Congress’ bid to rescue Puerto Rico from its debt crisis is turning into yet another test for House Speaker Paul D. Ryan, and the early signs are not good, with one conservative lawmaker accusing leaders of gagging rank-and-file Republicans to keep them from scuttling the relief package.
Republicans had hoped to clear the bill through the Natural Resources Committee on Thursday in anticipation of a floor vote next week, but the committee vote was scuttled Wednesday evening after party leaders decided they needed more time to work out a compromise with Democrats and the Obama administration.
Democratic support will be needed to make up for the loss of conservative Republicans who rebelled against the bill, calling it a “bailout,” and who accused their own leaders of trying to silence them by ordering them not to offer amendments or to demand a roll-call vote.
“In all my time in Congress, no one has ever asked me to do something quite like this,” said Rep. John Fleming, Louisiana Republican. “This is the kind of ‘go along’ politics Americans and I are tired of. Any time we don’t have full transparency, we have a bad outcome.”
A Natural Resources Committee spokesman, Parish Braden, said Chairman Rob Bishop, Utah Republican, had proposed a voice vote but then agreed to hold a recorded vote. He said the chairman also directed staff to assist members with amendments.
The procedural hiccup was just the latest problem for Mr. Ryan and his leadership team, which vowed to approve a rescue bill early this year but now find themselves struggling to find a compromise.
If Mr. Ryan does turn to Democrats to pass the bill, he will face the same complaints that doomed his predecessor, John A. Boehner, Ohio Republican. But Democrats said he has no choice at this point.
“If it’s going to pass, it’s going to be bipartisan, and an overwhelming number of Democrats have to vote for it — period,” said Rep. Raul M. Grijalva of Arizona, the ranking Democrat on the Natural Resources Committee.
Analysts say Puerto Rico’s woes are the result of years of overborrowing and spending and the steady exit of young, working-age residents who could help turn around the island’s fortunes. To keep itself afloat, the island is swiping money from pensions and shifting funds from one pool of creditors to satisfy others.
Mr. Bishop’s plan would rescue the island from $72 billion in bond debt by letting the territorial government restructure some of that debt, similar to a bankruptcy, in exchange for being subject to an oversight board tasked with auditing its finances and putting it on a path toward fiscal responsibility.
“This is not going to be a bailout,” Mr. Bishop said. “This is going to be an effort to try and establish something based on precedents that have happened in the past.”
Democrats had pushed to let the island claim full bankruptcy protections and objected to broad powers for the oversight board, saying it intruded on Puerto Rico’s autonomy.
They also want Mr. Bishop’s bill to protect islanders’ pensions and to delete language that would lower Puerto Rico’s hourly minimum wage from $7.25 to $4.25.
Democrats say the island is already scaling back public programs and laying off hospital workers so time is of the essence — even as they pushed for more work on the Bishop bill.
“Without an agreement, there is a collapse in Puerto Rico,” said Antonio Weiss, counselor to Treasury Secretary Jack Lew, as he testified to the committee Wednesday. “We have got to get this done.”
Conservative Republicans, though, fear taxpayers will be left on the hook. They also don’t want to rewrite rules creditors agreed to when they invested in the U.S. territory.
“If Congress rewrites the law for Puerto Rico, every lender in every state will no longer trust the security of their own loans to those states,” said Rep. Tom McClintock, California Republican.
Mr. Ryan publicly endorsed the bill Tuesday, saying it “holds the right people accountable for the crisis, shrinks the size of government and authorizes an independent board to help get Puerto Rico on a path to fiscal health.”
Yet members of his own caucus are still not convinced. They say Puerto Rico’s problems were self-made, so the island will have to take responsibility for digging itself out of the morass.
“It’s Washington going in and determining the local affairs of a jurisdiction,” Alfonso Aguilar, president of the Latino Partnership for Conservative Principles, said of Republican objections. “This is a problem created in Puerto Rico and should be resolved by Puerto Ricans.”
He said Mr. Ryan appears to be following “classic Boehner strategy” and risks a messy, intraparty fight on the floor.
Mr. Bishop, meanwhile, has retooled his original draft plan to water down the powers of the oversight board.
Commissioner Pedro Pierluisi, the island’s nonvoting member of Congress, said the latest version calls for a “back and forth” between the oversight board and Puerto Rican government to reach consensus rather than letting the unelected board overrule local leaders.
“This is the bottom line: My constituents and I will accept this oversight, provided — let me say again, provided — we also get a meaningful debt restructuring mechanism,” Mr. Pierluisi said.
The newest version will allow the oversight board to forge ahead with debt restructuring on classes of creditors even if there are some holdouts, so long as two-thirds of creditors in each pool agree to the arrangement.
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