Finance

Puerto Rico debt becomes constitutional fight on the right

Greg Nash

Republicans are waging a battle over the Constitution when it comes to helping Puerto Rico.

Supporters of Speaker Paul Ryan’s legislation to help Puerto Rico handle billions in debt before a critical July bond payment deadline point to Article IV of the Constitution in arguing they have a responsibility to help the territory.

{mosads}Article IV stipulates that Congress has power “to dispose of and make all needful rules and regulations respecting the territory.”

Conservatives, never shy about a constitutional debate, have a counter-argument.

Many on the right don’t want to pass the Ryan-backed measure because they believe Puerto Rico’s financial problems are its own. Though the House measure wouldn’t send any tax dollars to Puerto Rico, they argue further U.S. involvement could lead to a bailout.

They also say the framers were a bit muddy with their language on U.S. obligations to territories.

And since there’s nothing explicit in the Constitution that compels Congress to act for Puerto Rico, they say it shouldn’t be done.

“If we’re not the backstop right now in any way right now, then I’d be very reluctant to get involved,” said Rep. David Brat (R-Va.), a member of the conservative House Freedom Caucus. 

“This [constitutional] ambiguity is part of the problem with the territorial status, and that’s muddying the waters,” he said.

At an April meeting of House Republicans to discuss Puerto Rico, a constitutional debate ensued, with some conservatives arguing the founding document indicates Congress has no obligation to act.

Others took a different view.

“I was telling my Freedom Caucus friends, look, we have a constitutional obligations to manage the territories,” said Rep. Mick Mulvaney (R-S.C.). “We have to do something, jurisdictionally.”

Leaders in both parties are pushing for a legislative fix to Puerto Rico’s debt woes, which are getting worse by the day. Puerto Rico already defaulted on $422 million in debt payments on May 1 and will default on billions more if Congress doesn’t act by July 1. 

New legislation from the House Natural Resources Committee has repeatedly been delayed, but could be released next week.

In the constitutional debate,  Republicans have discussed whether the Constitution’s requirement that the “full faith and credit shall be given in each state” also applies to territories.

“I don’t think we have an obligation to act, and I’ve been telling people if we get involved, we’re going to own this problem,” said Rep. Randy Weber (R-Texas), a member of the conservative Freedom Caucus. “What has occurred is because of [Puerto Rico’s] policies … and in my opinion, they need to deal with that now.”

Brat said he’s still unsure whether Congress is obligated to act. If it isn’t, he doesn’t want to get involved.

“What’s our responsibility to our territory?,” asked Brat. “I don’t know if we’re already the backstop and we already are going to have to provide some support to them if they collapse right now.”

“If we engage, then we’re for sure going to be a backstop,” he said.

Ryan has insisted that the current bill to help Puerto Rico isn’t a bailout, but one could be necessary if Congress doesn’t pass that legislation. Some House Republicans are on the same page. 

“Congress will be obligated to act here because of humanitarian reasons,” said Rep. Dennis Ross (R-Fla.). “If they fail, if we can’t help them save themselves, then the only option politically and from the humanitarian perspective is a bailout, which I don’t think is good for the taxpayers.”

House Ways Committee Chairman Kevin Brady (R-Texas), a Ryan ally, said the current bill isn’t a bailout, and “creates some fiscal discipline and sort of forces everyone at the table to solve some things.”

And even some of the House’s most critical conservatives say Congress should push through the dangerous political headwinds.

Rep. Mark Meadows (R-N.C.) a Freedom Caucus member who filed legislation to unseat former House Speaker John Boehner last summer, said Puerto Rico’s debt “is a number below last” on a list his constituents’ concerns.

But he said he could support a debt restructuring bill that doesn’t send taxpayer money to Puerto Rico or prioritize pension payments. The current draft does neither.

“Any comments I get about Puerto Rico is about not bailing them out. It’s certainly not about saying we’ve got to act to help,” said Meadows. But “Puerto Rico being a territory is certainly something that we have to look at, and so to completely ignore it would be irresponsible.”

Tags Boehner John Boehner Kevin Brady Paul Ryan Puerto Rico Puerto Rico Puerto Rico debt crisis Randy Weber
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