House May Not Vote on Puerto Rico Bill 'Til July

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WASHINGTON – A vote on the Puerto Rico bill may be stalled until mid-July as many, including unions and other groups, press for changes to address concerns over debt restructuring and oversight board provisions as well as to protect the island's pensioners.

Resident commissioner Pedro Pierluisi, Puerto Rico's nonvoting member in Congress, said on Tuesday that a solution may not be passed until mid-July, according to the news outlet Metro Puerto Rico.

Also on Tuesday, Heather Slavkin Corzo, director of the office of investment for the AFL-CIO, said it is time for Congress to stop stalling and "do its job" to pass a bill that protects the interests of people in Puerto Rico.

She and representatives of other groups made their requests on a conference call with reporters on Tuesday.

Legislators, Treasury Department officials, interest groups, and media personalities have been increasingly focused on the bill since the House Committee on Natural Resources cancelled a vote on it that had been scheduled for April 14 because it did not have enough votes for approval. The cancellation indefinitely delayed relief for the commonwealth, which is required to make $2.4 billion of bond payments by July 1. The committee is working on revisions to draw wider support.

The current House bill seeks to balance competing interests by creating a seven-member, presidentially-appointed oversight board for Puerto Rico that would have the power to require balanced budgets, address pension liabilities, and file debt restructuring petitions on behalf of the commonwealth and its entities in a district court as a last resort if voluntary negotiations do not succeed.

But members on both sides of the aisle still have concerns with sections of the lengthy bill. Conservative Republicans, several of whom sit on the committee, have promised not to vote for the bill, claiming its debt restructuring provisions are too close to bankruptcy and would set a dangerous precedent for financially troubled states. Democrats are still concerned about several aspects of the power of the board and whether the debt restructuring process would work for the commonwealth, which is struggling with $70 billion and $46 billion in unfunded pension liabilities.

Bailey Childers, executive director for the National Public Pension Coalition, criticized the bill's treatment of pensions, saying its reliance on Puerto Rico's existing debt hierarchy, which favors constitutionally backed general obligation bonds, means there is a "lack of protection for some of the island's most vulnerable residents." She said there must be a reversal of the bill's ranking of accrued pension benefits as inferior to the status of other creditors.

"One thing that is abundantly clear is that teachers, public safety officers, and other retirees did not cause the crisis in Puerto Rico," Childers said. "They should not be forced to suffer for Puerto Rico's mistakes."

Eric LeCompte, executive director of religious organization alliance Jubilee USA Network, said legislators need to consider several other, fundamental portions of the bill before moving forward.

The most important thing is making sure the commonwealth and its entities have the "right tools" for debt restructuring, something Democrats, led by Pierluisi, are depending on Treasury officials to confirm. Antonio Weiss, counselor to Treasury Secretary Jack Lew, has yet to give his blessing, saying at the last hearing on the bill on April 13 that certain debt restructuring provisions, like the bill's collective action clause, are still problematic.

Under the collective action clause, the majority of creditors in number and two thirds of creditors in dollar amount of a particular class voting can bind hold-outs to a restructuring plan. Weiss said the clause makes the restructuring process too stringent and thus unworkable.

LeCompte also said the bill's proposed temporary moratorium on litigation over Puerto Rico's debt would not give the territory enough time to make headway under the debt restructuring process. The moratorium, which was meant to give Puerto Rico breathing room, would apply retroactively to actions begun on or before Dec. 18, 2015 and would continue until the earlier of Feb. 15, 2017, or the date that the first restructuring case is filed.

Additionally, LeCompte challenged current provisions that require a supermajority of the board to approve restructuring before a filing can be made and also suggested that the Puerto Rico government as well as the U.S. president be able to appoint members of the oversight board. A provision that would lower the minimum wage to $4.25 for workers up to 25 years old should also be eliminated, he said.

These proposed changes and other suggested alterations have been made to the committee in the past few weeks.

There is pressure on House Speaker Paul Ryan, who has been a prominent facilitator of the development of the bill, to lead representatives to pass it. He has said the bill is undergoing continued tweaking as he and Committee on Natural Resources chair Rob Bishop, R-Utah, face opposition from some committee members like Reps. John Fleming, R-LA, and Tom McClintock, R-CA. Both Fleming and McClintock both made clear during the last hearing they would not vote for the bill. Fleming chastised leadership in a press release on April 13, before the scheduled vote was canceled, saying they asked committee members who opposed the bill to "remain silent, refrain from asking for a recorded vote, or leave the room when the time came for a vote" regarding the bill.

Ryan has the challenge of trying to work with Fleming, McClintock, and other conservative members of his party to try to forge a solution. If that is not possible, he and Bishop may need to rely on giving several concessions to Democrats to carry the bill through the House, which would be a blow to Ryan's image as speaker.

The bill is also facing opposition in the Senate where Senate Finance Committee chair Orrin Hatch, R-Utah, told reporters last week that the current legislation "is not satisfactory and it's not going to work, and we're not going to be able to pass it."

The complexity and generally accepted seriousness of Puerto Rico's situation as defaults loom has also led several media personalities to weigh in on the issue. Lin-Manuel Miranda, creator of the popular "Hamilton" musical and a child of Puerto Rican parents, has made several pleas to Congress and Ryan particularly to pass a bill.

Miranda most recently made an appearance on "Last Week Tonight with John Oliver" to perform a rap about the crisis, during which he promised he would sing "Hamilton" at Ryan's house or give him free tickets to the show in exchange for a Puerto Rico solution. The rap came at the end of a lengthy segment in which Oliver explained the crisis and the stalled bill.

Ryan told "CBS This Morning" on Tuesday that he was surprised when he saw Miranda rapping about him and confirmed Congress will allow Puerto Rico to restructure its debt.

 

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