Puerto Rico pushes Congress to rethink debt

By MARY CLARE JALONICK The Associated Press

Us CongressWashington • Puerto Rico’s governor pressured Congress on Thursday in a last-ditch effort to win debt relief for his territory before the end of the year, warning that the island is headed toward a “humanitarian crisis under the United States flag.”

Gov. Alejandro Garcia Padilla lobbied lawmakers to oppose a massive year-end spending bill that fails to include the debt restructuring that Puerto Rico is seeking. In an interview with The Associated Press, he said Congress must act soon and he was hoping negotiators would change the bill, a step Republican leadership has ruled out.

Garcia, who said last week that he would not run for re-election, said he decided to stay in town after he heard that some Democrats were planning to vote against the bill because it didn’t include the Puerto Rico provisions. He said he had meetings scheduled with some of the House’s most liberal members.

“This is the battleground,” Garcia said of Congress. “It’s not over until it’s over.”

Struggling Puerto Rico faces more than $900 million in bond payments in January, including a $357 million general obligation bond payment due Jan. 1. It would be the island’s first major default if the payment is not made. Puerto Rico’s Public Finance Corporation already missed a $58 million bond payment in August. Garcia said the island will not be able to make more upcoming debt payments because it has no more money.

The island is seeking access to Chapter 9 bankruptcy provisions to help solve the problem, and House Minority Leader Nancy Pelosi, D-Calif., and other Democrats aggressively pushed to get that language in the wide-ranging spending bill. But Republicans have so far objected, saying they first want to address the root causes of the crisis and see more data on the island’s finances.

Garcia blamed some of his creditors for lobbying against the provisions.

“Hedge funds prove that they were more persuasive than fairness for Puerto Rico,” Garcia said. “Wall Street won the first round.”

Garcia met last week with House Speaker Paul Ryan, R-Wis., who said on Wednesday that the House will work with Puerto Rico to come up with “a responsible solution” for the territory’s debt problems next year.

Ryan did not detail what he would support, but said he would like to see a congressional solution by the end of March.

Garcia said he thinks Ryan understands the urgency of the problem, but believes many lawmakers aren’t respecting the wartime sacrifices that his island has made for the mainland United States. And “that is a huge lack of respect,” he said.

Republican senators have introduced legislation to give the island tax relief and some financial oversight.

“While Puerto Rico’s leaders need to make some hard decisions to address the fiscal problems on the island, Congress should still consider a path forward for Puerto Rico that will help the island help itself,” said Iowa Sen. Charles Grassley, chairman of the Senate Judiciary Committee and one of the sponsors of that bill. Grassley has so far opposed the debt restructuring.

Garcia said that solution is not enough. If the island isn’t able to restructure its debt, officials have said they will have to start laying off police officers, firefighters, medical professionals and other public employees.

As Garcia lobbied lawmakers, White House Press Secretary Josh Earnest laid out several steps the Obama administration would like Congress to take on Puerto Rico, including restructuring, financial oversight and Medicaid reform. He noted the administration would not support a bailout, but “common-sense steps” to allow the island to recover.

Garcia sat in the House gallery Thursday morning as one of his closest congressional allies, Rep. Nydia Velázquez , D-N.Y., angrily asked her colleagues to reconsider the spending bill on the House floor. She said Congress is playing “Russian roulette” with the Puerto Rican people, who are American citizens.

“Five million Puerto Ricans who live on the mainland are watching,” she said. “This is a dark hour.”

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