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The Daily 202: Puerto Rico bankruptcy puts 2016 candidates in tough spot

Team USA celebrates a 5-2 win over Japan in the finals of the Women’s World Cup last night. (AFP/Nicholas Kamm)

THE BIG IDEA:

Puerto Rico’s debt crisis may soon blow up into a significant 2016 issue. The island is poised to default on its crushing $72 billion debt. Its government wants to file for Chapter 9 municipal bankruptcy, following the path of cities like Detroit, but as a U.S. commonwealth it is barred from doing so. The island’s leaders are launching a campaign to get the law changed, using a mix of public pressure on 2016 candidates and a bipartisan lobbying blitz in D.C. But they face opposition from Wall Street, the Koch brothers’ political network and movement conservatives who think it smacks of a bailout.

Puertorriqueños recognize their increasing political clout, particularly in Florida, and they promise to put it to use. In an interview on Telemundo yesterday, Puerto Rico Gov. Alejandro García Padilla threatened negative consequences for politicians in either party who are “passive” about giving them the privilege to declare Chapter 9. “Those who want the support of Puerto Ricans must help Puerto Rico now, not later,” he said. “Puerto Ricans decide the elections in Florida. That’s very important. By deciding the election in Florida, we can decide [who is the next] president of the United States.”

Jeb Bush endorses the bankruptcy approach. “Puerto Rico should be given the same rights as the states,” the former Florida governor said during an April visit to San Juan. He reiterated that stance last week in South Carolina and also supports making Puerto Rico the 51st state.

Other Republican candidates face pressure from the donor class to oppose it. Wall Street leaders largely oppose Chapter 9 because bondholders tend to take a bath in municipal bankruptcies. The 60 Plus Association, a key node of the Koch Brothers political network, which reportedly plans to spend upwards of $1 billion on 2016, opposes Chapter 9 as a a federal handout. Their proposed solution is creating an outside control board that would manage Puerto Rico’s debts.

Senate Democratic leaders, led by Sen. Chuck Schumer (D-N.Y.), will try attaching a provision to upcoming bills that would tweak the bankruptcy statutes for Puerto Rico. A Senate vote would force all four Senate Republicans running for president to go on the record.

Watch for Rubio to avoid taking a position until the politics become clearer. The Florida senator might be in the toughest position of anyone. He wants to appeal to tea party conservatives while also touting himself as the Republican who is best positioned to make inroads with Latinos in a general election, especially in his home state. “Senator Rubio has been closely watching events in Puerto Rico and is concerned about the economic situation there,” spokeswoman Brooke Sammon emailed last night. “He’s in the process of reviewing the legislation to make sure it is the right approach to begin addressing Puerto Rico’s debt crisis without having any negative impact on American taxpayers.” Spokesmen for Rand Paul, Ted Cruz and Lindsey Graham did not respond to requests for comment.

In the Democratic contest, Hillary Clinton has also avoided taking a clear position. Martin O’Malley aggressively embraced the bankruptcy option last Tuesday in a play for Hispanics, and the former Maryland governor earned tons of free media in the Spanish-language press for his stance. Clinton tweeted last week that, “Puerto Rico’s debt crisis is not theirs alone. For PR’s economy to grow & their people to thrive, they need real tools & real support.” Asked if that means she supports the right to Chapter 9, a spokesman for the former secretary of State declined to comment.

Clinton is trying to raise as much as she can from Wall Street executives who already eye her skeptically because of her leftward lurch to win the nomination. But, in 2008, she beat Barack Obama in the island’s June 1 primary after both traveled there for events. The Podesta Group, run by Democratic lobbyist Tony Podesta, has earned at least $1.15 million in the past two years lobbying on the Puerto Rican government’s behalf. Tony’s brother, John, is chairman of the Clinton campaign.

WHILE YOU WERE SLEEPING:

— Greek Finance Minister Yanis Varoufakis announced his resignation after voters overwhelmingly rejected the terms of a European bailout in a national referendum. Writing on his blog, Varoufakis implied that he was not welcome at the negotiating table by European authorities: “Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.” He added: “And I shall wear the creditors’ loathing with pride.”

More than 61 percent of voters said “no” to an expired-bailout by European nations and the IMF in a Sunday referendum. “The outcome spurred popular celebrations into the night across downtown Athens and other Greek cities, but threatens to deepen the rift between Greece and the rest of Europe and push the country closer to bankruptcy and an exit from the euro,” the Wall Street Journal reports. The Eurogroup will meet Tuesday to hear new Greek proposals. The Post’s Griff White and Michael Birnbaum are on the ground.

