The House Natural Resources Committee released legislation sponsored by U.S. Rep. Sean Duffy (R-WI) on Tuesday that would ensure that Puerto Rico meets its debt obligations.
The Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), H.R. 4900, would give the U.S. territory tools to restructure its $72 billion debt, as well as a path forward after the Puerto Rican government approved a moratorium on debt repayment last week.
“The 3.5 million Americans living in the U.S. territory deserve the attention and support of Congress,” Duffy said. “After decades of mismanagement, Puerto Rico’s investors also deserve better. A protracted and chaotic legal battle would not serve the interest of creditors or the island. Worse would be a multi-billion dollar taxpayer bailout thrust on the shoulders of America’s taxpayers and retirees.”
Under Duffy’s bill, Puerto Rico would be authorized to unilaterally discharge debt and to compel creditors to accept settlements for less than they asked, the New York Times reports.
“The PROMESA Act will ensure that the island meets its debt obligations in a controlled, responsible manner, without saddling the U.S. taxpayers with the bill,” Duffy said. “If we get this right, we have an opportunity to put the people of Puerto Rico on a path to economic opportunity. However, if we do nothing, the American people will be on the hook.”
U.S. Rep. Rob Bishop (R-UT), Chairman of the House Natural Resources Committee, said that Duffy’s bill would maintain self-governance in Puerto Rico while holding the territory accountable for its debt, uncovering audited financial documents, enforcing fiscal responsibility and cutting red tape restricting economic growth.
“This is the constitutionally-sound solution that will provide real, long-lasting reform to the commonwealth while respecting the rights of all parties and creditors,” Bishop said. “It is the island’s best shot to mitigate its financial collapse and future calls for a bailout, which would be untenable. Congress must act now to avoid a humanitarian crisis that will severely impact 3.5 million Americans living in Puerto Rico and millions of Americans on the mainland.”
House Speaker Paul Ryan (R-WI) said that the Puerto Rican government broke its financial obligations when it approved a moratorium on debt repayment last week, and commended Duffy for introducing a legislative fix.
“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. “I applaud Rep. Duffy for introducing H.R. 4900, which holds the right people accountable for the crisis, shrinks the size of government and authorizes an independent board to help get Puerto Rico on a path to fiscal health. Just as important for the long-term, this bill protects American taxpayers from bailing out Puerto Rico.”