US senator dismisses "not satisfactory" Puerto Rico debt bill
Apr 20, 2016 03:05 AM EDT
On Tuesday, a top Republican senator dismissed as "not satisfactory" a draft legislation targeted at addressing Puerto Rico's fiscal crisis prior to an impending debt default on May 1.
Orrin Hatch of Utah, who oversees the Senate Finance Committee, said the draft legislation by the House Natural Committee is not going to work and will not be able to pass in the Senate. Speaker Paul Ryan and other Republican officials were already struggling to pass the legislation to help Puerto Rico deal with its massive $70 billion debt.
According to The Wall Street Journal, Puerto Rico, a US territory, has been in recession for a decade and the island claims that its economy will soon deteriorate further since it can no longer afford to pay its billion debt. The legislation in Congress would create a federal board to provide fiscal oversight, create a mechanism for Puerto Rico to restructure its debts, and provide legal stay against lawsuits from creditors.
Since the island is not a state, it cannot file a normal bankruptcy court protection afforded to troubled municipalities in the rest of the US; and since it is not a country, it cannot also ask for monetary assistance from the International Monetary Fund.
Republicans have been airing vocal concerns about Puerto Rico's crisis and leadership centers behind a key piece of the bill. The legislation was set to move forward and was then momentarily ceased as members huddled to figure out the next move, reports The Hill.
Josh Earnest, White House's Secretary, casts skepticism on some provisions of the legislation. He said that the administration is against a measure that would lower minimum wage in Puerto Rico for younger laborers. Meanwhile, Chairman Rob Bishop of the House Natural Resources Committee, expressed confidence that the bill will gain momentum, reports Reuters.
The internal division features the complexity of the task facing legislators to keep the island's economy intact, while protecting the competing interests of many bondholders owed money by Puerto Rico.