House Passes Puerto Rico Debt Bill
The House passed legislation Thursday designed to put a federally-appointed control board in place to oversee Puerto Rico’s finances.
Puerto Rico currently faces a $70 billion debt burden, defaulted on the majority of its $422 million payment in early-May, and has a looming $2 billion payment due July 1.
The bill, known as the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), would allow the board’s seven members to review budgets, call hearings, subpoena information and impose criminal penalties if false or misleading information is provided. It was passed in a 297-127 vote.
The House Committee on Natural Resources said the legislation does not provide a bailout and differs from granting the island Chapter 9 bankruptcy. The oversight board would propose a plan to adjust payments, which would be subject to judicial approval. The chief justice of the United States would designate a district court judge to oversee the cases.
The idea of a control board has faced some pushback from both ends of the political spectrum.
GOP Rep. Dave Brat of Virginia, a member of the House Freedom Caucus, said he wouldn’t get behind a bill that wasn’t supported by the people of Puerto Rico.
“We’re going to do a control board with five year plans, channeling Stalin,” he said at press event held by conservatives ahead of the vote. “If you have read Hayek, as our speaker has done, and you’ve read Mises, no control boards. And the United States Congress should never have the right to overrule the legislative body.
Vermont Sen. Bernie Sanders recently encouraged members of his party to vote against the bill in the upper chamber, but unlike Brat, he feels the government should provide a bailout for the territory.
Critics also expressed concern that letting Puerto Rico restructure its debt would set a precedent for states.
Rep. Raul Labrador, also a member of the House Freedom Caucus, said the bill was constructed to prevent a precedent since the language only pertains to territories of the U.S., not states.
“Not only is this bill not a bailout, I believe this bill preventing a bailout and preventing a bigger cry for a bailout to the states that are mismanaging their finances,” he said.
The Senate is expected to take up the bill before the end of the month.
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