(Senate Majority Leader Mitch McConnell, R-Ky. / Photo: AP)
With days before a critical deadline, a bill restructuring Puerto Rico’s debt is headed to the President’s desk for signature thanks to the leadership of Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.). Debate on the Republican-authored Puerto Rico’s Oversight, Management and Economic Stability Act (PROMESA) was fierce, but in the end cooler heads prevailed on both sides of the aisle in a rare act of bipartisanship in a deeply divided Congress. This crucial legislation will stave off a likely humanitarian crisis in an island reeling from gross financial mismanagement.
Much of the credit belongs to Rep. Sean Duffy (R-Wis.) and Rep. Rob Bishop (R-Utah), the Chair of House Committee on Natural Resources who shepherded passage of the bill in the contentious U.S. House of Representatives after incorporating a number of amendments from the minority party. Contrary to the thinking of some, PROMESA will not cost any taxpayer money (it’s not a bailout), but will instead position the U.S. territory to repay a $72 billion bond debt while steering it towards a path of eventual economic growth.
“Although tough decisions remain ahead for Puerto Rico’s leaders, PROMESA’s passage brings hope for the Island and its residents,” said Chairman Bishop shortly after the legislation secured the votes necessary for approval.
Still, it’s clear that this is just the start in the likely long road to financial solvency for the island of Puerto Rico, a sentiment shared by both leading Republican and Democratic members supportive of PROMESA. The LIBRE Institute, a non-profit organization committed to growing prosperity in the Hispanic community through less government dependence, released a study on the causes responsible for Puerto Rico’s financial calamity. Titled, Back to Work: Freeing Puerto Rico’s Labor Market from Stifling Federal Intervention, the authors of the study laid blame to a combination of “well intentioned” but “ill-conceived” public policies that encouraged lower worker productivity and anemic economic growth.
House Natural Resources Committee Chairman Rob Bishop, left, was one of the leaders who helped usher the PROMESA bill successfully through Congress. | Photo: AP
To right the ship, the authors of the study conclude that it will take more than what is included in the debt-restructuring PROMESA bill. Specifically, the island of Puerto Rico must resist public pressure to raise the minimum wage while simultaneously making it harder for Puerto Ricans to rely on generous welfare payments for income.
On a call with reporters, Jorge Lima, Vice President for Policy and Operations at the Libre Initiative, a free market advocacy group loosely aligned with the LIBRE Institute, described PROMESA as “one of many steps that are required to address the financial crisis in Puerto Rico.” Lima told Opportunity Lives that the Libre Initiative and the LIBRE Institute are working with like-minded organizations in Puerto Rico to advance many of the ideas that are necessary to truly unleash the island’s full economic potential.
But with a July 1 deadline to repay $2 billion debt obligation fast approaching, a number of Democrats voted with Republicans to clear the Senate’s sixty vote procedural hurdle to advance the legislation out of Congress for the President’s signature. Reflecting the inclusion of a number of conservative-backed elements, such as exempting the island of Puerto Rico from having to abide by the Department of Labor’s new overtime rule, a number of Democrats voted against the procedural vote, including progressive hero Sen. Elizabeth Warren (D-Mass.) and Democratic presidential candidate Sen. Bernie Sanders (I-Vt.).
Ultimately, it’s clear that the urgency taking place in the island, coupled with the Puerto Rico Governor Alejandro Garcia Padilla personally lobbying members on the fence to support the compromise legislation, was enough to win over the necessary votes. Failure to act by Congress was not an option, as McConnell reiterated prior to passage of the bill, “The U.S. territory of Puerto Rico is in crisis, it owes billions of dollars in debt, and it could be forced to leave residents without essential services like hospitals and public safety resources without prompt congressional action.”
If President Barack Obama signs PROMESA into law, it would represent a significant victory for Speaker Ryan and McConnell, who both expended political capital to get the bill passed the finish line. In a written statement shortly after final passage in the Senate, Speaker Ryan said: “Congress has fulfilled our constitutional obligation and I urge President Obama to sign PROMESA immediately.”
Israel Ortega is a Senior Writer for Opportunity Lives. You can follow him on Twitter:@IzzyOrtega.