Overnight Finance: Puerto Rico defaults on $422M

PUERTO RICO DEFAULTS ON DEBT: Puerto Rico will default Monday on roughly $422 million in debt payments.

Gov. Alejandro García Padilla said Sunday night that the territory’s Government Development Bank would not be making payments owed Monday. He argued that the island’s dwindling revenues could not go toward the debt payment without unacceptable cuts to public services.

{mosads}”Faced with the inability to meet the demands of our creditors and the needs of our people, I had to make a choice,” he said in a televised address. “I decided that essential services for the 3.5 million American citizens in Puerto Rico came first.”

Monday’s default could ramp up pressure on policymakers in Washington to move forward with legislation that would let the island restructure its debt, as well as establish an outside fiscal control board to monitor its finances.

At the end of 2015, Speaker Paul Ryan (R-Wis.) set a March 31 deadline for action to address Puerto Rico’s debt crisis. That deadline slipped, and lawmakers are now on a weeklong recess with no bill as Puerto Rico suffers its largest default yet. The Hill’s Peter Schroeder tells us why July is even more dangerous: http://bit.ly/26MesxS.

NEW PUERTO RICO BILL ON THE WAY: House Natural Resources Committee Chairman Rob Bishop (R-Utah) is aiming to unveil a reworked bill to address the Puerto Rican debt crisis shortly after lawmakers return from a weeklong recess.

Bishop told reporters Friday he wants to produce the bill after the recess so that members have a chance to examine it before it receives consideration. The first version of the bill stalled earlier this month when Bishop’s panel had to quickly cancel a markup of the legislation due to a lack of support.

“We’ll probably redraft the bill and drop another one,” he said. “We can’t drop it until we come back.
“I tried doing it over the break before, and I found out no one was reading it over the break, so we’re going to wait until we get back,” he added.

Bishop was optimistic about the legislation, predicting the bill could pass his committee: http://bit.ly/1Ocebcd.

GOP RENEWS PUSH FOR BUDGET: House Republicans on Friday morning appeared no closer to a deal as they emerged from a 90-minute closed-door meeting on the budget.

The House’s budget struggles consumed the entire agenda of a members-only meeting also intended to discuss a response to the Zika virus and Puerto Rico’s looming default.

GOP leaders are reigniting conversations on the stalled budget plan with little time left to take a vote before moving on to appropriations bills. The House can begin voting on spending bills every year after May 15, even without an official budget, though some members are concerned it would appear to violate the “regular order” promised by Speaker Paul Ryan (R-Wis.).

Ryan is now aiming to bring up the bill the week of May 10, after next week’s recess, according to several lawmakers and aides. The Hill’s Sarah Ferris tells us more: http://bit.ly/26MfgTF.

TRADE DEAL LEAKS: U.S. and European Union trade officials refused to acknowledge the validity of about 250 pages of leaked trade documents by Greenpeace Netherlands, saying that assessments of the texts are misleading at best.

The Office of the U.S. Trade Representative (USTR) and the EU said that the release of the alleged Transatlantic Trade and Investment Partnership (TTIP) documents are being misinterpreted and don’t reflect the high aims that the two trading partners share for a final agreement

“While the United States does not comment on the validity of alleged leaks, the interpretations being given to these texts appear to be misleading at best and flat out wrong at worst,” a USTR spokesman said Monday morning.

Greenpeace Netherlands leaked what it says are the negotiating texts of 13 chapters of the TTIP following the latest round of discussions in New York City, claiming it shows that the trade deal “is about a huge transfer of power from people to big business.” The Hill’s Vicki Needham walks us through the leaks: http://bit.ly/1TrkL00.

HAPPY MONDAY and welcome to Overnight Finance, where we’ve finally recovered from #WHCD16 weekend. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

Tonight’s highlights include a Bitcoin revelation, Hillary Clinton’s potential impact on the debt and talk of an exit fee for businesses leaving the U.S.

See something I missed? Let me know at slane@digital-stage.thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

THE INTERNET OF THINGS: Join us on Tuesday, May 10 for Internet of Things: The Next Frontier in Tech Innovation. Policymakers & industry leaders will discuss public-private partnerships for developing and implementing cutting-edge mobile technologies, and the policies and regulations necessary to ensure the security of these new tools. Sponsored by Visa. RSVP here.

