “would exert undue and undemocratic control over Puerto Rico’s government and residents.” The plan, she said, “is far from what Democrats can support.”
Rep. Luis Gutiérrez, D-Ill., who was born in Puerto Rico, slammed the draft proposal, calling it “a new layer of colonial oversight from Washington through a Control Board.”
Congress has been struggling to agree on a legislative solution to help the bankrupt Island since last year.
The effort was complicated last week after Puerto Rico Gov. Alejandro García Padilla signed a one-year moratorium on debt payments, which he said was needed because Congress has yet to act on a plan to help the territory deal with payments that will be due in a matter of weeks.
Bipartisan efforts will continue, Democratic and Republican leaders said, despite the significant differences.
White House spokesman Eric Schultz signaled to reporters last week that the governor’s moratorium would not impact the effort to pass a bill in Congress.
“We’ve expressed some concerns with the legislation as it currently lays out, but our work on that continues in earnest,” Schultz said.
