Legislation aimed at handling the Puerto Rico debt crisis is slated to be modified after lawmakers expressed concerns over its current state.
House Speaker [crscore]Paul Ryan[/crscore] gathered the Republican conference for a closed-door, policy-planning meeting on how to best address the island’s fiscal dilemma Friday.
A source from inside the room told The Daily Caller News Foundation the Wisconsin Republican addressed his party at the start of the meeting, saying members “have an obligation to protect the American taxpayer and the economy.”
“Rep. Duffy (who has been working this issue for months) and Chairman Bishop (Natural Resources has jurisdiction over territories) then presented the facts at hand and the proposal,” the source said in an email. “They reiterated that under this plan, taxpayers won’t be on the hook. Instead, we require the territory to restore fiscal order and balance its budget – a conservative solution to decades of liberal mismanagement of their finances.”
The House Committee On Natural Resources postponed a markup of its bill, which would put a control board and grant the island restructuring tools, Wednesday following pushback on both sides of the aisle over the measure.
The island faces $70 billion in debt and says it can’t pay it back. It faces a potential default in May.
Virginia Republican Rep. [crscore]Dave Brat[/crscore], a member of the House Freedom Caucus, said the party is in agreement with the speaker that they want to make sure American taxpayers are not on the hook for a bailout.
“The real question is do we need to get involved now with this control board in order to avert a worse outcome later on,” he told TheDCNF. “I don’t think we are formally responsible for bond defaults or the entire island’s economy. They are our territory, but so is Chicago – if the city defaults, they default, and so the secondary level is, who’s the backstop?”
Brat said no free market proponent likes the idea of a control board, saying it would likely be susceptible to political pressures gunning for certain outcomes.
“We had all sorts of questions, who’s the hook, what about cramdowns, which debt gets priority who’s responsible for it,” Brat continued. “There were a lot of concerns expressed in the room, and that’s just doing the policy side – then you have the voters back home, and after all these bailout stories with Frannie and Freddie and the Export-Import Bank, people are just exasperated and fed up with D.C. and they hear bailout language for Puerto Rico and the average voter back home is not going to be a happy camper when they hear about more federal intrusion.”
Ryan has praised the idea of an oversight board, saying it will help the island get back on a path to fiscal vitality without placing the financial burden on the American people.
Brat said he recommended to the conference getting someone like Vernon Smith, a Nobel-prize winning economist who has dealt with similar issues, to help redesign the restructure of the commonwealth’s economy.
“If you are seriously talking about how to best guide and design an economy, you don’t want 100 politicians deciding that,” he said. “If you are designing an economy and you’re a free-market Republican you ought to have some high-caliber minds in there.
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