PROMESA on hold indefinitely

by Apr 28, 2016Congress, Headlines0 comments

On April 13, a legislative hearing on a discussion draft of the “Puerto Rico Oversight, Management, and Economic Stability Act” was held by the House Committee on Natural Resources with chairman Rob Bishop, the representative of Utah’s 1st district. Other speakers in the hearing were Puerto Rico Resident Commissioner Pedro Pierluisi, Antonio Weiss, Anthony Williams, John Miller, Prof. Andrew Kent, Susheel Kirpalani, Prof. Simon Johnson, and Timothy Lee.

With objections coming from both parties, PROMESA is currently on hold. The House Natural Resources canceled a planned meeting to vote on the bill, delaying action until this week at the earliest, said Raul Grijalva, the representative of Arizona’s 3rd district. On the other hand, Nancy Pelosi, the House Minority Leader, was more negative on the date; “we were hoping for May 1,” the California Democrat said. “I don’t know if that’s still possible, but I think we have to target it to that time.”

At the moment, there are many challenges blocking the way for the upcoming bill, which Rob Bishop called “the constitutionally sound solution that will provide real, long-lasting reform to the commonwealth while respecting the rights of all parties and creditors. It is the island’s best shot to mitigate its financial collapse.”

The Democrats are not really fond of the land transfers proposed by the Republican-led Committee. If this Republican proposal takes place, it is foreshadowed by the Democrats that the minimum wage might drop down to $4.25 dollars an hour for about 5 years. The current minimum wage in Puerto Rico is $7.25 an hour. Furthermore, the Republicans are also not pleased with some of the provisions regarding the restructuring of Puerto Rico’s debt. Republican representatives believe that these provisions might push creditors to accept less money for their claims.
The bill also received some praise by Anthony Weiss, the counselor to the Secretary of the Treasury Department. Weiss has stated the following:

The alternative to this legislation […] will in fact become a bailout over time. And so has been stated by many Members of Congress in both parties, this legislation costs taxpayers nothing and in fact what it does is precludes the likelihood that over time taxpayers would have to step in as they always do when the safety and economic prosperity of Americans are at stake.

One of the private sector representatives, Mr. Kirpalani, seemed very fond of the bill.

I think that the House Natural Resources Committee has done an outstanding job of trying very hard to ensure that battle-tested principles that have been upheld under the U.S. Constitution are upheld under any kind of restructuring regime for Puerto Rico,”

Still, Mr. Kirpalani’s positive opinion on the bill does not fully reflect the opinions of other private groups. For example, Matthew Kandrach, the vice president of the 60 Plus Association, made the following statement:

The bill is a toxic combination of Nancy Pelosi’s legal stay and the dangerous, precedent-setting Super Chapter 9 proposal that congressional Republicans supposedly rejected last year.

With enough opposition coming from both the public and the private sector in the hearing, there has to be some changes done to the current draft or the future of this bill is not remarkably bright.

The House Committee had previously scheduled April 14 to mark up the bill, but with the decisions taken on the previous panel, the mark-up was postponed. As of today, there is no scheduled vote on the bill, but discussion are ongoing.