Lew: Senate must pass Puerto Rico bill now

Lew: Senate must pass Puerto Rico bill now
© Michael Bonfigli/Christian Science Monitor

Treasury Secretary Jack LewJacob (Jack) Joseph LewOvernight Finance: US reaches deal with ZTE | Lawmakers look to block it | Trump blasts Macron, Trudeau ahead of G-7 | Mexico files WTO complaint Obama-era Treasury secretary: Tax law will make bipartisan deficit-reduction talks harder GOP Senate report says Obama officials gave Iran access to US financial system MORE is warning the Senate that any delay to legislation to fix Puerto Rico's debt crisis could carry dire consequences for the island.

In a letter sent Monday, Lew said that if Congress fails to pass a bill by July 1, a torrent of litigation from creditors could put the territory’s public services at risk.

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On that date, the island has $2 billion in debt payments due, and island officials have warned they do not have the funds to pay it. Congress is working on legislation to allow the island to restructure its $70 billion in debt under strict new oversight, and Lew called for immediate action on that bill.

“In the event of default, and if creditor lawsuits are successful, a judge could immediately order Puerto Rico to pay creditors over essential services such as health, education, and public safety,” he wrote. “This could force Puerto Rico to lay off police officers, shut down public transit, or close a hospital.”

Lew added that even if Congress were to miss the July 1 deadline and pass something retroactively, it would not be able to halt such a judge’s order, meaning the island's public services will be at risk if no bill is passed by the end of the week.

“Doing nothing now to end the debt crisis will result in a chaotic, disorderly unwinding with widespread consequences,” he said. “Some well-funded creditors are working hard to delay legislative action this week, even if it comes at the expense of the Puerto Rican people.”

The House passed the Puerto Rico bill earlier this month, and the measure is now pending before the Senate, where leaders have said they plan to take it up.

But some lawmakers, particularly Democrats, are dissatisfied with the House measure and are pushing to amend it. Sen. Bob MenendezRobert (Bob) MenendezThe Hill's 12:30 Report: Manafort sentenced to total of 7.5 years in prison Acting Defense chief calls Graham an 'ally' after tense exchange William Barr is right man for the times MORE (D-N.J.) said he was considering placing a hold on the bill if it is not changed.

The island is facing a debt crisis after years of economic decline. The territory, which is home to 3.5 million American citizens, has already defaulted on some debt payments and is slashing public services as it struggles to pay bills thanks to dwindling revenues and a flow of residents to the American mainland.