Lew: Treasury, Congress still working toward solution on Puerto Rico

Treasury Secretary Jack Lew says the House’s delay in unveiling a bill to restructure Puerto Rico’s ailing finances shouldn’t be misinterpreted as a lack of progress.

Lew said Friday that while time is of the essence, with a looming $2 billion debt payment due July 1, Treasury and Congress are making progress toward a long-term solution to the island’s fiscal woes.

{mosads}“The substance is more important than the schedule, as long as it gets done for Puerto Rico,” Lew told reporters at a Christian Science Monitor breakfast in Washington.

“So I wouldn’t confuse delaying a day with a lack of progress; sometimes a delay can be a sign of progress if you’re getting close to something,” he added. “What the jury is still out on is whether we’ll get to that point where we can all agree that there is a restructuring package that will work.”

The measure seemingly hit another snag this week when House Natural Resources Committee Chairman Rob Bishop (R-Utah) delayed the introduction of an expected reworked measure to deal with some technical issues.

The panel is aiming to hold a markup of the legislation next week, but time is running short without a measure that is ready to move.

“Rather than have a bill done that there’s not agreement on a day earlier, it’s better to wait a day and try to reach an agreement,” Lew said.

Lew said that there is a shared understanding between the White House and congressional negotiators that the debt crisis is urgent and could, without legislative action, put Puerto Rico’s 3.5 million inhabitants in jeopardy of facing dire cuts to services such as fire and police.

“The alternative to an orderly restructuring is a chaotic unwinding,” Lew warned.

Leaders in both parties are agreed that the bill will need broad bipartisan support to pass both chambers and receive President Obama’s signature.

Lew called the prospect of Puerto Rico failing to make the $2 billion debt payment by July 1 “a default of tremendous size” that would “ratchet it up to a whole new level of crisis.”

The island defaulted on $422 million in debt payments on May 1.

Puerto Rico is in a tough spot because as a territory, its officials don’t have access to restructuring process afforded a U.S state or city, Lew said.

The basic framework of the bill that would establish an outside fiscal control board that would help restructure Puerto Rico’s $70 billion in debt is largely expected to remain intact.

Lew said that the administration is “seeking a clear and sustainable path forward.”