McConnell: Failure for Senate to pass Puerto Rico debt bill not an option

WASHINGTON, June 29 (UPI) — The U.S Senate on Wednesday is set to begin voting on a bill that would restructure Puerto Rico’s $70 billion of debt and set up recovery conditions days before the commonwealth is expected to default on a $2 billion payment.

The $2 billion debt repayment due Friday would depend on action by Congress. The White House supports the measure that passed in the House of Representatives earlier this month.

“Failure is really not an option,” Senate Majority Leader Mitch McConnell, R-Ky., said of the vote on Tuesday.

The bill needs 60 votes to pass. If the bill does not pass, Puerto Rico is expected to default yet again, the commonwealth’s creditors will continue suing for full repayment of debts, and essential public services — such as education, transportation, public safety and sanitation — will continue to suffer.

Under the bill, a seven-member board to oversee Puerto Rico’s finances would be established. The bill’s primary goal is to reduce Puerto Rico’s debt burden, which currently absorbs about a third of its revenues.

Congress has been at odds over helping Puerto Rico get out of massive debt. Puerto Rico cannot afford to pay debts and has no legal power to declare bankruptcy. Puerto Rico Gov. Alejandro Garcia Padilla has previously urged for Congress to take action.

The commonwealth hopes Congress will allow it to restructure its debts, or more ambitiously, to extend the ability to declare Chapter 9 bankruptcy — an unlikely scenario, as the U.S. Supreme Court ruled against it and as those who gave loans to Puerto Rico did so knowing bankruptcy was not an option.

About 45 percent of Puerto Ricans live in poverty, where the median household income is $19,000. Treasury Secretary Jack Lew on Tuesday said the bill’s failure would mean a descent into “chaos.”

“If anyone was writing this bill on their own, they might do it different than the way it was produced,” Lew said. “But it’s a compromise, and most importantly, it works. The risks of Puerto Rico descending into chaos are very real, and the alternative is action. It is a choice between something that works and something that would just be a terrible ordeal for the 3.5 million Americans who are Puerto Rican citizens and American citizens.”