Senate Dems unite in call for Puerto Rico debt aid

Senate Dems unite in call for Puerto Rico debt aid
© Getty Images

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 McConnellAddison (Mitch) Mitchell McConnellRand's reversal advances Pompeo After Dems stood against Pompeo, Senate’s confirmation process needs a revamp Overnight Cybersecurity: Senators eye path forward on election security bill | Facebook isn't winning over privacy advocates | New hacks target health care 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.”

“We urge you to commit to working with us to swiftly enact legislation to give Puerto Rico access to appropriate restructuring tools,” the Democrats wrote. “This is the only way Puerto Rico can respond effectively and responsibly to this growing financial and social catastrophe.”

Senate Democratic Leader Harry ReidHarry Mason ReidAfter Dems stood against Pompeo, Senate’s confirmation process needs a revamp GOP poised to advance rules change to speed up Trump nominees Dems walk tightrope on Pompeo nomination 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 Davis RyanWatchdog group sues for donor list from Ryan-aligned nonprofit Terminating Budget Committees not as absurd as it sounds The writing is on the wall for bump stocks and Congress should finalize it 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.