— Bernie Sanders celebrated the vote: “I applaud the people of Greece for saying ‘no’ to more austerity for the the poor, the children, the sick and the elderly,” he said in a statement. “In a world of massive wealth and income inequality Europe must support Greece’s efforts to build an economy which creates more jobs and income, not more unemployment and suffering.”

GET SMART FAST:

  1. Secretary of State John Kerry said negotiations with Iran “can go either way” still. “We are not yet where we need to be on several of the most difficult issues,” he told reporters in Vienna yesterday after a session with Iranian Foreign Minister Mohammad Javad Zarif. Tuesday is the new deadline.
  2. Pope Francis arrived in Ecuador yesterday to kick off his seven-day tour of South America. The trip, which will focus on poverty and inequality, will also take the pontiff to Bolivia and Paraguay, but not his home country of Argentina.
  3. At least 47 were wounded and nine were killed during a flurry of shootings in Chicago over the holiday weekend.
  4. Seventh-day Adventists will vote this week on whether women can become clergy.
  5. The federal government has begun vetting applicants for security clearances on paper while the database for background investigations remains offline for at least several weeks because of vulnerabilities exposed by the Chinese OPM hack.
  6. A 22-year-old man in Maine died instantly when he put a firework on his head and set it off on July Fourth. Yes, he’d been drinking.

POWER PLAYERS IN THE NEWS:

  1. Ted Cruz raised about $10 million in the second quarter. That means the Texas senator has raised $14.2 million directly since announcing his candidacy. His super PACs previously disclosed that they’ve raised an additional $37 million.
  2. Chris Christie said “the liberal media” should apologize to him for its coverage of Bridgegate during an interview with Fox News Sunday. The New Jersey governor is going on “Morning  Joe” today for the first time since the scandal broke.
  3. John McCain, visiting Kabul over the weekend, warned against a calendar-based pullout of U.S. troops as outlined by the Obama administration. The Arizona senator held a press conference after meeting with Afghanistan’s president to express concerns about the rise of the Taliban.
  4. Jeb Bush, whose wife is from Mexico, said he is personally offended by Donald Trump‘s comments about Mexican immigrants while campaigning in New Hampshire.
  5. George Takei, the openly gay “Star Trek” star, apologized on Facebook for calling Clarence Thomas “a clown in blackface” because of his dissent in the Supreme Court’s gay marriage decision.

WAPO HIGHLIGHTS:

“Scott Walker’s wife Tonette, toughened by life, adds steel to candidate’s spine,” by Mary Jordan in Wauwatosa, Wis.:

  • Walker’s sons were “disappointed” with his comments after the Supreme Court’s gay marriage decision: “In their house, Tonette Walker heard immediately about her husband’s response from the couple’s two sons, Matt and Alex, who are taking time off from college to help their father’s campaign. She told them to talk directly to him. ‘That was a hard one,’ Tonette said, pausing and choosing her words carefully. ‘Our sons were disappointed. . . . I was torn. I have children who are very passionate [in favor of same-sex marriage], and Scott was on his side very passionate … It’s hard for me because I have a cousin who I love dearly — she is like a sister to me — who is married to a woman, her partner of 18 years,” she said. She said her son Alex was her cousin’s best man at their wedding last year.
  • Walker picked up his wife at a karaoke night! “Tonette was married at 23 and widowed at 30, supporting her sick husband at the end. Then six years later, in April 1992, she and a friend went to karaoke night at Saz’s, a Milwaukee bar known for its barbecue. There, as she chuckled at the amateur singers, she spotted a young man looking at her, and they kept locking eyes. Scott Walker, then only 24, scribbled a note on a napkin and handed it to Tonette as he walked out, without saying a word. ‘Forgive me for being rude. I have to go to get up early for work,’ he wrote. ‘If you want to have dinner, please call,’ he said, as the two recounted their first meeting laughing as they quibbled over how many days it took her to phone him. (She says a week; he says two days.)”
  • At 59, Tonette Walker is 12 years older than her husband: Her parents were concerned about how young he was when they met. “‘But he had an answer for everything — that’s Scott Walker,’ she said … She said she looks back now and thinks that if her son Matt at 24 brought home a 36-year-old woman, ‘I would say, ‘Really, Matthew?’’ But just months after they met, when the couple went back to Saz’s, Walker pushed another napkin-note toward her. This one was a marriage proposal, and she said yes.”

