Senate clears Puerto Rico debt bill for final passage

Senate clears Puerto Rico debt bill for final passage
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Congress is on the precipice of sending a major debt relief bill for Puerto Rico to President Obama’s desk after legislation on Wednesday cleared a significant Senate hurdle.

The 68-32 vote in the Senate makes final passage of the legislation a virtual certainty. Sixty votes were needed to clear the procedural hurdle, but only a majority vote is necessary on final passage.

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The legislation would allow Puerto Rico to restructure $70 billion in debt and establish an outside control board to steer the island's troubled finances.

President Obama supports the package and is expected to quickly sign it.

Puerto Rico faces $2 billion in debt payments on Friday, creating an effective deadline for passing the legislation that the Obama administration has been determined to meet. Treasury Secretary Jack LewJacob (Jack) Joseph LewHogan urges Mnuchin to reconsider delay of Harriet Tubman bill Mnuchin says new Harriet Tubman bill delayed until 2028 Overnight Finance: US reaches deal with ZTE | Lawmakers look to block it | Trump blasts Macron, Trudeau ahead of G-7 | Mexico files WTO complaint MORE was on Capitol Hill on Tuesday to round up support for the legislation.

The bill faced opponents across the political spectrum.

Powerful creditors who worry their investments in Puerto Rico’s debt will be eroded have fought the bill for months.

An advertising campaign, believed to be backed by creditors, charged that the legislation was a taxpayer bailout of Puerto Rico, though no taxpayer funds would be provided through the legislation.

Civil society groups in Puerto Rico also opposed the legislation, arguing an oversight board created by the measure would supersede the will of the Puerto Rican people. They received loud support on the Senate floor from Sens. Bernie SandersBernie SandersGabbard moves to New Hampshire ahead of primary Sanders to join youth climate strikers in Iowa Saagar Enjeti unpacks why Kamala Harris's campaign didn't work MORE (I-Vt.) and Bob MenendezRobert (Bob) MenendezThe job no GOP senator wants: 'I'd rather have a root canal' Senate passes legislation supporting Hong Kong protesters Graham blocks resolution recognizing Armenian genocide after Erdoğan meeting MORE (D-N.J.).

Despite the opposition, party leaders backed the package and were able to cobble together enough support to surpass 60 votes, handing a victory to Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellTrump's legal team huddles with Senate Republicans Schumer briefs Democrats on impeachment trial 'mechanics' Trump legal team gears up for Senate impeachment trial in meeting with GOP senators MORE (R-Ky.) and Minority Leader Harry ReidHarry Mason ReidDoctors are dying by suicide every day and we are not talking about it Impeachment trial throws curveball into 2020 race Harry Reid: Early voting states Iowa, New Hampshire 'not representative of the country anymore' MORE (D-Nev.). 

The legislation’s advancement is also a significant victory for the Obama administration, which served as the lead negotiator for Democrats, hammering out a package with House Republicans over weeks of discussion.

Intense lobbying surrounded the bill for months on Capitol Hill, as a raft of investors in Puerto Rican debt descended on the Capitol to try to carve out the most advantageous package possible. Lawmakers were bombarded with pressure from all sides, as creditors jockeyed for optimal position in the final package, which would determine who gets paid how much from what is left of Puerto Rico’s revenue.

With the bill apparently set to become law, Congress will have taken steps to address a deepening economic, fiscal and humanitarian crisis on the island. Years of economic decline had led to a mass exodus of Puerto Ricans to the American mainland, driving down its revenues and eventually leaving it without enough government funds to pay off its debt.

The island’s status as a U.S. territory left officials there with no recourse, since a quirk in the bankruptcy code leaves territories without access to the same bankruptcy protections afforded to states and municipalities. In effect, the island needed Congress to pass a law, in an election year, to get out from under its crushing debt.

The island has had to slash public services in an effort to stay afloat, and the White House warned that even more severe steps, like the shuttering of hospitals, could come without congressional action.

But now, the bill freezes any legislation from creditors and allows the oversight board to step in and work toward an affordable debt restructuring package for the island.

Liberal lawmakers griped about side provisions that relax labor regulations on the island. Democrats also were peeved that Republicans brought the bill straight to the floor without the opportunity to try to amend it.

Some Senate conservatives, for their part, opposed the package on the grounds that it allows the island to rework existing contracts with creditors, or that the provisions trimming regulations to boost economic activity were insufficient.

The bill also faced headwinds from a bloc of Rust Belt lawmakers in both parties, who opposed the bill in an attempt to obtain a vote on an unrelated bill on coal miner pensions.

— Updated at 10:58 a.m.