WASHINGTON — Help for debt-stricken Puerto Rico may be just weeks away as a strong House vote bolstered prospects in the Senate for a rescue package to ease the U.S. territory’s crippling $70 billion debt.
“The House bill provides a solid basis for moving forward and we must move forward,” Sen. Richard Blumenthal, D-Conn., said Friday, a day after the House overwhelmingly backed the bipartisan bill, 297-127. The legislation would create a financial control board and allow restructuring of some of Puerto Rico’s debt.
The U.S. territory owes a $2 billion payment to creditors July 1. Puerto Rico has already missed several payments to creditors while a lengthy recession has forced businesses to close, driven up the unemployment rate and sparked an exodus of hundreds of thousands of people to the U.S. mainland. Some schools on the island lack proper electricity and some hospitals have said they can’t provide adequate drugs or care.
In a rare display of political unity, the House bill had the support of President Barack Obama, House Speaker Paul Ryan, R-Wis., and Minority Leader Nancy Pelosi, D-Calif., who see it as the best hope for the 3.5 million Americans on the island. Senate Majority Leader Mitch McConnell, R-Ky., has indicated that he would like the Senate to take up the House bill.
“I suspect that now that the House has passed it, we’re going to look for an opportunity to take it up here,” Sen. John Cornyn of Texas, the No. 2 Senate Republican, said Friday.
Some senators have opposed the legislation, though, and a single member of the Senate can slow down proceedings in the next three weeks. New Jersey Sen. Bob Menendez has spoken out strongly against the House bill, saying the control board would take away the rights of ordinary Puerto Ricans and has colonialist overtones.
Democratic presidential candidate Bernie Sanders, I-Vt., said the rescue package would “make a terrible situation even worse.” He has introduced his own bill to help the territory.
The legislation would allow the seven-member control board to oversee negotiations with creditors and the courts over reducing some debt, but bill does not provide any taxpayer funds to reduce that debt. Like all U.S. states and territories, Puerto Rico cannot declare bankruptcy under federal law.
The bill would also require the territory to create a fiscal plan. Among other requirements, the plan would have to provide “adequate” funds for public pensions, which the government has underfunded by more than $40 billion.
Blumenthal said he has some concerns with the bill, including a provision that would allow the Puerto Rican government to temporarily lower the minimum wage for some younger workers. But he said he’s realistic about what may be possible, and the size of the House vote is encouraging.
“A vote of that magnitude eases a lot of the doubts here,” Blumenthal said of the Senate.
The overwhelming, bipartisan vote in favor of the bill was a victory for Ryan, who had urged his colleagues, especially reluctant conservatives in the GOP caucus, to back the bill. He participated closely in negotiations on the legislation, which was one of the first major bills he shepherded through the House since becoming speaker last fall.
Some of those conservatives did vote against the legislation, expressing concern for the bondholders and saying it could set a precedent for financially strapped states. But more than half of Republicans voted for it, joining 158 Democrats.
“The Puerto Rican people are our fellow Americans. They pay our taxes, they fight in our wars. We cannot allow this to happen,” Ryan said in a floor speech just before the bill passed.
After the vote, the White House urged the Senate to follow the House’s lead quickly.
Puerto Rico Gov. Alejandro Garcia Padilla has opposed the legislation but said after the vote that it is the least harmful alternative for Puerto Rico. “This will protect us from the chaos that will result from an inevitable default that looms on July 1,” he said.