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Hatch blasts Obama's Puerto Rico proposals

Hatch blasts Obama's Puerto Rico proposals
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Senate Finance Committee Chairman Orrin HatchOrrin HatchOvernight Finance: Trump blasts Carrier's union leader | What's in the spending bill | Jamie Dimon gets perch for Trump era | AT&T, Time Warner execs grilled The Hill's 12:30 Report Hatch to meet with Trump Cabinet picks Thursday 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 LewOvernight Finance: House GOP plans short-term spending bill | Senate Republicans not happy | Yellen intends to finish term Lew: Don't paint Wall Street execs with 'broad brushstroke' Dumping Obama’s faux foreign tax legislation should be high on Trump's to-do list 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 MenendezThe right person for State Department is Rudy Giuliani Warren, Menendez question shakeup at Wells Fargo Democrats press Wells Fargo CEO for more answers on scandal 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.