House Republicans are struggling to meet Speaker Paul Ryan’s March 31 deadline to come up with a solution for Puerto Rico’s $70 billion debt crisis, as House conservatives continue to resist provisions that resemble a federal bailout.
Representative Rob Bishop of Utah, who is leading the effort to write a bill as chairman of the Natural Resources Committee, says he wants to establish a muscular federal board to oversee the island territory’s deficit-cutting efforts.
He is also considering granting the board powers to help restructure Puerto Rico’s debt, but that step, portrayed by lobbyists as a bailout, may be opposed by conservatives on the 170-member House Republican Study Committee.
RSC Chairman Bill Flores is in talks with Natural Resources Committee staff members over aspects of the bill, RSC spokeswoman Caitlin Carroll said Friday. She gave a more upbeat view of those discussions without offering any details.
"I don’t think we can comment at this point on the internal discussions we’ve had with Natural Resources, but the talks have been productive and we are optimistic," she said.
The U.S. Supreme Court will also be hearing a case concerning Puerto Rico’s debt on Tuesday. The justices will consider whether Puerto Rico can ease its fiscal crisis by using a 2014 law to allow its debt-ridden public utilities to restructure their more than $20 billion of debt.
Debt Restructuring
If some kind of restructuring authority is included in the House bill, Bishop wants it to be broad and include bonds issued by the Puerto Rico government, or so-called general-obligation bonds, matching the U.S. Treasury’s proposal in that respect, the Democratic aide said.
Still, such restructuring would only be the last resort, after Puerto Rico exhausts other ways to pay its bills and debts, the aide said. Bishop has said it would be up to the federal board to decide whether Puerto Rico gets to cut its debt or not.
"There’s still a lot of conversations going on," said Don Young of Alaska, chairman of the House Natural Resources subcommittee on Indian, Insular and Alaska Native Affairs.
But Young said a draft of the Republican bill could be ready and circulated to fellow lawmakers and others as early as the weekend, confirming it will include language for a "strong" federal oversight board.
Timetable Slipping
Bishop’s spokesman Parish Braden confirmed the committee will make bill draft public by March 31 -- technically, at least, meeting Ryan’s deadline -- and the panel will hold a legislative hearing and markup “shortly thereafter.”
But the House is scheduled to be in session only through next Wednesday, then adjourn for its spring break until April 12.
That means the House could not vote on any measure until mid-April at the earliest.
U.S. Treasury Secretary Jack Lew warned this week that time is running short.
"Puerto Rico faces very large bond Payments which they do not appear to us to be able to meet," he told a House panel on Wednesday. "Action needs to be taken in a timely way so that in the May, June, July period, we don’t see a disorderly unwinding of Puerto Rico."
Balancing Demands
In the meantime, Bishop will be trying to reconcile conservatives’ opposition with the demands of Democrats and Puerto Rican officials. In addition, members of the Judiciary Committee are seeking to weigh in on aspects of the bill, which could also slow consideration.
Congressional Democrats and Puerto Rico’s Governor Alejandro Garcia Padilla were disappointed that some debt relief for the island was not included in a catch-all government spending bill passed in December.
Amid their outcry right after that bill’s passage, Ryan announced he was directing House committees to find a solution to Puerto Rico’s problems by end of March, in cooperation with commonwealth officials.
"Puerto Rico’s fiscal crisis is a problem that is not going away any time soon," Ryan said at the time.
"That’s why I am instructing our House committees of jurisdiction to work with the Puerto Rican government to come up with a responsible solution by the end of the first quarter of next year," said Ryan.
At the same time, the top House Democrat, Nancy Pelosi, introduced a bill to temporarily shield Puerto Rico from lawsuits over the debt issue through March 31.
’Good Faith’
On Thursday, Pelosi confirmed to reporters that passage of Puerto Rico legislation will not occur by March 31. She said she has been in talks with Republicans and that "Republicans are acting in good faith on this."
Pelosi would not discuss whether some form of Chapter 9 Bankruptcy protection has been taken off the table, but said of the bill, "I have some idea where it’s going."
She said she hopes a bill could be marked up at least as soon as the House reconvenes after its spring break on April 12, "and then taken to the floor immediately and sent to the Senate."
To contact the reporters on this story: Billy House in Washington at bhouse5@bloomberg.net, Kasia Klimasinska in Washington at kklimasinska@bloomberg.net. To contact the editors responsible for this story: Kevin Whitelaw at kwhitelaw@bloomberg.net, William Selway
By: Billy House and Kasia Klimasinska
©2016 Bloomberg News
