Saving Puerto Rico with a compromise debt plan is the only hope

Keep the flags flying in Puerto Rico. (BLOOMBERG VIA GETTY IMAGES

Keep the flags flying in Puerto Rico. (BLOOMBERG VIA GETTY IMAGES

DAILY NEWS OPINION – Puerto Rico would lose much of its sovereignty under financial restructuring legislation passed out of the House Natural Resources Committee. Unfortunately, the bitter pill is unavoidable.

With the U.S. territory increasingly unable to pay its bills — and little more than a month away from defaulting on a $2 billion bond payment — the bipartisan bill would create a long-term process for restoring fiscal stability.

Washington must act because Puerto Rico was inexplicably denied the power to declare bankruptcy in the way that American cities, such as Detroit, have.

Backed by President Obama, the legislation creates a bankruptcy-like process for relieving Puerto Rico of obligations, with rules specifying that bondholders and a pension system with $46 billion in unfunded liabilities would be treated equally.

Another major provision would give a seven-member board much governing authority, including powers to force balanced budgets, sell off government assets, oversee negotiations with creditors and block any law passed by the Puerto Rican legislature deemed in violation of the fiscal settlement.

The board would be appointed by the House and Senate majorities (two members each), House and Senate minorities (one member each) and the President (one member.) Its clear overtones of colonialism gain legitimacy because of the island’s growing economic and human disaster.

Puerto Ricans have voted with their feet as this crisis has mounted: In the last five years, 220,000 have fled to the mainland as jobs have shriveled and a debt-strangled government has fallen down on providing basic services, including responding to an outbreak of the Zika virus.

The full House and Senate must act promptly after the Memorial Day recess.

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