WASHINGTON — Senate Majority Leader Mitch McConnell late Monday filed for cloture on the Puerto Rico rescue bill currently waiting for Senate consideration, setting up a procedural vote for as soon as Wednesday morning.
The procedural vote on cloture will need 60 votes to pass and would curtail extensive debate on the bill.
"This legislation is broadly expected to attract the 50 votes needed for passage, so in our view, the vote on cloture is more important than the vote on the actual measure since it will require more votes to advance the legislation across the finish line," said Daniel Hanson, an analyst with Height Securities, in commentary released Tuesday.
Pressure has been mounting on the Senate to consider and pass the legislation before July 1, when Puerto Rico has an approximately $2 billion debt on which the commonwealth's governor has said it will default. Roughly $800 million of the payment will be on constitutionally backed general obligation debt. A default would lead to more creditor lawsuits that in turn could lead to court orders forcing Puerto Rico's government to pay its creditors before essential services like health and education.
For the Senate to meet the July 1 deadline, it will have to pass the bill without any amendments. If the bill is amended, it would have to go back to the House for consideration and the House does not come back from recess until July 5.
The bill, called PROMESA, passed the House 292 to 127 on June 9. It would create a seven-member oversight board that would have the power to require balanced budgets and fiscal plans, as well as to file debt restructuring petitions on behalf of the commonwealth and its entities. There is also a provision that would put a moratorium on creditor lawsuits filed between December of last year and the date the bill is enacted.
Treasury Secretary Jack Lew and others, including Puerto Rico officials, have said the moratorium on litigation is necessary before July 1 to protect the commonwealth from the possibility of forced creditor payments.
"Even a retroactive stay on litigation passed by Congress a few days later would not reverse such a court order," Lew wrote in a letter sent to Senate leaders on Monday. "Creditors are hoping to gain the protection of legal judgments as quickly as possible, and this could impair Puerto Rico's chances of getting on a path to stability and eventual growth."
Despite the pressure to pass the bill quickly, some Democratic senators have indicated they would like to amend the bill. Sen. Bob Menendez, D-N.J., has been a vocal opponent of the legislation in its current form and has said that he would like to see changes that, among other things, allow the Puerto Rican government more say as to who sits on the oversight board.
Senate Minority Leader Harry Reid, D-Nev., said last week that some of his Democratic colleagues have serious concerns about the bill.
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