House panel approves Puerto Rico debt relief

The House Natural Resources Committee on Wednesday approved legislation to help Puerto Rico handle its debt crisis. 

The committee approved the bill in a 29-10 vote, sending a measure hailed as the last, best hope for dealing with the island’s fiscal woes to the House floor.

{mosads}All 10 votes against the bill were Republicans: Reps. Louie Gohmert (Texas), John Fleming (La.), Tom McClintock (Calif.), Jeff Duncan (S.C.) Doug LaMalfa (Calif.), Dan Newhouse (Wash.) Cresent Hardy (Nev.), Paul Gosar (Ariz.), Rob Wittman (Va.) and Doug Lamborn (Colo.).

Rep. Raúl Labrador (R-Idaho), a Freedom Caucus member who helped draft the bill, voted yes. Rep. Norma Torres (D-Calif.) voted “present.”

The Puerto Rico bill was developed over months of arduous negotiations and has the backing of House leaders in both parties and the White House. It is expected to pass the House in early June, after the Memorial Day recess.

“Only Congress can provide Puerto Rico with the tools it needs to emerge from the fiscal and public debt crisis that hangs over its economy, its families and its future,” said House Minority Leader Nancy Pelosi (D-Calif.) in a statement. “Now that a bipartisan compromise has been voted out of Committee, we hope we can move swiftly to the floor and toward enactment.”

Still, it’s unclear how the legislation will be received in the Senate. Leaders from both parties have stayed mum even as Sens. Bernie Sanders (I-Vt.) and Bob Menendez (D-N.J.) have sought to rally opposition.

The bill would set up an oversight board to help Puerto Rico restructure its $70 billion of debt. The territory faces a $2 billion payment deadline in July, and lawmakers would like to get a bill to President Obama’s desk before it comes due. 

House Natural Resources Chairman Rob Bishop (R-Utah), eager to clear the bill from his committee, opposed several amendments that would have altered or removed some provisions.

The amendments that were batted down would have removed language limiting Puerto Rico’s minimum wage, eased economic aid to the island, and banned the Federal Reserve from purchasing Puerto Rican bonds or paying down the commonwealth’s debt.

Several failed amendments focused on Puerto Rico’s constitutionally guaranteed debt. Roughly $18 billion of the more than $70 billion in Puerto Rican debt is backed by its constitution. 

Rep. Tom McClintock (R-Calif.) offered an amendment that would exempt constitutionally guaranteed debt from the bill. He argued that restructuring any debt backed by the full faith and credit of Puerto Rico would hamper states from selling bonds backed by their constitutions. 

“If Congress is willing to undermine a commonwealth’s constitutionally guaranteed bonds today, there is every reason to believe it would be willing to undermine state guarantees tomorrow,” McClintock said. 

But Republican and Democratic critics said decisions about which debt to restructure should be left to the oversight board, not lawmakers.

“We are simply not equipped to adjudicate all of the claims,” said Rep. Tom MacArthur (R-N.J.) in opposition. “Let’s not try to exclude 20 percent of the bonds by fiat here in committee.” 

The committee also rejected an amendment from Rep. John Fleming (R-La.) that critics said wouldn’t give the board enough flexibility to properly sort out debt repayment priorities according to the Puerto Rican Constitution.

“All of them should be part of the solution, not part of the problem,” said Resident Commissioner Pedro Pierluisi (D), Puerto Rico’s nonvoting representative to Congress. “We cannot simply be listening to one particular class over the other. We should be encouraging them all to engage in negotiations.”

The bill cleared committee with one significant change. The adopted amendment from Rep. Garret Graves (R-La.) mandates that no federal money can go to paying down or buying Puerto Rican debt or liability, which could help tamp down Republican fears of a potential bailout.

This story was updated at 7:04 p.m.