The House on Thursday easily passed a bill to rescue Puerto Rico from its massive bond debt, overcoming carping from both the left and right and setting up a final showdown in the Senate.
Approved 297-127, the bill imposes a seven-member oversight board to review the territorial government’s decisions and petition for debt restructuring, should voluntary negotiations with creditors fail. The legislation also permits changes to minimum wage and overtime rules in an attempt to spur the island’s economy.
“Puerto Rico is in trouble, and we need to act now,” House Speaker Paul D. Ryan said minutes before the vote.
He won most Republicans, but 103 of them still defected, arguing the bill stiffed creditors and could leave taxpayers facing an eventual bailout of the island territory.
Two dozen Democrats, meanwhile, objected, saying the legislation was too harsh on Puerto Rico, stripping the island of political power and potentially forcing deeper cuts to social services.
Rep. Luis Gutierrez, one of those Democrats, compared Congress to King George III for imposing an oversight board on the island. The Illinois lawmaker, whose father was born on the island, said Puerto Rican leaders see the bill as a return to colonial rule. “They are a proud people,” he said in a fiery speech from the chamber floor.
The bill was the result of a bipartisan deal that involved the Obama administration. It emerged after months of negotiations about how best to help the island deal with $72 billion in debt without resorting to a taxpayer bailout.
The island has already defaulted on $370 million in bond payments, and it faces a $2 billion payment on July 1, heaping pressure on Congress to forge a rescue plan before it leaves town for the presidential conventions.
The bill must get through the Senate before it reaches President Obama, who says the bill is necessary to protect the island’s 3.5 million inhabitants.
Sen. Bernard Sanders, a Vermont independent whose campaign for the Democratic nomination has made him a national liberal leader, has urged his colleagues to reject the bill, saying the island’s residents would suffer more than the banks who loaned to the debt-addled territory.
By contrast, House Minority Leader Nancy Pelosi told her Democratic troops to “pray on it” and vote “yes” Thursday, despite hand-wringing over the control board’s powers and provisions that could slash the minimum wage for young adults on the island.
Reps. Jose E. Serrano and Nydia M. Velazquez, New York Democrats who were born in Puerto Rico, backed the bill Thursday as an imperfect — though necessary — path forward, giving it a major boost.
From the right, a large contingent of conservative Republicans opposed the measure, saying bondholders could be forced to swallow a bad deal, or to take a backseat to government pensioners and unions.
“Let every Republican be on notice: if you vote for this bill, you are voting to bail out the unions and 40 years of liberal policies in Puerto Rico,” said Rep. John Fleming, Louisiana Republican.
Heritage Action, a key conservative pressure group, had urged members to vote “no,” saying the bill didn’t do enough to kick-start economic growth.
Also Thursday, the Supreme Court barred Puerto Rican prosecutors from filing weapons charges against two men after they’d pleaded guilty to the offenses in federal court.
Island officials said they should be able to charge them under local laws — something the 50 states can do — but the justices in a 6-2 ruling said Congress remains “the original source of power” for Puerto Rico’s prosecutors, triggering the Constitution’s prohibition on double jeopardy.
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