By Peter Schroeder - 01/27/16 11:37 AM EST
Senate Democrats have united to push for Puerto Rico to get bankruptcy protections to help it get out from under its massive debt burden.
Every Senate Democrat signed on to a letter released Wednesday, pushing Majority Leader Mitch McConnellMitch McConnellPelosi urges end to Pentagon's clawback of soldier overpayments Coffman’s stance on climate change disingenuous, irresponsible Bill Murray honored with Mark Twain Prize MORE (R-Ky.) to act quickly on legislation allowing the island territory to declare bankruptcy. They added that any Puerto Rico relief bill that does not include bankruptcy language would not be a “real solution.”
Senate Democratic Leader Harry ReidHarry ReidGOP groups ride to rescue in 3 key Senate races Obama seeks down-ballot gains after being midterm loser Reid: 'I have set the Senate' for nuclear option MORE (Nev.) underlined that demand Wednesday on the Senate floor. He said any bill that does not include bankruptcy legislation would be an “abject failure.”
For months, Puerto Rican officials have pushed Congress to allow it to declare bankruptcy for some of its agencies. Years of economic decline and a shrinking population have placed the island under significant stress, and officials say it is impossible for them to completely pay back the billions of dollars they owe creditors.
Leaders in both parties have said they want to do something on Puerto Rico in the coming months, but a partisan divide has emerged on what solution is most appropriate.
Democrats argue that Congress inadvertently left out territories like Puerto Rico from bankruptcy powers enjoyed by states when it rewrote that portion of the code in 1984. But Republicans have been slow to warm to the idea, arguing that years of fiscal mismanagement by island officials put it in this state, and allowing Puerto Rican agencies to declare bankruptcy would excuse those mistakes.
Adding fuel to the fire is pressure from Wall Street investors holding Puerto Rican debt, who are following the Washington debate closely and are not interested in seeing their investments put at risk.
Speaker Paul RyanPaul RyanPoll: GOP voters trust Trump more than Ryan to lead party Rep. Meadows to run for Freedom Caucus chairman Trump slams ObamaCare after premium hikes announced MORE (R-Wis.) vowed in December that the House would act on the Puerto Rican crisis by the end of March. Reid called on McConnell to follow suit.
Senate Republicans had crafted a bill in 2015 aimed at providing relief to Puerto Rico. That package, written by several key committee chairmen, did not give the island bankruptcy power but would provide up to $3 billion in federal aid in exchange for heightened federal oversight of the island’s finances.
While lawmakers deliberate, Puerto Rico has struggled to stay current on its debt obligations. Island officials have pulled revenues legally intended for some obligations to pay more imminent bills, resulting in the default of some lower rated island agency debt.
A spokesman for McConnell referred the matter to the committees with jurisdiction over the issue — Judiciary, Finance and Energy and Natural Resources.