The US May Finally Give Puerto Rico a Financial Lifeline. Here’s What’s Happening.

If Congress fails to take action soon, “it does so at its own peril.”

Shannon O'Brien/Palm Beach Post/Zuma

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


After months of pleading by the governor of Puerto Rico and the island’s representative to Congress, lawmakers have introduced legislation in both the House and Senate that would offer tangible help for the island’s debt crisis. On Wednesday, the Republican chairs of three Senate committees proposed $3 billion in cash relief, a 50 percent payroll tax cut for Puerto Rico residents for the next five years, and the creation of an independent “assistance authority” that would help the government of Puerto Rico with its short-term and long-term budgeting process.

A separate House bill introduced Wednesday by Rep. Sean Duffy (R-Wis.) would permit the island’s cities to restructure mounting debts through bankruptcy reorganization, an option available to cities in the United States but not in Puerto Rico. The legislation comes as the US territory grapples with ballooning debt payments on roughly $72 billion in borrowing that the island’s governor, Alejandro García Padilla, has said the island cannot pay. According to Bloomberg, Puerto Rico is in danger of defaulting on $957 million in interest payments that are due on January 1.

The Senate proposal comes from a trio of Republicans who chair committees with various oversight responsibilities for Puerto Rico: Finance Committee Chair Orrin Hatch (R-Utah), Judiciary Committee Chair Chuck Grassley (R-Iowa), and Energy and Natural Resources Committee Chair Lisa Murkowski (R-Alaska).

Hatch and the other Republicans said in a statement that the bill aims to put Puerto Rico on a path to financial stability, but that it was drafted without all the information on the island’s financial situation or the details of how federal policies affect the island’s spending.

“Puerto Rico’s financial and economic challenges, fueled by a sagging economy and dysfunctional bureaucracy, have been years in the making,” Hatch said in a statement released Wednesday. “And despite repeated attempts by Congress to clarify how the interplay between federal tax, healthcare and pension policies affect the territory’s economy, we have been unable to receive audited financial statements from Puerto Rico or federal health officials. Federal taxpayers and the Puerto Rican people deserve better.”

The Republicans’ proposal specifically does not include provisions to allow the island’s cities and publicly financed institutions to restructure debt under federal bankruptcy laws. Duffy introduced a bill Wednesday that would give Puerto Rico this option, which is supported by both Senate Democrats and the Obama administration. Previous bankruptcy bills proposed by Democrats and Puerto Rico’s non-voting representative to Congress have all stalled.

Rep. Pedro Pierluisi, the island’s non-voting representative to Congress, said in a statement that he supported Hatch’s proposals for $3 billion in federal funding and the payroll tax cut for Puerto Rican workers, but stressed the importance of including bankruptcy provisions.

“Overall, I am grateful to Chairman Hatch for his attention to this issue, and I know he is approaching this matter in good faith,” Pierluisi said, adding that Congress should act on the bill before the holiday recess. “If Congress declines to take action by then, it does so at its own peril.”

The bill’s chances for success are unclear, but the fact that it was proposed by members of the Republican majority makes it more likely to pass than the previous plans offered by Democratic lawmakers.

Earlier in the day, Pierluisi spoke on the House floor about Puerto Rico’s debt crisis. While acknowledging that the island’s government has mismanaged spending and borrowing for years, he noted that a “second, equally significant source” of the problem was the colonial relationship between the United States and Puerto Rico, which he said was akin to that of a “master and his servant,” and “a national disgrace.”

“It denies my constituents, countless numbers of whom have served this country in uniform, the fundamental right to vote for their national leaders,” he said. “Remember this the next time you hear our country lecture another country about the importance of democracy…Puerto Rico must have equality in this union or independence outside of it. No longer should we be reduced to begging Congress for crumbs, and hoping you throw some our way. We must get off our knees, stand up straight, look you in the eyes, and say, ‘No more.'”

See his full statement below:

 

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with The Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with The Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate