Puerto Rico voters sent a signal of displeasure this weekend with the debt rescue package now pending in Congress, but leaders on Capitol Hill are pushing ahead anyway, insisting the bipartisan compromise is the best deal for federal taxpayers and the island territory.
Conservative critics still fear the bill will end up socking average Americans’ pockets, while liberals say the deal is too harsh on Puerto Rico itself, making cuts to social services more likely.
Puerto Ricans appeared to send that same message themselves when Ricardo Rossello, who opposes the House bill, defeated Commissioner Pedro Pierluisi, the island’s nonvoting member of Congress, in a primary this weekend to see who the New Progressive Party’s candidate for governor will be this fall.
“We know that Puerto Rico doesn’t agree with it,” said Rep. John Fleming, Louisiana Republican and one of the conservatives who fears the bill will put pensioners and unions ahead of regular bondholders.
Mr. Pierluisi, he added, “ran on this issue and lost.”
The House is scheduled to vote on the rescue package Thursday, and Speaker Paul D. Ryan has implored his Republican troops to rally around the bill he negotiated with the Obama administration, saying it is the best a divided Congress can do to help Puerto Rico restructure its $72 billion of debt without resorting to a taxpayer bailout.
House Minority Leader Nancy Pelosi is also urging her Democratic troops to back the bill.
The legislation imposes an oversight board to review the territorial government’s decisions and petition for debt restructuring. It also permits changes to minimum wage and overtime rules in an attempt to spur the island’s economy.
Puerto Rico has already defaulted on $370 million in bond payments, and it faces a $2 billion payment on July 1, heaping pressure on Congress to reach a solution before it breaks for the presidential conventions.
Mr. Pierluisi has deemed the bill, dubbed “PROMESA,” the best compromise possible, and doubled down on his support ahead of the primary.
On Wednesday, his office said there is “no evidence to support the argument that there is public opposition to PROMESA.”
“In any event, it is Mr. Pierluisi’s obligation to do what he believes is right for his constituents, not simply what he believes is popular,” Pierluisi spokeswoman Dennise Perez said.
Mr. Rossello, meanwhile, wants statehood to be part of the solution, and would like to renegotiate the island’s debts outside the courts. His main opponent going forward, David Bernier of the Popular Democratic Party, says the proposed oversight board will have too much power over the U.S. territory’s governor and legislature.
“That means that the next governor of Puerto Rico doesn’t like PROMESA. Why impose it?” said Alfonso Aguilar, president of the Latino Partnership for Conservative Principles, which has criticized the House effort.
Natural Resources Committee Chairman Rob Bishop, the Utah Republican who managed the bill, insisted Wednesday there is “no logical reason” to oppose it and that Puerto Rico’s gubernatorial candidates are playing politics on the campaign trail.
“If you were running for governor of Puerto Rico, you would badmouth PROMESA,” he said outside the House chamber. “But you also, if you’re running for governor, you realize there has to be a solution. This is the ideal solution.”
Mr. Bishop said he didn’t have a count of how many votes the bill will get Thursday, and some of his GOP colleagues remain leery.
Conservatives worry that some bondholders would be forced to swallow a bad deal through restructuring mechanisms in the bill should voluntary negotiations fail. That would set a bad precedent for states that overextend themselves and seek help, they say.
“We’re essentially creating a new bankruptcy method that didn’t exist when these bonds were issued,” Rep. Thomas Massie, Kentucky Republican, said. “Every bond issuer, from here on out, that issues bonds to Kentucky or any other state, is going to have to factor in the probability that Congress could one day give that state new bankruptcy protection and change the rules in the middle of the game.”
Heritage Action, a conservative pressure group, urged lawmakers this week to reject the bill, citing similar concerns about the restructuring provision and a lack of reforms to spur economic growth.
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