Congress’ bill to rescue Puerto Rico from its debt crisis is not a bailout, House Republicans agreed Friday, but conservatives are still coming to grips with provisions that appear to rewrite the rules from under the island’s creditors.
Speaker Paul D. Ryan insisted this week that the bill by Rep. Sean Duffy, Wisconsin Republican, is the best way to shield taxpayers from an expensive rescue mission down the road. The legislation would deal with Puerto Rico’s $72 billion in bond debt by imposing a fiscal oversight board to audit the U.S. territory’s finances and put it on a path toward fiscal responsibility.
Conservatives who emerged from a House GOP conference meeting on the crisis said the bill did not, in fact, swoop in with taxpayer funds, despite “bailout” claims that have swirled around the debate.
But they worry that Puerto Rico’s creditors will be forced to swallow a bad deal through a “cram-down” restructuring mechanism in the bill, should voluntary negotiations fail. That would set a bad precedent for states that over-extend themselves and seek help, they say.
“Despite the fact we’ve been told it’s not a bankruptcy, it looks, smells and walks like a bankruptcy,” said Rep. John Fleming, Louisiana Republican and member of the Natural Resources Committee that is handling the bill.
He also said the legislation doesn’t overhaul “leftist” Puerto Rican policies that led to the crisis.
“There are a lot of people who are not ready to vote for this bill,” Mr. Fleming said.
The Natural Resources panel suddenly scrapped a test vote on Mr. Duffy’s bill earlier this week, saying they’re still scrambling to reach bipartisan consensus, while getting the Obama administration on board as well.
Democrats say they’re prepared to vote for the bill, with certain changes. They want it to protect islanders’ pensions, while striking provisions that could decrease the island’s minimum wage from $7.25 to $4.25 per hour for some workers.
And they’re concerned about a “supermajority” provision that requires five of the oversight board’s seven members to approve petitions to restructure debts, saying that threshold might be unworkable.
The impasse leaves Mr. Ryan in the type of pickle that doomed his predecessor, John A. Boehner. By rewriting the bill to gain Democratic votes, Mr. Ryan would risk violating the so-called “Hastert rule” — an understanding that the speaker will not bring a bill to the floor that does not have support from a majority of his members.
Rep. Mick Mulvaney, South Carolina Republican and member of the House Freedom Caucus that nudged Mr. Boehner out of town, said current leaders haven’t forced the caucus to “take it or leave it” so far.
“The attitude in there was much different than it would have been a year ago,” Mr. Mulvaney said outside Friday’s meeting.
Analysts say Puerto Rico’s woes are the result of years of over-borrowing 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 pension funds and shifting funds dedicated to one pool of creditors to satisfy others.
Hoping to sway members this week, Mr. Ryan said the existing bill can “bring order to the chaos” in Puerto Rico.
Mr. Duffy and Natural Resources Chairman Rob Bishop of Utah have echoed those sentiments.
“These are people we all know and trust,” Rep. Tom Cole, Oklahoma Republican, said Friday.
The timeline to settle on a final draft of the bill remains unclear, however, with one Republican estimating the matter would be settled within three weeks.
The Treasury Department has said that without an agreement soon, “there is collapse in Puerto Rico.”
Copyright © 2021 The Washington Times, LLC.