“For Clintons, brotherly love includes financial help and a 3-bedroom house,” by Rosalind S. Helderman and Alice Crites: “In 2009, Bill Clinton bought a three-bedroom house about a mile from the beach in suburban Los Angeles — for use by his younger half-brother Roger, the aspiring actor whose legal troubles had long been a source of distress for the family. A year earlier, Hillary Rodham Clinton’s cash-strapped brother, Anthony Rodham, testified that the former president had recently lent him $160,000 and was paying school tuition and a monthly allowance for his teenage son. ‘They’ve given me money all the time,’ Rodham said of his famous sister and brother-in-law during a 2012 court proceeding.”

“In a February 2008 deposition that has not previously been reported publicly, Rodham suggested he was trying to use his sister’s presidential campaign that year to make money for himself. Under oath, he testified that he was advising the California-based Huntington Career College on ‘how they should set up a fundraiser for my sister.’ If the campaign event was held, Rodham said, he would get five percent of the take. Rodham did not say whether the fundraiser took place, and it was not clear from public records whether he made any money from the arrangement. The college’s phone number has been disconnected, and state records show that its California business registration has been suspended.”

SOCIAL MEDIA SPEED READ:

— ZIGNAL NUGGET: Some people on Twitter would rather have an avocado as president than Donald Trump. “Who would you rather have in office?” an account called @avocadofact asked last Wednesday, over a picture of Trump and an avocado. Followers were asked to retweet the tweet if they’d prefer an avocado and favorite the tweet if they’d rather have Trump. It was probably the most popular political tweet of the holiday weekend. As of this morning, 64,240 people retweeted the item and 6,291 favorited it.

–WHAT EVERYONE IS TALKING ABOUT:

Pictures of the day, Fourth of July edition:

Tweets of the day:

Joe Biden, who was in Vancouver last night for the World Cup, recalled meeting Pelé in 2010:

Instagrams of the day:

Hillary Clinton’s camp wrangled reporters (literally):

Mitt Romney hosted Marco Rubio and Chris Christie in New Hampshire:

Former President George W. Bush hosted the Dalai Lama, who is celebrating his 80th birthday in the U.S. this week:

GOOD READS FROM ELSEWHERE:

— New York Times, “I.R.S. Expected to Stand Aside as Nonprofits Increase Role in 2016 Race,” by Eric Lichtblau: “While the nonprofit groups are supposed to limit their political activity, the I.R.S. appears powerless to stop the onslaught of money coursing through them. The tax agency remains deeply wounded by the scandal that began two years ago over its scrutiny of nonprofits tied to the Tea Party and other political causes, both conservative and liberal … ‘It’s anything goes for the next couple of years,’ said Paul Streckfus, a former nonprofit specialist at the I.R.S. who now edits a newsletter on tax-exempt groups. ‘The whole system has really collapsed.’ … I.R.S. officials concede that the rules are vague and difficult to enforce. Audits for excessive campaign work are extremely rare, even for groups spending huge chunks of their budgets to support candidates. Complaints about abuses can languish for years, records show.”

— Politico, “Clinton puts tight grip on DNC wallet,” by Edward-Isaac Dovere: “Hillary Clinton’s staff and the Democratic National Committee leadership have been struggling for months to finalize a joint fundraising agreement over a basic problem: The Brooklyn-based campaign doesn’t trust the national party structure with the money…The Clinton campaign’s chief administrative officer, Charlie Baker, is serving as the point man to start laying the groundwork for what Clinton aides expect will be an eventual takeover of the national party structure, according to sources familiar with both DNC and Clinton activity. While DNC staffers are officially neutral, most see her as the eventual nominee, and several staffers describe a ‘first among equals’ approach to her when dealing with the primary field.”

— San Jose Mercury News, “San Francisco slaying suspect was deported five times,” by Katie Nelson: “Five times, the man accused of killing former Pleasanton resident Kate Steinle was deported to Mexico. Five times he returned. But the efforts of federal immigration officials to detain Francisco Sanchez for a sixth time failed when they turned him over to San Francisco officials, who released him in mid-April. Ten weeks later, Steinle was dead on Pier 14 and Sanchez, 45, a habitual felon, had been arrested for the shooting. Sheriff’s officials let Sanchez go after drug charges against him were dismissed. San Francisco, a ‘sanctuary city,’ refuses to enforce federal immigration holds. And as news of his circumstances broke, that pro-immigrant policy — shared by many other cities — became embroiled in controversy once again.”

The accused killer, who benefited from San Francisco’s status as a “sanctuary city”:

The victim’s parents:

BUZZING AT THE CAPITOL:

— Congress returns from July Fourth recess on Tuesday.

