WASHINGTON (AP) — House Republicans hope an emerging compromise can satisfy Puerto Rico’s government, creditors and the GOP rank and file about how the U.S. territory can deal with its $70 billion debt and emerge from its financial crisis.
Rep. Rob Bishop, chairman of the House Natural Resources Committee, is trying to bring together those competing interests, with a hearing set for Wednesday on legislation that would create a financial control board for Puerto Rico. A vote was expected Thursday on a new draft measure from Bishop, R-Utah, and Rep. Sean Duffy, R-Wis.
Puerto Rico’s governor has said the island is in the midst of a humanitarian crisis as multimillion-dollar payments to creditors loom. Puerto Rico already has defaulted on some smaller payments.
House Speaker Paul Ryan, wanted to bring fellow Republican aboard, quickly endorsed the idea of a seven-member board to audit the San Juan government and put financial plans in place. The legislation let Puerto Rican leaders have some say in the process.
“Congress has a constitutional and financial responsibility to bring order to the chaos that is unfolding in the U.S. territory — chaos that could soon wreak havoc on the American bond market,” Ryan said.
Ryan, R-Wis., pledged last year to find a “reasonable solution” for Puerto Rico. But the proposal has divided Republicans and failed to attract support from Democrats and Puerto Rican officials.
At issue are the control board’s powers. Puerto Rican officials and congressional Democrats said a version of the legislation from Bishop last month would take too much power away from the territory’s government.
Committee Republicans say they are aiming to avoid a “colonialist” approach, while taking steps to get the island’s economy back on track.
The new version of the legislation would increase the size of the control board from five to seven seats, with the two added members picked by the minority party in the House and Senate — a clear enticement to Democrats who have opposed the bill. House Democratic leader Nancy Pelosi of California said the earlier version of the bill would exert “undue and undemocratic control” over the territory.
She still does not seem ready to sign on.
“More work needs to be done on the heart of the Republican proposal to improve the makeup and scope of the board and streamline the restructuring process to make it more workable,” she said in a statement late Tuesday, without detailing the changes should would like to see.
The legislation would not give Puerto Rico the broad bankruptcy authority sought, but would allow the board to decide whether debt restructuring was necessary. The board could facilitate court-supervised debt restructuring.
In an attempt to satisfy conservatives, the new draft would give creditors more of a say on a debt plan.
The House Republican Study Committee, a group of around 170 conservatives, had expressed concerns about the debt restructuring provisions, throwing the bill’s future in doubt. Texas Rep. Bill Flores, head of that group, said members “are encouraged that there appear to be some improvements.”
Pedro Pierluisi, Puerto Rico’s nonvoting representative in Congress, praised Bishop and Duffy for eliminating language that would have allowed the board to issue some rules and regulations as if it were the territory’s government. Gov. Alejandro Garcia Padilla said the revised version incorporates some of the island government’s suggestions about the board and was a step in the right direction.
Puerto Rico has been mired in economic stagnation for a decade. The financial problems worsened as a result of setbacks in the wider U.S. economy, and government spending in Puerto Rico continued unchecked as borrowing covered increasing deficits.
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Follow Mary Clare Jalonick on Twitter at http://twitter.com/mcjalonick
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