Hoyer: Dems’ support for Puerto Rico measure hinges on bankruptcy protection

Democrats’ support for emergency Puerto Rico legislation hinges on providing bankruptcy protection to the U.S. territory, the second-ranking House Democrat warned Tuesday.

{mosads}”We don’t think it can be done without bankruptcy authority because we don’t believe they’ll get an ability to work out, with their creditors, payment schedules,” Rep. Steny Hoyer (D-Md.), the minority whip, said during his weekly press briefing in the Capitol.

Puerto Rico’s debt has ballooned to more than $72 billion, and Democrats in the White House and on Capitol Hill have warned of an imminent humanitarian disaster if Congress doesn’t act to help the territory manage the crisis.

Speaker Paul Ryan (R-Wis.) said Tuesday that a group of bipartisan House lawmakers will meet later in the day to discuss a strategy. The House Natural Resources Committee, he added, will take up a bill on April 13, a day after the House returns from its 19-day spring recess.

But that bill has yet to be written, and there’s wide disagreement over what it should look like. Democrats want to empower Puerto Rico to dump some of its debt unilaterally while restructuring its finances to prioritize state pensions above bond liabilities owed to private investors.

But the investors with stakes in Puerto Rico’s enormous debt are adamantly opposed to empowering the territory with sweeping new bankruptcy protections that were not in place when the investments were made and would batter their bottom lines. Republicans on Capitol Hill tend to be sympathetic to those concerns, questioning the legality of such a move.

Hoyer said Tuesday that he’s spoken about the issue with Rep. Rob Bishop (R-Utah), chairman of the Natural Resources panel, which has jurisdiction over U.S. territories.

“I think he’s trying to work conscientiously to get to an objective,” Hoyer said.

But the Democratic whip also noted that Republicans are certain to miss the March 31 deadline for action outlined by Ryan’s office in December. He suggested a prolonged delay amounts to dereliction of duty, but also vowed to work with Republicans on a solution — as long as it contains a bankruptcy element.

“If they put something forward that does, in fact, empower Puerto Rico to … have the availability of bankruptcy so they can make a workout with their creditors, we think that needs to be done,” Hoyer said. “So we’ll see what they’re going to offer. I think the Speaker knows this needs to be done.”

Treasury Secretary Jack Lew told lawmakers Tuesday that time is of the essence, warning that Puerto Rico will be likely unable to make good on debt payments due in May.