May 11, 2016

Support Builds To Address Humanitarian Crisis In Puerto Rico

Former Rep. Judd Gregg: No Action Will Cost Taxpayers Money. “Former Sen. Judd Gregg (R-N.H.), who now represents a group of Puerto Rico bondholders, said that if Congress does not act to help the island navigate its crisis, the end result will be hundreds of thousands of Puerto Ricans, who are American citizens, moving to the mainland.  ‘A lot of folks in Puerto Rico are going to have to come to the United States to make ends meet,’ he said.  ‘Most of those folks getting started are going to have support from our social safety net, so it’s going to cost our taxpayers money.’” (Peter Schroeder, “Trump Becomes Puerto Rico Wild Card,” The Hill, 5/8/16)

Speaker Paul Ryan (R-WI): Puerto Rico Could Go “From Bad To Worse.” “Ryan has been aggressive in his support for the legislation, calling it a critical measure.  His office reacted to Monday’s default of roughly $422 million in Puerto Rican debt payments by pushing the legislation hard.  ‘Without congressional action, things in Puerto Rico are going to go from bad to worse,’ his office said.  ‘[This bill] is the best hope for Puerto Rico to get to a place where it can pay its debts and get on a path to fiscal health.’” (Peter Schroeder, “Trump Becomes Puerto Rico Wild Card,” The Hill, 5/8/16)

  • Speaker Ryan: No Action Could Have Implications For U.S.“Ryan himself has said inaction on Puerto Rico’s impending fiscal crisis could have deep ramifications for the U.S.  ‘Our primary responsibility is to protect the American taxpayer and to help bring order to the chaos that will befall Puerto Rico if the status quo continues going in the direction it’s going,’ he told reporters on April 14.” (Billy House, “Ryan’s Biggest Test Yet: Saving Puerto Rico From Congress,” Bloomberg, 4/25/16)

Majority Leader Kevin McCarthy (R-CA): PROMESA Will Protect Taxpayers. “‘We’re going to protect taxpayers, it will not be a bailout,’ McCarthy said.  ‘And if we don’t proactively do that we could be in a situation that puts taxpayers at risk’ … ‘We’ll get it done as soon as possible.  The most important thing to do here is to get it done right,’ he said.” (Eric Werner, “House GOP Leader: No Help For Puerto Rico Before Deadline,” The Associated Press, 4/26/16)

House Committee On Natural Resources Chairman Rob Bishop (R-UT) On PROMESA: “Puerto Rico is not a state and any program dealing with it, or any territory, will not impact, nor set precedents for, states or municipalities.  At the end of the day, we will have a good bill that helps Puerto Rico and protects all taxpayers.” (Press Release, “Chairman Bishop Reiterates Opposition To Puerto Rico Bailout,” Office of U.S. Congressman Rob Bishop, 4/7/16)

Rep. Darrell Issa (R-CA): Puerto Rico’s Problems Are “Getting Worse By The Day.” “Make no buts about it: The island’s problems are getting worse by the day, and congressional action now seems inevitable.  The good news is that we have seen this movie before and know how to fix it without putting taxpayers on the hook … To solve this situation, we need only look back in time to how Congress addressed the financial woes of Washington, D.C., in the 1990s.  The D.C. model worked because its cornerstone was a strong independent control board.” (Rep. Darrell Issa, Op-Ed, “How To Solve Puerto Rico’s Debt Crisis,” National Review, 5/2/16)

Rep. Sean Duffy (R-WI): Failure To Respond To Puerto Rico Could Lead To A “Humanitarian Calamity.” “Failure to respond to the very real crisis on the island would not only be an abdication of leadership; it would also have a devastating effect on the people of Puerto Rico and countless Americans throughout the states who stand to lose billions in the bond markets.  If today’s debt crisis is ignored, the problem could quickly turn into a humanitarian calamity … we have a moral and financial obligation to work together to prevent a larger default from happening in the future.  We must also acknowledge the root causes of this economic crisis in Puerto Rico and improve fiscal oversight to ensure this never happens again.” (Rep. Sean Duffy, Op-Ed, “Give Puerto Rico Tools To Restructure Its Debt,” Orlando Sentinel, 1/16/16)

