House passes Puerto Rico rescue

The House on Thursday passed legislation to tackle Puerto Rico’s debt crisis, as Congress took a large step towards addressing the economic and humanitarian crisis enveloping the island.

The carefully crafted compromise passed 297-127, earning majorities in both parties.

{mosads}The passage of the carefully crafted compromise is a significant win for Speaker Paul Ryan (R-Wis.), who was an early and active supporter of the legislation, and Minority Leader Nancy Pelosi (D-Calif.) and the White House, which also pushed the package.

In a rare move, both Ryan and Pelosi took to the House floor to urge support for the legislation, shooting for broad bipartisan support to encourage speedy action through the Senate.

Ryan made a moral case for the bill, arguing that the island’s 3.5 million residents — who are American citizens — need Congress’s support. 

“The Puerto Rican people are our fellow Americans. They pay our taxes. They fight in our wars,” he said. “We cannot allow this to happen.”

The bill now heads to the Senate, where lawmakers appear lukewarm about the measure. Still, there is little evidence senators are eager to remake the bill wholesale, particularly as conditions on the island continue to worsen. 

“The Senate should act expeditiously to review and vote on this measure, so the President can sign the bill into law ahead of the critical July 1st debt payment deadline,” said White House Press Secretary Josh Earnest after its passage. “We urge leaders in both parties to build on today’s bipartisan momentum and help Puerto Rico move toward lasting economic prosperity.”

Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-Alaska) said Thursday that her committee would “probably” consider the Puerto Rico bill, leaving open the possibility that it could move directly to the Senate floor.

The island faces a default on $2 billion of debt payments on July 1. The crisis has been created by years of economic decline and an exodus of Puerto Ricans to the U.S. mainland, leaving the island with a shrinking pile of revenues. 

The House bill is something rarely seen in Washington of late: a genuine compromise. Top officials in both parties huddled for weeks on the bill, which both parties now characterize as the best possible path, even though neither side is entirely happy with it.

The White House threw its weight behind the bill, dubbed the Puerto Rico Oversight, Management, and Economic Stability (PROMESA) Act, just before Thursday’s vote, saying the president “strongly supports” its passage. 

“The Administration urges the Congress to build on the bipartisan effort behind PROMESA and pass this legislation quickly before this crisis grows materially worse,” the White House said in a statement of administration policy. 

Following House passage, the White House urged the Senate to act “expeditiously” on the measure, saying the chamber should send the bill to the president before the island’s critical July 1 deadline.

“We urge leaders in both parties to build on today’s bipartisan momentum and help Puerto Rico move toward lasting economic prosperity,” said White House Press Secretary Josh Earnest in a statement.

Passage of the bill comes after months of tense, private negotiations between both parties and the White House. Democrats pushed hard to ensure the island could restructure its $70 billion in debt, while Republicans wanted to see an outside board that could step in and overhaul the island’s grim finances.

Further complicating the talks, lawmakers were under pressure from investors in Puerto Rican debt who were jockeying to ensure the largest possible payout from the island. One outside group, the Center for Individual Freedom, ran ads in the districts of key lawmakers blasting the bill as a “bailout.”

The bill was very touch and go for a stretch, as the House Natural Resources Committee abruptly cancelled a planned markup of the bill at the last minute, as members from both parties were wary of backing the complex and unfamiliar legislation. 

Negotiators had to return to the drawing board, while Speaker Paul Ryan (R-Wis.) mounted a public campaign to dispel the “bailout” narrative, emphasizing repeatedly that no extra federal dollars would go to Puerto Rico.

Talks between House Republicans and the White House dragged on for weeks. Ultimately, the two sides emerged with a compromise package that made it through a committee markup relatively unscathed.

Conservatives have long been skeptical of allowing the island to rework its debt obligations, fearing it could encourage other debt-strapped parts of the country to follow suit.

Some on the right wanted to see the bill focus primarily on slashing regulations and taxes on the island, arguing that was the path towards salvaging its economy. 

The bill does include some of those provisions to the chagrin of Democrats, including one that allows the island to avoid paying the federal minimum wage to some workers. Democrats tried to pass an amendment on the floor stripping that provision, but failed.

Democrats also said they were disappointed the bill did not expand Medicaid benefits and the Earned Income Tax Credit to the island. 

— Updated 7:08 p.m.