The bipartisan Puerto Rico debt-rescue bill has been blasted by conservatives as a bailout, and by liberals as too harsh to residents of the island territory — but GOP leaders say they’re about to prove the naysayers wrong in a key test vote Wednesday.
Facing $72 billion in debt, and having already missed one payment, Puerto Rico has asked Congress to step in and allow it to restructure its finances.
After months of negotiations, the House Committee on Natural Resources has a vote slated for Wednesday on a package that would impose an oversight board to review the territorial government’s decisions to help it escape the crippling debt.
And GOP and Democratic leaders on the panel say they’ve threaded the needle to get the best deal possible.
“This is a compromise with the best opportunity to pass,” said Rep. Raul M. Grijalva of Arizona, the ranking Democrat.
Opposition is growing, however.
Conservatives have been making the most noise, running a barrage of ads arguing taxpayers will be left on the hook and that seniors who invested in the island territory will be “crushed” by the island’s restructuring.
“Illinois, New Jersey and California owe trillions in debt. When these states can’t afford to pay, you could be stuck with the bill. Puerto Rico is just the first domino to fall,” the latest ad from the Center for Individual Freedom, a Virginia-based conservative group, says.
From the left, Sen. Bernard Sanders, a Vermont independent chasing Democratic presidential front-runner Hillary Clinton, kicked up dust when he urged colleagues to reject the compromise, saying the island territory’s residents would suffer from benefit cuts, while the banks who loaned to the debt-addled island would not take a major hit.
Natural Resources Committee Rob Bishop, Utah Republican, predicted the combined opposition will fall short.
“I feel comfortable with both sides,” Mr. Bishop said of votes from either party. “The ads against it were so outrageous. It was pretty obvious that they were wrong.”
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 pension funds and shifting funds dedicated to one pool of creditors to satisfy others.
The bill has been stuck in neutral for weeks, after Democrats complained about the power of its fiscal oversight board and Republicans said it rewrote the rules from under creditors, setting a poor precedent. Puerto Rico has defaulted on $370 million in bond payments earlier this month, as GOP leaders renegotiated the bill with Democrats and the Obama administration.
Speaker Paul D. Ryan, the Treasury and House Minority Leader Nancy Pelosi have backed the latest version, even though Democrats bemoaned provisions that could lower the island’s minimum wage or change overtime rules.
Leaders in both parties downplayed the influence of Mr. Sanders’ opposition among Democrats, though Rep. Luis V. Gutierrez of Illinois, who is of Puerto Rican descent, said he will reject the bill as “counter to basic values of democracy, fairness and justice.”
The Senate is waiting to see what the House does, but all sides are racing a July 1 deadline, when the territorial government must make a $1 billion bond payment.
The compromise bill is drawing a wide range of support.
Americans for Tax Reform, a nonprofit founded by conservative Grover Norquist, says the House bill prevents a bailout down the road, while Jubilee USA, a network of faith-based groups, says its restructuring provisions will set the island on the right path and reduce poverty on the island.
“The reality of it is the human suffering on the island is absolutely terrible,” Executive Director Eric LeCompte said.
Lin-Manuel Miranda, creator of the Broadway hit “Hamilton,” used a New York Times op-ed and a performance on HBO’s “Last Week Tonight with John Oliver” to urge Congress to give Puerto Rico restructuring power.
But a key opposition group, Main Street Bondholders, reiterated criticism of the legislation Tuesday, saying Congress is trying to “bail out” government pensions ahead of seniors who’ve invested in bonds for their retirement.
Mr. Ryan and Mr. Bishop have urged their troops to ignore the critics.
“If we do not pass this bill,” Mr. Bishop said, “Congress will be faced with the prospect of a bailout later on.”
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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