TREASURY KEEPS EYE ON CURRENCY TRADING: The Treasury Department is ramping up monitoring of exchange rate policies of several major U.S. trading partners including Japan and China.

Treasury said it will closely watch and assess the currency practices of five countries — China, Japan, Korea, Taiwan and Germany — over the next six months after the countries met two of three new criteria required under a new customs law, according to a report sent to Congress.

But no nations met the standard for more enhanced monitoring or to be labeled as currency manipulators.

“These new tools significantly enhance Treasury’s ability to undertake a data-driven, objective analysis of a country’s foreign exchange policies and their impact on bilateral trade with the United States and the broader multilateral trade position,” the department said in a statement.

The law also provides new measures to address unfair currency practices. Vicki Needham breaks it down: http://bit.ly/1rOvXxS.

AUSTRALIAN MAN CLAIMS TO BE BITCOIN INVENTOR: An Australian man claimed Monday that he is the secretive figure who invented bitcoin, the popular virtual currency.

Some have previously speculated that Craig Steven Wright developed the intellectual underpinnings for the cryptocurrency under the name Satoshi Nakamoto. In a blog post on Monday, as well as in interviews with various media outlets, Wright said those reports are true.

“Since those early days, after distancing myself from the public persona that was Satoshi, I have poured every measure of myself into research,” he said. “I have been silent, but I have not been absent. I have been engaged with an exceptional group and look forward to sharing our remarkable work when they are ready.”

Wright said in his post that he possesses a private code used to access a bitcoin “block” that was part of a 2009 transaction involving Nakamoto and showed news outlets his verification process. The Hill’s David McCabe reviews the evidence: http://bit.ly/1X5mqOC.

STUDY: CLINTON’S PLAN EASY ON NATIONAL DEBT: Campaign proposals from Democratic presidential candidate Hillary Clinton would not significantly increase the debt levels projected under current law, the Committee for a Responsible Federal Budget (CRFB) said in a report Monday.

The former secretary of State’s proposals would cost $1.8 trillion over 10 years with interest and would be almost completely paid for by $1.6 trillion of offsets. The $200 billion gap may be more than fully covered by a corporate tax reform plan whose specifics have yet to be released, the CRFB said.

Clinton’s spending proposals include her plans for debt-free college, expanding ObamaCare and increasing infrastructure spending. Her spending initiatives would largely be offset by tax increases on the wealthy. The Hill’s Naomi Jagoda tells us how: http://bit.ly/1Y3Glf2.

PAY AS YOU GO: Rep. Lloyd Doggett (D-Texas) introduced a bill that would impose an exit tax on expatriating companies, a concept Democratic presidential candidate Hillary Clinton has championed.

“American citizens who renounce their citizenship must pay an exit tax. American corporations should too. No more ‘take the money and run,’ ” said Doggett, who sits on the House Ways and Means Committee.

The bill has the support of 50 congressional lawmakers, according to a news release from Doggett’s office.

The bill is intended to reduce the tax benefits for companies that participate in corporate “inversions,” transactions in which U.S. companies combine with foreign companies and then reincorporate overseas to lower their taxes: http://bit.ly/1SJeNYO.

TAX CHIEF SAYS REFORM ALMOST READY: House Ways and Means Committee Chairman Kevin Brady (R-Texas) said Friday that Congress is in “the last two miles” of a 30-year tax-reform marathon.

“How we run [in] 2016 I think is critical to how we finish in 2017,” he said at a Bloomberg Government event.

Republican lawmakers intend this summer to release a blueprint for a tax code that will help to grow the economy, Brady said. They hope to implement the blueprint in 2017.

Brady said that priorities for tax reform include flatter and simpler tax rates, eliminating loopholes, competitive business tax rates and making it easier for corporations to repatriate foreign earnings. Additionally, tax reform should not “bail out Washington’s spending problem,” he said.

Tax reform will almost certainly be “bipartisan in some sense,” Brady said, adding that there are Democrats who are willing to work with Republicans on the topic: http://bit.ly/1rrIEy7.

Write us with tips, suggestions and news: slane@digital-stage.thehill.com, vneedham@digital-stage.thehill.com; pschroeder@digital-stage.thehill.com, and njagoda@digital-stage.thehill.com. Follow us on Twitter: @SylvanLane,  @VickofTheHill; @PeteSchroeder; and @NJagoda.