Bid to Ease Puerto Rico Debt Crisis Draws Fire in House
Member concerns prompt House panel to postponse Thursday markup
After months of working on legislation to help Puerto Rico dig out of its ongoing financial crisis, a House panel produced a bill that is drawing criticism from Republicans and Democrats alike.
The opposition was loud enough Wednesday that the Natural Resources Committee postponed a markup of the bill set for Thursday. A new date has not yet been set.
“Democrats could blow this up just as much as Republicans can,” the committee’s chairman, Rep. Rob Bishop, R-Utah, said before the decision to delay the markup. “In fact, sometimes I think they can blow it up even more than Republicans can.”
Committee ranking member Raúl Grijalva, D-Ariz., said Democrats hold the power because Republicans don’t have the votes to pass the bill on their own.
“If it’s going to pass it’s going to be bipartisan and an overwhelming number of Democrats have to vote for it. Period,” Grijalva said.
The Natural Resources Committee bill introduced Tuesday would create a board to oversee Puerto Rico’s fiscal decisions and help the territory balance its budget. The board would hold veto power over the legislature and have authority to reject financial transactions of the executive branch.
To resolve the immediate problem of Puerto Rico’s $72 billion in debt, the bill would grant the terrority authority to restructure debt and give creditors the opportunity to negotiate voluntary agreements.
If the voluntary restructuring efforts fail, the oversight board could essentially force a restructuring under a mechanism similar to Chapter 9 bankruptcy. Members refer to this as a “cram down” provision.
While some Republicans, including House Speaker Paul D. Ryan, say the measure accomplishes the GOP’s goal of avoiding a federal bailout of Puerto Rico, others remain concerned that the “cram down” provision was equivalent to bankruptcy authority and could set a bad precedent that might affect the credit of state governments.
If Congress rewrites the law for Puerto Rico, creditors might not recognize the security of their loans to states, said Rep. Tom McClintock, R-Calif.
“This is bankruptcy,” he argued, noting that the bill included no fewer than 93 sections of federal bankruptcy law.
Rep. Bill Flores, R-Texas, chairman of the Republican Study Committee, said he believed the measure should strengthen provisions for voluntary restructuring that would eliminate the need for the “cram down” provision.
Democrats have their own concerns about the bill, including provisions related to Puerto Rico’s minimum wage, allowing pension reserves to pay down debt, and the conveyance of land marked for conservation.
“We want those things changed, and at the same time [Bishop] trying to satisfy that group that doesn’t want to do anything, just wants to continue the litigation, that’s going to be tough,” Grijalva said.
The Natural Resources Committee held a hearing on the proposal Wednesday morning and began the markup proceedings with opening statements, although all members but McClintock simply submitted their statements for the record.
Shortly after the panel adjourned, Bishop announced the markup would be postponed because the administration was still trying to negotiate provisions.
During the hearing, Treasury Department counselor Antonio Weiss objected to the “collective action” clause that would allow a majority of the creditors owning a majority of the debt to reach an agreement with the territory that could then be imposed on the remaining creditors. He called the clause “an unworkable, mandatory process that will only delay the ability to reach a comprehensive resolution.”
The markup delay also indicates that Bishop lacked enough votes to get the bill through his committee.
“The very foundation of what we want to accomplish — everyone is in agreement, including the administration,” the Utah Republican said. “Everyone is now throwing out little details of little things that they want that are part of it, and it’s silly.”
Without changes, many members are unlikely to get behind the bill, but deciding what changes to make is a delicate balance. But any changes to accommodate some members’ concerns could create new opposition elsewhere.
“This is the best bill right now,” Bishop said. “And if people want to make it perfect and we’re willing to screw with people in Puerto Rico to do it, that may happen.”
Ultimately Bishop is hopeful the crisis itself will push members to accept the bill as compromise solution.
And he’s hoping it will happen soon, saying, “I want it out of my life.”
Jonathan Miller contributed to this report.
Contact McPherson at firstname.lastname@example.org and follow her on Twitter @lindsemcpherson.
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