GLOBAL ECONOMY

White House says solving Puerto Rico's economic crisis requires Congress to act

SAN JUAN, PUERTO RICO - JULY 01:  The Puerto Rican Capitol building is seen as the island's residents deal with the government's $72 billion debt on July 1, 2015 in San Juan, Puerto Rico. Governor of Puerto Rico Alejandro García Padilla said in a speech recently that the people of Puerto Rico will have to make sacrifices and share the responsibilities to help pull the island out of debt. (Photo by Joe Raedle/Getty Images)

SAN JUAN, PUERTO RICO - JULY 01: The Puerto Rican Capitol building is seen as the island's residents deal with the government's $72 billion debt on July 1, 2015 in San Juan, Puerto Rico. Governor of Puerto Rico Alejandro García Padilla said in a speech recently that the people of Puerto Rico will have to make sacrifices and share the responsibilities to help pull the island out of debt. (Photo by Joe Raedle/Getty Images)  (2015 Getty Images)

The Obama administration is calling on Congress to provide Puerto Rico with the support it needs to emerge from a debt crisis.

The administration issued a statement late Wednesday saying its efforts to help would not be enough to solve the crisis and only Congress has the power to adequately address Puerto Rico's problems.

The administration proposed a four-step program that calls on Congress to approve restructuring Puerto Rico's debt burden and then provide oversight for a credible recovery plan. The plan also calls for reforms to Puerto Rico's Medicaid program.

The administration says that without congressional action Puerto Rico will face a "long and difficult recovery that could have harmful consequences for the residents on the island and beyond."

The administration's proposal, if approved by Congress, would give Puerto Rico a way to restructure its $72 billion in debt. Earlier Wednesday, the island's Government Development Bank announced it was ending talks with a group of bondholders without having reached a deal on debt restructuring.

The administration's plan was scheduled to be presented on Thursday to the Senate Energy and Natural Resources Committee, which has jurisdiction over Puerto Rico and America's other territories.

"Puerto Rico, and the 3.5 million American citizens who call the island home, are facing a serious crisis that requires immediate congressional action," Treasury Secretary Jacob Lew, Health and Human Services Secretary Sylvia Mathews Burwell and Jeff Zients, director of the administration's National Economic Council, said in a joint statement.

In addition to debt restructuring, the administration said Congress needs to approve reforms to the island's Medicaid program for poor people to provide better access to healthcare and also provide low-income residents with access to the Earned Income Tax Credit.

"Only Congress has the authority to provide Puerto Rico with the necessary tools to address its near-term challenges and promote long-term growth," the administration officials said.

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