House searches for Puerto Rico fix

With time dwindling, House lawmakers gathered Tuesday in search of a solution to Puerto Rico’s economic and debt woes.

The issue of what to do with Puerto Rico has risen to the top of Washington’s “to do” list, ever since Speaker Paul Ryan (R-Wis.) vowed to produce a relief bill by the end of March.

{mosads}According to the White House, the territory was one of a handful of topics discussed at the president’s meeting with Ryan and Senate Majority Leader Mitch McConnell (R-Ky.).

And if the House’s self-imposed deadline were not enough, Puerto Rico is likely to default on a debt payment as soon as May without external assistance.

House Majority Leader Kevin McCarthy (R-Calif.) vowed Monday there would be a Puerto Rico bill on the House floor by Ryan’s deadline, but he did not detail what it would look like.

That job fell to the House Natural Resources Committee, which tried to find a path forward Tuesday. Chairman Rob Bishop (R-Utah) said he hopes the panel will “very soon” produce legislation.

Ever since Puerto Rico indicated it would be unable to pay off all its debts, a partisan fault line has emerged in Congress. Democrats have primarily pushed to grant Puerto Rico access to the bankruptcy code — as a territory, Puerto Rico is not granted the same power as states.

Meanwhile, Republicans have griped that years of fiscal mismanagement led the island to its current state, and have called for federal oversight to step in and help steer its finances back to health.

At Tuesday’s hearing, it appeared that lawmakers were at least willing to listen to ideas from the other side, searching for a legislative path to getting Puerto Rico out from under its debt load, and rejuvenating its economy for the long haul.

“Debt restructuring alone is not going to help the territory,” said Bishop Monday. “We’ve got to be able to find an affordable way for them to actually be able to compete and manufacture on the island.

“We can get it done, especially if people don’t take off and try to make it into some kind of partisan endeavor,” he added.

The topic of Tuesday’s hearing was on the prospects of a federal control board for Puerto Rico, but bankruptcy remained a major topic of conversation.

Rep. Raul Labrador (R-Idaho), a prominent House conservative, said he was “open” to bankruptcy for Puerto Rico, but only as part of a broader plan.

But the prospect of bankruptcy for some Puerto Rican agencies has been met with fierce resistance by investment firms holding island debt, many of which have mobilized in Washington to air their concerns.

Thomas Moers Mayer, an attorney representing a host of investment funds in a legal fight with Puerto Rico, argued it wasn’t Wall Street giants that would feel the pain from restructured debt.

“Most Puerto Rican debt is held by individuals,” he said. “We believe a substantial amount of the problem, perhaps the whole problem…is found in this [Puerto Rican] government.”

Some Democrats were adamantly resistant to the idea of additional federal oversight, arguing that it would subjugate the territory even more than it already is.

“How do you give the territory the needed assistance, while not making it more of a colony?” asked Rep. Jose Serrano (D-N.Y.). “To bring Puerto Rico on its knees when it’s already on one knee would just add more pain.”

Rep. Luis Gutierrez (D-Ill.) argued that Puerto Rico’s history as an American colony makes the idea of further federal control an uncomfortable idea.

“It wasn’t like Puerto Ricans got together one day, had a convention, and said, ‘Would you allow us?’ No, it was military intervention,” he said. “Puerto Rico belongs to, but is not part of, the United States of America.”

But, when faced with the prospects of debt defaults that could thrust Puerto Rico’s finances into disarray and legal challenges, it appeared Democrats were also eager to find a solution.

“We should do all we can to transcend partisan politics,” said Pedro Pierluisi (D), the island’s nonvoting member of Congress. “This is not a foreign country or foreign nationals. You’re talking about American citizens who can hop a plane from one day to the next if the going is tough. And no one can blame them.”

In the Senate, Republicans have already crafted a bill. Chairmen from the Senate Finance, Judiciary, and Energy & Natural Resources Committees joined forces to produce a bill at the end of 2015 that would give Puerto Rico up to $3 billion in federal aid. In turn, it would subject the island’s finances to heightened federal oversight, but would not provide bankruptcy power.