Senate Finance Committee Chairman Orrin HatchOrrin Grant HatchLobbying world Congress, stop holding 'Dreamers' hostage Drug prices are declining amid inflation fears 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.
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 LewJacob (Jack) Joseph LewThe Hill's Morning Report - Biden argues for legislative patience, urgent action amid crisis On The Money: Senate confirms Yellen as first female Treasury secretary | Biden says he's open to tighter income limits for stimulus checks | Administration will look to expedite getting Tubman on bill Sorry Mr. Jackson, Tubman on the is real 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 (Bob) MenendezFive ways Senate could change Biden's spending plan Spending bill faces Senate scramble Republicans raise concerns over Biden's nominee for ambassador to Germany 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.