Duffy, Bishop lead effort to address Puerto Rico’s financial crisis to House approval

The House of Representatives approved legislation on Thursday that U.S. Reps. Sean Duffy (R-WI) and Rob Bishop (R-UT) led to address Puerto Rico’s escalating financial crisis.

The Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), H.R. 4900, would address the territory’s financial crisis without a taxpayer bailout and would establish more oversight going forward.

In floor remarks, Duffy said that Puerto Rico is $73 billion in debt and has approximately $2 billion in unpaid bills to the vendors.

“That means schools are closing down because we don’t have fuel for energy in the schools or for school buses,” Duffy said. “Hospital wings are closing. Emergency vehicles aren’t being run because the island doesn’t have money to pay its bills. This is a true economic crisis. It is a true humanitarian crisis that is taking place in Puerto Rico.”

Duffy said that PROMESA was the result of months of negotiations with Democrats, Republicans, the administration, the Treasury and Puerto Rico’s elected officials.

“I think this is a great bill that is going to actually get Puerto Rico on a path to prosperity, opportunity and economic growth; that is going to help the people in Puerto Rico who have a dream of living in Puerto Rico stay in Puerto Rico with their families in their communities on the island that they love,” Duffy said.

The bill would establish an oversight board with the authority to impose fiscal responsibility, obtain audited financials and enforce balanced budgets. It would also institute governmental and economic reforms that promote growth and meet credit obligations, and it would establish a framework for negotiations and voluntary settlements between creditors and debtors.

“Six months ago, our committee began the effort to try to solve this problem,” Bishop, chairman of the House Natural Resources Committee, said. “We had four hearings, countless stakeholder meetings, and got input from expert testimony. Interested parties from all over the place were able to get their input in various drafts of this bill. It was an exhaustive effort, but what happened is at the end of this time we had a good bill. That is the way this process is supposed to work.”

U.S. Rep. Frank Lucas (R-OK) said that PROMESA does not establish a new precedent. Rather, it resembles a bill Congress passed in 1995 to address the District of Columbia’s financial crisis with a supervisory board that took control of finances “to help right the ship.”

“Now, I am voting for this piece of legislation because I believe my fellow American citizens who live in Puerto Rico deserve the right to have a renaissance, deserve the right to move forward,” Lucas said in a floor speech. “But we are all members of elected bodies and we know how tough these decisions and situations are.”

U.S. Rep. Ander Crenshaw (R-FL) said that Americans don’t need to look beyond their own back yards to understand the importance of stabilizing Puerto Rico’s economy.

JAXPORT, the top U.S. port handling trade with Puerto Rico, Crenshaw said, faces negative economic consequences if Congress sits on the sidelines.

“PROMESA responds directly to Puerto Rico’s dire economic situation by taking necessary steps to restructure its $118 billion-plus debt and protect taxpayers from a bailout,” Crenshaw said. “Without the legislation’s reforms, a much more costly intervention is down the road when a full default brings on an even more disastrous fiscal and humanitarian crisis.”

House Speaker Paul Ryan (R-WI) added that PROMESA was the congressional action needed to prevent a taxpayer bailout of Puerto Rico.

“The Puerto Rican people are our fellow Americans,” Ryan said. “They pay our taxes and fight in our wars. We cannot allow this to happen. I should also say that if we do nothing, the contagion will only spread. About 15 percent of Puerto Rico’s debt is held by middle-class Americans. If the government can’t meet its obligations, these families will pay the price. Or even worse, taxpayers could be asked to bail it out. That is simply unacceptable.”

House Majority Leader Kevin McCarthy (R-CA) said that if Puerto Rico falls further into insolvency, the territory could escalate into a humanitarian crisis.

“However, American taxpayers can’t be on the hook for Puerto Rico’s bad choices, which is why a bailout has never been on the table,” McCarthy said. “The PROMESA Act rejects the false choice between insolvency and a bailout by establishing an oversight board to help responsibly manage Puerto Rico’s finances and budget while also instituting a way for Puerto Rico to restructure its debt without going bankrupt. Long-term fiscal reforms and debt restructuring have always been the key to solving Puerto Rico’s fiscal crisis, and I thank the House Natural Resources Committee, especially Chairman Rob Bishop and Representative Sean Duffy for crafting a bill that delivers these solutions.”

U.S. Rep. Carlos Curbelo (R-FL) said that he was proud to offer an amendment to PROMESA that would require the Congressional Task Force on Economic Growth in Puerto Rico to recommend changes in federal law to help reduce childhood poverty in Puerto Rico.

“I want to thank Chairman Bishop and Rep. Duffy, who have shown steadfast leadership in finding practical solutions to address the fiscal crisis in Puerto Rico,” Curbelo said. “PROMESA is an important step forward in helping the island mitigate the existing humanitarian and economic emergency in a responsible way.”

U.S. Rep. Jason Chaffetz (R-UT) said “reckless, free spending states” should take note that they cannot look to Congress for a bailout.

“Puerto Rico faces serious consequences for its failure to appropriately manage budgets,” Chaffetz said. “With some responsible supervision and an injection of conservative economic policies, Puerto Rico can chart a better course and American taxpayers can avoid the worst consequences of the island’s fiscal intransigence.”

American taxpayers deserve assurances that they will not be on the hook for decades of irresponsible budget practices in Puerto Rico, U.S. Rep. Glenn Thompson (R-PA) added.

“The territory’s debt has caused a humanitarian crisis, where the local government has become incapable of meeting basic services for the more than three million American citizens who reside on the island,” Thompson said. “The Supreme Court ruled this week in a case that the U.S. Constitution’s Territories Clause places powers related to the island with the United States Congress. The Puerto Rico Oversight, Management and Economic Stability Act is a path forward, which will allow restructuring of the debt without a bailout, while creating a strong oversight board to help Puerto Rico regain control of its economic future. By taking action now, we will avoid a major problem in the future.”

U.S. Rep. Steve Womack (R-AR) said that passage of PROMESA would put Puerto Rico on “firmer footing” after years of poor governance that led to economic decline.

“Through the establishment of a responsible and experienced fiscal oversight and management board, coupled with the repeal of harmful Obama administration policies such as the Department of Labor Overtime Rule and an expansion of the federal minimum wage, Puerto Rico will be able to take the actions necessary to turn this dire situation around,” Womack said. “All of this is accomplished alongside minimum debt restructuring with no cost to the taxpayers, and I am proud to support it.”

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