Hatch blasts Obama's Puerto Rico proposals

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Senate Finance Committee Chairman Orrin HatchOrrin HatchInternet companies dominate tech lobbying Senate panel approves pension rescue for coal miners Overnight Tech: GOP says internet fight isn't over | EU chief defends Apple tax ruling | Feds roll out self-driving car guidelines | Netflix's China worries MORE (R-Utah) on Wednesday blasted the White House's proposals to restructure Puerto Rico's debt.

“I do not believe the administration has been straightforward about the nature of the debt-restructuring authority it is seeking for the territory,” Hatch said at a hearing on the Obama budget released a day earlier.

The Obama administration would allow Puerto Rico to undergo a “comprehensive restructuring” of its debts that would be broader than the Chapter 9 bankruptcy protections offered to municipalities.

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Hatch criticized this idea, saying it would give Puerto Rico “unprecedented” restructuring authority. Hatch also expressed concerns that the proposal would prioritize pension liabilities over bondholders despite a provision in Puerto Rico’s constitution that requires the island to pay "general obligation" debt first. He noted that the commonwealth’s debt is often held by retirees. 

Treasury Secretary Jack LewJack LewConsumer bureau remains partisan target after Wells Fargo settlement European Commissioner defends Apple decision Hatch condemns European Commission’s fine on Apple MORE, the hearing’s sole witness, said that Puerto Ricans’ pension contributions are being paid to bondholders.

“That’s not a tenable arrangement,” he said. He added that the administration has not said that all bondholders have to be treated equally.

Lew also said that Puerto Rico doesn’t have the capacity to support all of its debt service. If Puerto Rico doesn’t have the ability to restructure its debt, the commonwealth will be subject to a decade of litigation from bondholders, he said.

“You’ll have a lost decade,” Lew said.

Several Democrats on the Senate Finance Committee expressed support for restructuring authority for Puerto Rico.

Sen. Bob MenendezRobert MenendezTaiwan and ICAO: this is the time Rubio warns of terror attack from Cuba flights Politicians shouldn’t be above the law, Trump and Clinton included MORE (D-N.J.), said the Puerto Rico issue is "really consequential to millions of people" and that the debate over it has been politicized by hedge funds that want to maximize their profits.

Hatch also took a shot at the administration’s proposal to provide about $30 billion for increased Medicaid funds to Puerto Rico.

The senator said that he had been asking the administration how much health funding it wanted for Puerto Rico since last summer and that the budget was the first time  the administration proposed specific numbers.

“Why it took until now for these details to emerge is beyond me,” he said.

Hatch sent a letter to Puerto Rico’s governor on Wednesday asking him to provide current financial information.