The House is poised this week to finally begin considering legislation that would give Puerto Rico new tools to deal with its $72 billion public debt, and after weeks when it seemed as though conservative opposition might tank any rescue bill, it is liberal critics who are now making their voices heard.
Foremost among them is Sen. Bernie Sanders of Vermont, whose campaign for the Democratic presidential nomination has taken aim at financiers such as those who now hold much of the debt issued by the U.S. territory. Sanders criticized the latest version of the rescue bill in a statement Friday, saying the federal oversight board created under the legislation would undercut the elected government of Puerto Rico and could allow bondholders to remain whole as islanders bear the brunt of fiscal austerity.
“The billionaire hedge fund managers on Wall Street cannot get a 100 percent return on their bonds while workers, senior citizens and children are punished,” said Sanders, who campaigned in Puerto Rico last week. “Wall Street vulture capitalists must not be allowed to get it all.”
Sanders followed up Monday with a letter to his Senate colleagues framing the bill in stark terms: “We have an important choice to make: do we stand with the working people of Puerto Rico or do we stand with Wall Street and the Tea Party? The choice could not be clearer.”
The House rescue bill — known as the Puerto Rico Oversight, Management, and Economic Stability Act, or PROMESA — sets out a bargain for the troubled territorial government: In return for access to an orderly debt restructuring process akin to bankruptcy, a federally appointed oversight board would be granted broad powers to get the island’s fiscal house in order. Those powers include modifying budgets, forcing the sale of territorial assets and even firing government employees.
With the approach of a July 1 deadline, when roughly $2 billion in bond payments come due, key parties negotiating on the island’s behalf have concluded that the latest version of PROMESA represents the best deal that can be struck with congressional Republican leaders, who are facing pressure from their conservative wing not to agree to any process that could result in a court-ordered haircut for creditors and establish a precedent for other potential future debt crises.
Among those who have expressed measured support for the new bill are Treasury Secretary Jack Lew, House Minority Leader Nancy Pelosi (D-Calif.) and Rep. Raúl M. Grijalva (D-Ariz.), the ranking Democrat on the House Natural Resources Committee and one of only a handful of Sanders supporters in Congress. Also in favor is Sanders’s rival for the Democratic presidential nomination, Hillary Clinton, who last week cited “serious concerns about several provisions in this bill” but said that “we must move forward with this legislation.”
“Otherwise, without any means of addressing this crisis, too many Puerto Ricans will continue to suffer,” Clinton continued. “However, as this bill moves forward, I will work to ensure that concerns about the oversight board are addressed and any such entity includes members that will act in the best interest of Puerto Ricans — protecting their health, their pensions, and their well-being.”
Meanwhile, a coalition of powerful labor groups, including the AFL-CIO, voiced fierce opposition to the new bill, objecting to provisions that could allow a lowering of the minimum wage and a suspension of overtime regulations on the island, as well as the fact that there are no explicit protections for the territorial government’s underfunded pensions — meaning retirees could very well have to take a haircut alongside bondholders.
The bill, the labor groups wrote Friday, “provides no economic stimulus, and in fact takes money out of the economy by reducing the minimum wage and overtime protections. Any restructuring package must also protect the accrued pension benefits of Puerto Rican workers and retirees, retain worker protections that apply to all working people in the U.S. including minimum wage and overtime protections, and preserve the democratic rights of the people of Puerto Rico.”
Besides the AFL-CIO, the letter was signed by the American Federation of State County and Municipal Employees, the International Association of Machinists and Aerospace Workers, the Service Employees International Union, the United Auto Workers, the United Food and Commercial Workers and the United Steelworkers.
Rep. Rob Bishop (R-Utah), who is the House Natural Resources Committee chairman and largely crafted the bill, has said repeatedly in recent weeks he is seeking a broadly bipartisan vote in favor of the bill, and as conservative objections have mounted, negotiators have made concessions with an eye toward keeping Democrats united behind the legislation. A controversial provision to transfer national parkland on the island of Vieques, for instance, was jettisoned from the most recent version of the bill.
But the objections from Sanders and the labor groups indicate they will seek additional concessions as the bill proceeds. Sanders, for instance, seized on the makeup of the seven-member oversight board. All seven members are to be appointed by President Obama or his successors, but they are to be chosen from lists drawn up by congressional leaders. Under the current scenario, four of the seven members would be candidates screened by House Speaker Paul D. Ryan (R-Wis.) or Senate Majority Leader Mitch McConnell (R-Ky.).
Sanders criticized the bill for allowing GOP leaders to “to determine the fate of Puerto Rico by handpicking a majority of the control board’s members, while the people of Puerto Rico would be in charge of choosing none. That may make sense to groups representing Wall Street, but it makes absolutely no sense to me.”