— National Journal, “Must-pass highway bill dominates jammed July,” by Sarah Mimms: “The only true deadline this session is July 31, when the nation’s Highway Trust Fund—which gives federal funding to states to build and maintain roads and other infrastructure projects—runs dry. With just three weeks to find a solution, neither chamber seems to have made much progress. Many in the Senate are pushing for a multi-year solution, with bipartisan legislation out of the Environment and Public Works Committee calling for a six-year extension, but the Senate’s Finance Committee has yet to announce how it would be paid for. The House, meanwhile, appears to be moving toward another short-term patch, the third in the last year.”

— Associated Press, “Congress facing busy agenda, funding deadline,” by Erica Werner: “Legislative maneuvering over the highway bill may also create an opening to renew the disputed federal Export-Import Bank … Depending on the progress of the Obama administration’s nuclear negotiations with Iran, lawmakers could face debate on that issue, too. Leading Republicans have made clear that they are prepared to reject any deal the administration comes up with.”

— The Hill, “Four sticking points to a GOP defense deal,” by Kristina Wong: “House and Senate defense committee leaders are set to face off in closed door talks in the coming days over a Pentagon policy bill that could have broad implications for the country. Sen. John McCain (R-Ariz.) and Rep. Mac Thornberry (R-Texas), the two Armed Services Committee chairmen, will lead the sides in hashing out major differences between their bills in hopes of getting a final measure to the president’s desk by mid-July.”

–Politico, “GOP blocks dozens of Obama court picks,” by Burgess Everett and Seung-Min Kim: “The GOP-controlled Senate is on track this year to confirm the fewest judges since 1969, a dramatic escalation of the long-running partisan feud over the ideological makeup of federal courts…Republicans appear willing to absorb criticism that they’re interfering with the prerogative of a president to pick his nominees in the hopes that the GOP can get its own judges installed in 2017, with one of their own in the White House. In the meantime, federal courts could be left with dozens of unfilled vacancies. More than two dozen federal courts have declared “judicial emergencies” because of excessive caseloads caused by vacancies.

HOT ON THE LEFT

What Ted Cruz admires most about President Obama. Via the Huffington Post: “I admire that he’s a true believer. There are some people in the grassroots who ascribe bad motives to him, and I will often dispute that. I think he believes in all of his heart in his principles. I think he fights for them, relentlessly, and if I were a leftist, I would love Barack Obama because he has advanced the left-wing progressive agenda more than any president in history.”

HOT ON THE RIGHT

Putin congratulates Obama on Independence Day. From CNN: “Russian President Vladimir Putin congratulated President Barack Obama on Independence Day and expressed confidence that Russia and the United States can ‘find solutions’ to international issues, the Kremlin said Saturday. In the message, Putin noted that while there are differences between Russia and the United States, ‘Russian-American relations remain the most important factor of international stability and security.’”

DAYBOOK:

— At the White House: President Obama will receive an update on ISIL and deliver a statement to the press. Press Secretary Josh Earnest will brief the media at 12:30 p.m.

— What’s happening today on the campaign trail: Ben Carson will celebrate his 40th wedding anniversary with a party in New Hampshire. Mike Huckabee is in South Carolina, and Bobby Jindal is in New Hampshire.

— On the Hill: The House and Senate are not in session.

QUOTE OF THE DAY:  “Do I agree with him all the time? No. But most of the time things work out a lot better than I think they will.” – Tonette Walker, speaking about her husband, during an extensive interview with The Post

NEWS YOU CAN USE IF YOU LIVE IN D.C.:

— It will rain off and on all day. “For the first half of this week, the weather has a hard time making up its mind,” per the Capital Weather Gang. “Today is wet, Tuesday is mostly dry. Wednesday and Thursday repeat that wet-dry sequence.  But by Friday into the weekend, the weather pattern settles into a summery stride, each day bringing heat, humidity and a small chance of late day storms.”

— The Nationals beat the Giants 3-1 last night to sweep the three-game series and avenge last year’s playoff loss. In bad news, the team put Stephen Strasburg on the 15-day disabled list yesterday afternoon with a strained left oblique, the right-hander’s second disabled list stint in two months.

VIDEO OF THE DAY:

Jeb Bush does rapid-fire Q&A to humanize himself. He prefers Katy Perry’s “Firework” over Miley Cyrus’ “Party in the USA,” Bud Light over Budweiser, mustard over ketchup and top-siders over flip-flops.

As a bonus, in case you missed last night’s game, here are highlights from the U.S. win in the World Cup:

(Via FIFA TV)

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