WASHINGTON (AP) — The White House on Thursday strongly endorsed a bipartisan bill to help ease Puerto Rico's financial crisis, urging the Republican-led House to pass it as the U.S. territory faces a $2 billion debt payment in just over three weeks.
The House was scheduled to begin debate on the bill that would create a financial control board and restructure some of Puerto Rico's $70 billion debt. Republican and Democratic leaders support it, as does the Obama administration. But the measure faces opposition from members of both parties, as some bondholders, unions and island officials have lobbied against it.
The White House said failing to act could result in an "economic and humanitarian crisis" in the U.S. territory beyond what the island is already facing. A lengthy recession has forced businesses to close, driven up the employment rate and sparked an exodus of hundreds of thousands of people to the U.S. mainland.
"This compromise legislation is far superior to the status quo and is necessary to protect the well-being of 3.5 million Americans and create a path to recovery," the White House statement said.
House Speaker Paul Ryan, R-Wis., will need significant support from his own caucus as well as most Democrats to get the bill passed. He has argued the legislation is the only way to avoid an eventual taxpayer bailout for the island and was closely involved in negotiations with the administration and House Democratic leader Nancy Pelosi of California.
In a push to get the bill passed, President Barack Obama summoned House Democrats with ties to Puerto Rico to a meeting in the Oval Office on Wednesday, including supporters and opponents of the measure.
Puerto Rico's representative in Congress, Pedro Pierluisi, attended the meeting and said he is supporting the bill despite opposition from other lawmakers on the island.
"He made absolutely clear that there is no 'Plan B' here," Pierluisi said of Obama.
Puerto Rico has missed several payments to creditors and faces the $2 billion installment on July 1. Some schools on the island lack proper electricity and some hospitals have said they can't provide adequate drugs or care. The island's only active air ambulance company announced Tuesday that it has suspended its services.
Ahead of the vote, Republicans said they had enough support from both parties for passage. But some bondholder groups continued to try and pick off conservatives with the argument that the bill is unfair to creditors and tantamount to a bailout for the territory.
The control board would "cast aside bondholder contracts and retroactively subvert them to Puerto Rico's government pension system at its sole discretion," a group called Main Street Bondholders said in a release this week.
Some conservatives said they would vote against the bill.
"People in my district are very unhappy with it," said Rep. John Fleming, R-La. "They see it as just another bailout of a government that was run in a liberal progressive way."
Others are supporting it, however. Idaho Rep. Raul Labrador, a Republican born in Puerto Rico who is a member of the House Freedom Caucus, helped negotiate the legislation and has worked to sell it to colleagues.
Unions have also lobbied against the legislation because of a provision that would allow the Puerto Rican government to temporarily lower the minimum wage for some younger workers. Democrats are offering an amendment to delete that provision from the bill.
The Senate has not yet acted, but senators said this week that they are watching the House vote. Texas Sen. John Cornyn, the No. 2 Senate Republican, said Tuesday that it's likely that the Senate will take up the House version of the bill if it passes the House this week.
The legislation would allow the control board to oversee negotiations with creditors and the courts over reducing some debt. It does not provide any taxpayer funds to reduce that debt.
It 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. AP
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