POLITICS

House Republicans searching for consensus on helping Puerto Rico with debt

(October 15th, 2009) Thousands of protestors flooded the streets in the largest public gathering in Puerto Rican history.  The massive strike was in response to the republican governor Luis Fortu–o's decision to lay off 16,720 public workers.  ~ San Juan, Puerto Rico ~ Photo © 2009 Ricardo Figueroa

(October 15th, 2009) Thousands of protestors flooded the streets in the largest public gathering in Puerto Rican history. The massive strike was in response to the republican governor Luis Fortu–o's decision to lay off 16,720 public workers. ~ San Juan, Puerto Rico ~ Photo © 2009 Ricardo Figueroa  (Photo © 2009 Ricardo Figueroa)

House Republicans have struggled to please Puerto Rico's government, creditors and their own caucus members as they try to figure out a way to help the island out of $70 billion in debt.

Utah Rep. Rob Bishop, the GOP chairman of the House Natural Resources Committee, is gingerly trying to bring all those stakeholders together this week as the committee considers legislation designed to turn around Puerto Rico's spiraling economy. On Tuesday, Bishop and Rep. Sean Duffy, R-Wis., released a new draft of compromise legislation to create a tough new financial control board for the territory.

Puerto Rico's governor has said the island is in the midst of a humanitarian crisis as multimillion-dollar payments to creditors loom. The territory has already defaulted on some smaller payments.

Seeking to bring his caucus together, House Speaker Paul Ryan quickly endorsed the legislation, which would create a seven-member board to audit the government and put financial plans in place but still allow the island's government to have some say in the process.

"Congress has a constitutional and financial responsibility to bring order to the chaos that is unfolding in the U.S. territory — chaos that could soon wreak havoc on the American bond market," Ryan said.

The bill has been a priority for Ryan, who pledged last year to find a "reasonable solution" for Puerto Rico. Instead, the bill has divided the Republican caucus and failed to garner support from Democrats and Puerto Rican officials.

At issue is just how powerful the control board should be. Puerto Rican officials and congressional Democrats said draft legislation introduced by Bishop last month would take too much power away from the territory's government.

Republicans have insisted that the board must be powerful enough to get the island's economy back on track. As they released the new draft with some concessions, committee Republicans said they are aiming to avoid a "colonialist" approach.

The new version of the legislation increases the number of people on the control board from five to seven, adding two seats that would be chosen by the minority party in the House and Senate — a clear concession to Democrats who have opposed the bill.

A spokesman for House Democratic leader Nancy Pelosi said she is still examining the legislation. Pelosi rejected the previous version, saying it would exert "undue and undemocratic control" over the territory.

The legislation would not give Puerto Rico the broad bankruptcy authority it has asked for, but would allow the oversight board to decide whether debt restructuring is necessary. If the board decides it is needed in some areas and certain conditions are met, it could facilitate court-supervised debt restructuring.

In an attempt to mollify conservatives, the new draft would give creditors more of a say, adding an option for a class of creditors to vote on whether they want to voluntarily restructure debt.

The House Republican Study Committee, a group of around 170 conservatives, had expressed concerns about the debt restructuring provisions, throwing the bill's future in doubt. Republican Rep. Bill Flores of Texas, head of that group, said Tuesday that its members are still reviewing the new version of the legislation, "but we are encouraged that there appear to be some improvements."

Pedro Pierluisi, Puerto Rico's nonvoting representative in Congress, also said he believed the bill is improved. He said the first version of the legislation had "fangs," not teeth, but that he'd wait to endorse the bill until committee votes.

Puerto Rico has been mired in economic stagnation for nearly a decade. The territory's financial problems grew worse as a result of setbacks in the wider U.S. economy, and government spending in Puerto Rico continued unchecked as borrowing covered increasing deficits.

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