In a breakthrough, House Republicans and Democrats have agreed on a deal to help rescue Puerto Rico from $70 billion in debt.
A revised bill introduced late Wednesday would create a control board to help manage the U.S. territory's financial obligations and oversee some debt restructuring. The legislation came after weeks of negotiations involving both parties and the White House.
The plan is "the most responsible solution to the crisis because it gives Puerto Rico a path to real reform while protecting taxpayers," House Speaker Paul Ryan, R-Wis., said in a statement Thursday.
House Democratic leader Nancy Pelosi of California said bipartisan negotiations had "achieved a restructuring process that can work." She hopes the House will pass the bill quickly. "We cannot shirk our responsibility to our fellow citizens in their hour of need," she said.
The goal is to speed aid before Puerto Rico defaults on a $2 billion debt payment due July 1.
The House Natural Resources Committee could vote on the bill as early as next week. The chairman, Utah Rep. Rob Bishop, has led the negotiations and worked closely with Ryan, Pelosi and the White House.
The Senate has not yet acted, and Senate Majority Leader Mitch McConnell, R-Ky., has said the chamber is waiting for the House to move first. But McConnell has provided input to Bishop's committee during negotiations, potentially smoothing the bill's eventual path through the Senate.
Bishop originally introduced a bill last month, but canceled a scheduled committee vote after objections from both parties. Since then, he has worked closely with Ryan to win over conservatives, who worry it might set a precedent for financially ailing states, and Democrats, who say they are concerned the control board will be too powerful and favorable to creditors.
The new version has concessions to Republicans, Democrats and members who want to make sure that Congress has the utmost say in who sits on the board.
Disagreements over how the board would be appointed held up negotiations over the past week. Under the bill, President Barack Obama would select all but one of the board members from lists provided by congressional leaders. If Obama does not pick from those lists, the members must be confirmed by the Senate. Lawmakers have been working to ensure the bill is written so that Obama cannot easily reject those nominees and the board is chosen quickly.
The final bill also removes a provision that would have transferred federal land on the nearby island of Vieques to the government of Puerto Rico. That was a major concession to Democrats, whose votes may be needed when the bill reaches the House floor.
The new version does retain a provision to allow the Puerto Rican government to lower federal minimum wage requirements for some younger workers, which Democrats have objected to.
Under the legislation, the control board would require the Puerto Rican government to create a fiscal plan, including directing the territory to provide adequate funding for pensions. The island has underfunded public pension obligations by more than $40 billion.
Creditors have expressed concern that they would take a back seat to the pension obligations, while the Obama administration has pushed to make sure that pensions are also a priority.
Puerto Rico has been mired in economic stagnation for a decade. More than 200,000 people have left Puerto Rico in the past five years, reducing the island's tax base. Financial problems grew worse as a result of setbacks in the wider U.S. economy, and government spending in Puerto Rico continued unchecked. Borrowing covered increasing deficits and bonds were sold on special terms.
As The Christian Science Monitor reports the financial crisis has everyday implications for the 3.47 million people who call Puerto Rico home.
The island’s unemployment rate was 11.8 percent in March, more than twice the overall US rate of five percent. Tens of thousands of government workers have been laid off since 2009 to cut costs and 10 percent of the island’s schools have been closed since 2014.
These personal hardships along with others have led to Puerto Rico’s largest mass exodus in the last 50 years. The island county has witnessed a 9 percent population decline in the 21st century, with almost seven percent occurring between 2010 and 2015.
“Population growth was once the norm in Puerto Rico,” explains Pew Research in a March study of population data from the US Census Bureau. “The island’s population grew by 10% from 1980 to 1990, and by 8% from 1990 to 2000. But as the effects of a decade-long economic recession have mounted, Puerto Ricans – who are US citizens at birth – have increasingly moved to the US mainland, with many settling in Florida.”
Bishop is hoping to win over skeptical committee Republicans. Ads that have aired nationwide claiming the legislation amounts to a financial bailout, even though the bill has no direct financial aid, have complicated that effort.
Puerto Rico's representative in Congress, Pedro Pierluisi, issued a statement after the bill was released that it is "moving in the right direction." He opposed previous versions of the legislation.
"I hope every member of Congress will bear in mind that the collapse of the bill could mean the collapse of Puerto Rico's government," said Pierluisi, who is running for governor of the territory. "History will judge us harshly if we do not act swiftly and wisely."
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