The Los Angeles Times: Without Action, Puerto Rico “Really Will Need A Bailout.” “Until those steps are taken, the island’s government will continue shuffling money desperately from one creditor’s account to another while its citizens, many of whom are impoverished, are neglected.  (One example of that neglect is the island’s limited response to the Zika epidemic.)  And the longer Congress waits, the greater the chance that the island will sink too deep into the red to restructure its debts, and really will need a bailout.” (Editorial, “Washington Needs To Pick Up The Pace On Puerto Rican Restructuring,” The Los Angeles Times, 5/3/16)

The Wall Street Journal: Without Help From Congress “Chaos Will Ensue.” “Puerto Rico on Monday made good on its threat to miss a payment on Government Development Bank debt.  While the default has so far been contained, chaos will ensue if Congress doesn’t provide federal supervision and a legal framework for restructuring the island’s debt.  Governor Alejandro Garcia Padilla invoked the commonwealth’s new debt-moratorium law to suspend payments on $422 million in GDB bonds due Monday.” (Editorial, “Puerto Rico’s Debt Portent,” The Wall Street Journal, 5/2/16)

  • The Wall Street Journal: No Action “Will Result In Anarchy And A Back-Door Bailout.” “An earlier House Natural Resources Committee proposal stalled after some Republicans carped that allowing Puerto Rico to write down its debt is tantamount to a bailout.  But doing nothing, as some have proposed, will result in anarchy and a back-door bailout as tens of thousands of Puerto Ricans flee to the mainland where they will land on the U.S. public dole.” (Editorial, “Puerto Rico’s Debt Portent,” The Wall Street Journal, 5/2/16)

The Boston Globe: No Legislation Now Means A Government Bailout In The Future. “After months of negotiations, delays, and a missed deadline, a proposed bill – named Puerto Rico Oversight, Management, and Economic Stability Act, ironically spelling PROMESA – is still opposed by both sides of the aisle.  But failure to act now only increases the odds that the island will need a federal bailout later.  Puerto Rico may not be a state, but its 3.5 million residents are still American citizens.  They fully deserve governments – both in Washington and San Juan – that function in a timely and responsible manner.  Both have abdicated their responsibilities.” (Editorial, “Congress Must Act To Give Puerto Rico Relief,” The Boston Globe, 4/26/16)

Bloomberg: “Bigger And More Consequential Defaults May Follow.” “House Speaker Paul Ryan is working to put together a promising plan to address the island’s bankrupt finances.  Unfortunately, it is unlikely to be ready before what could be the island’s next and biggest default, on May 1, when a $422 million payment on debt issued by Puerto Rico’s Government Development Bank comes due.  Bigger and more consequential defaults may follow on debt protected by Puerto Rico’s constitution, triggering a cascade of ugly lawsuits and roiling the municipal bond market.” (Editorial, “Congress’s Big Chance On Puerto Rico,” Bloomberg, 4/27/16)

National Review: “An Already Desperate Situation On The Island Will Become That Much Worse.” “The effects of this default will be severe for Puerto Rico’s citizens and its creditors.  The government depends on the GDB and a constant stream of new loans to finance its daily operations.  If the GDB is unable to go back to the debt markets, the government will have little choice but to slash essential services such as police, firefighters, and hospitals.  An already desperate situation on the island will become that much worse.” (Evan Berquist, “Time To Get Serious About Puerto Rico,” National Review, 4/26/16)

The Orlando Sentinel: Without PROMESA A “Federal Bailout Could Become Unavoidable.” “But as Treasury Secretary Jacob Lew, House Speaker Paul Ryan and others have warned, a federal bailout could become unavoidable in the future if Congress stands by as Puerto Rico’s economy completely collapses.  The prevailing view among independent financial analysts is that the government is in too deep a hole to dig out with spending cuts and tax increases alone.” (Editorial, “Congress Needs To Help Puerto Rico: Where We Stand,” The Orlando Sentinel, 5/4/16)