Treasury Secretary Jack Lew said Monday pension cuts are on the table for Puerto Rico to help deal with the debt-ridden island’s fiscal woes.
The commonwealth – which faces a $70 billion debt burden and recently defaulted on a major payment –has been pushing Congress to extend it Chapter 9 bankruptcy rights. Puerto Rico Gov. Alejandro Garcia Padilla has said on numerous occasions he has ruled out cutting pensions as an option to pay its bills.
“That doesn’t mean that all debt is equal. We’ve never said that pensions should be made senior to all debt,” Lew told reporters Monday evening, USA Today reports. “But there does have to be a balancing — and at the end of the day you’re going to need to have a functioning economy.”
Lawmakers are expected to unveil a reworked version of legislation shortly designed to allow the island to restructure its debt and put an advisory board in place to guide financial decisions.
The House Committee on Natural Resources postponed a markup in April of its initial legislation following concerns from both sides of the political spectrum. House Speaker Paul Ryan said the committee is working closely with the Department of Treasury to work out the mechanics of restructuring and wants to ensure the bill does not include a bailout.
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