WHEN HOUSE Speaker Paul D. Ryan (R-Wis.) took himself out of consideration for the Republican presidential nomination Tuesday, he explained that “we have too much work in the House,” which nonstop political speculation could only hinder. Here’s hoping Mr. Ryan’s determination to focus on legislating helps him and his colleagues keep one of their key promises for 2016: passing a financial repair bill for debt-plagued Puerto Rico.
The bad news about the island’s finances is, by now, not really news. Thanks to years of sluggish economic growth and poor governance, Puerto Rico and its various corporations and political subdivisions owe more than $70 billion to a dizzyingly complex array of creditors, with no plausible way to pay. Yet Puerto Rico must scrape up $422 million for a debt payment due on May 1, followed by $2 billion in July. What was once a serious but chronic condition is rapidly turning acute, stimulating migration to the United States and leaving the island’s dwindling populace exposed to a breakdown in public services similar to that experienced by Detroit and other bankrupt jurisdictions.
The good news is that Mr. Ryan and his committee chairmen, working with the Obama administration, are closer than ever to producing a bill — certainly closer than those familiar with the usual congressional dysfunction might have expected. A draft measure proposes a mechanism by which the island could restructure its obligations in cooperation with creditors and, crucially, with diminished opportunities for a minority of “holdouts” to block agreements satisfactory to most. It would establish a financial control board similar to the one that helped bring the District back from financial near-death in the 1990s. The proposed design of the board includes a number of provisions that respect and protect the legitimate prerogatives of the island’s legislature and governor, while ensuring that they would not be able to prevent necessary fiscal reforms imposed by the board. Importantly, the bill would present Puerto Rico with a tough but realistic goal — four straight years of balanced budgets — which, once achieved, would release it from board control.
The Obama administration broadly supports the framework; in the interest of a compromise, the administration has dropped its call for extra Medicaid funding and a new earned-income tax credit, which Republicans saw as too close to a taxpayer bailout, even if both measures probably would have helped jump-start the island’s economy. In fact, there’s no new federal cash in the draft proposal. Even so, conservative GOP backbenchers are objecting on the grounds that the bankruptcy-like restructuring plan would set a precedent U.S. states might ultimately cite to ask Congress for help wiggling out of their obligations. Actually, there’s little danger of that, since the proposed rules for Puerto Rico would be enacted pursuant to Congress’s special constitutional powers over the federal territories, not federal bankruptcy law, which would have to be applied uniformly to all states.
In short, there’s a chance for major bipartisan legislation on a big issue — and if Mr. Ryan can rein in his caucus, it might just happen.