WASHINGTON – House Speaker Paul Ryan said Congress needs to “bring order to the chaos” in Puerto Rico and prevent U.S. taxpayers from having to eventually bail out the territory, which is facing a $70 billion debt.
A House committee cancelled a Thursday vote on legislation establishing a financial control board for Puerto Rico as Republicans remained divided over how Congress should address the economic crisis. Gov. Alejandro Garcia Padilla has warned that a debt restructuring measure needs to be approved soon with a looming deadline next month for a $422 million bond payment.
Puerto Rico has said it will likely default on the payment, which would mark the first time the island would miss a payment on general obligation bonds protected by the island’s constitution.
At a news conference Thursday, Ryan said he believes Congress will eventually act, but that many lawmakers are still learning about the issue. He said House Republicans will have a meeting Friday morning to discuss what should be done about the territory’s financial woes.
Ryan said a control board would help the U.S. avoid an eventual bailout of the territory if there is total economic collapse.
“My No. 1 priority as speaker of the House with respect to this issue is to keep the American taxpayer away from this,” he said. “There will be no taxpayer bailout.”
Legislation released by Republicans on the House Natural Resources Committee this week would create the seven-member control board and allow it to facilitate some court-ordered debt restructuring, though it does not give the island the broad bankruptcy authority that territorial officials had sought.
Some conservative Republicans had objected to the debt restructuring, saying it’s a bad precedent. Like all U.S. states and territories, Puerto Rico cannot declare bankruptcy under federal law.
In an attempt to satisfy those lawmakers, the most recent draft of the bill would give creditors more of a say on debt plans, allowing them a preliminary vote on whether they wanted to voluntarily restructure debt.
But some Republicans are still wary. Before the vote was cancelled, several lawmakers on the committee said they couldn’t support it. On Thursday, some conservatives said they were concerned about the eventual consequences.
“Is the American taxpayer in any way going to be the backstop?” asked Virginia Rep. Dave Brat, a member of the conservative Freedom Caucus. “Once you take the management of something you are putting yourself in a riskier position.”
Also Thursday, the advocacy group National Taxpayers Union warned the panel to be careful of the precedents it could set for states on the mainland. The group said the bill’s expansion of restructuring power “will not escape the attention of wayward debt-ridden state governments.”
Bishop will need Democratic votes to pass the bill. But Democrats have worried that a control board would be too powerful, evoking echoes of colonialism. They have also expressed concerns about a land transfer in the bill from a national wildlife refuge to the territorial government, and a provision that would lower the minimum wage for some workers on the island.
House Minority Leader Nancy Pelosi, D-Calif., said that the bill should include an oversight board “that is respectful of the people of Puerto Rico and does not undermine the restructuring part of the bill and does not contain extraneous provisions that harm working people.”
The Obama administration has also been involved in the negotiations. Treasury Department official Antonio Weiss said at the hearing that the administration is concerned that the way the bill is written, restructuring could be made more difficult.
In a statement, White House spokeswoman Brandi Hoffine said the administration is working closely with the committee.
“Only bipartisan congressional action can end this crisis, and we encourage members to continue to work to improve this bill and to act without delay,” she said.
Bishop said he is hoping for strong votes from both parties.
“People haven’t had the chance of actually going through this and feeling comfortable with it,” he said. “And a lot of people were really more concerned than they were opposed, and I think that’s legitimate. And I think those concerns are going to be answered as we go forward.”
Pressuring Bishop is an advocacy group called the Center for Individual Freedom, which is running ads in various congressional districts that claim the bill is a bailout for the territory. The group does not say which interests it represents, but its website says its mission is to “protect and defend individual freedoms and individual rights guaranteed by the U.S. Constitution.”
The Senate has not yet acted on the issue. Senate Finance Committee Chairman Orrin Hatch said last week that senators are waiting to see how the House moves forward until they take it up.
Puerto Rico has been mired in economic stagnation for a decade. The financial problems worsened as a result of setbacks in the broader U.S. economy, and government spending in Puerto Rico continued unchecked as borrowing covered increasing deficits.
Associated Press writer Danica Coto in San Juan, Puerto Rico, contributed to this report.
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