A PROMESA kept, but changed
PROMESA, the bill meant to establish an oversight board to assist the Government of Puerto Rico, including its instrumentalities, in managing its public finances has now been approved in the United States House Committee on Natural Resources, following last few weeks’ failure from Republicans to meet their deadline for action.
The bill so far has three key components:
- A 7 member oversight board appointed by the President that would be tasked with coming up with a financial plan for the island
- An 18-month respite from any lawsuits from creditors
- Allowing the oversight board to restructure debt
Much of the opposition to this bill and to the greater problem facing Puerto Rico comes from conservative groups who have been sponsoring television advertisements depicting PROMESA as a bailout. Calling what the bill contains as a bailout is inaccurate, since it is a way to restructure debt and get the islands back on track by delaying or reducing payments to creditors. There are also many lobbyists who do not want any reduction in the payments that they are enjoying as the territory struggles.
Donald Trump, now the presumptive Republican Nominee, weighed in on the situation and has said that he would not bail out Puerto Rico, and that they have “far far too much debt”.
Puerto Rico needs this bill now more than ever as it faces a very serious Zika virus outbreak and without appropriate funds, medical facilities like Centro Medico, the primary medical center for the Caribbean region, face a shortage of supplies. Dr. Juan Nazario, executive director of the hospital says that “they are hanging by a thread” a thread that grows thinner each day Congress decides not to act.
Environmentalists were scared to see the bill relinquish federal control of a wildlife refuge on the island of Vieques before that provision was removed. This provision would have given up a 3,100 acre chunk of the refuge, which is home to 16 endangered species. They argued Puerto Rico right now would be cash-strapped and would be unable to properly manage the refuge.
After Chairman of the House Committee on Natural Resources, Rob Bishop predicted that an update on the bill would be received on Wednesday May 11th, Representative Raul Grijalva announced that this would not be the case and he added that “We are making progress, but we are not there yet. The situation in Puerto Rico is dire, but a bill that doesn’t solve the problem, or doesn’t pass won’t help anyone.” Again Puerto Rico was forced to wait as it approaches its massive $2 billion dollar default on July 1st. The bill was delayed before back in mid-April, and it was minutes before the panel was going to take up the bill as well. Democratic majority leader Nancy Pelosi believed that there will be some noticeable movement on PROMESA in just days, claiming that the reason that nothing could be shown on Wednesday is because the two sides could not agree to the bill. Rob Bishop was a bit more ambitious and claimed that there would be an update the following day with a markup still on track the following week.
The bill was finally replaced shortly before midnight on Wednesday, with a draft that puts fiscal affairs under federal control and establishes a legal frame for reducing the $72 billion of debt. This was a major victory for house speaker Paul Ryan, who promoted the bill and reached a bipartisan compromise. As expected, Rob Bishop held the markup for the bill in committee giving the chamber time to take up the bill before the Memorial Day recess, although that is unlikely to happen. The bill continues to be controversial, Treasury Secretary Jack Lew is disappointed that the bill does not include any long term economic growth proposals. Bernie Sanders on the other hand has called for a complete rejection of the bill because it doesn’t allow for a fair appointment of the oversight board. Sanders believes that the deal is undemocratic because it doesn’t take into consideration the decisions of the Puerto Rican people.
The new bill that was marked up at 5:00 PM on Tuesday May 24th is missing some key components such as pension protection, funding Medicaid and Zika response. HR 5278 is looking ahead towards real economic development on the island through title V and other pro-growth initiatives. Jack Lew has called the new legislation comprehensive and workable and said that “these critical tools paired with independent fiscal oversight will help put an end to Puerto Rico’s debt crisis, which is already showing signs of becoming a humanitarian crisis.”
On Wednesday May 25th PROMESA moved forward in a bipartisan 29-10 vote, which sent the legislation to the House floor where another vote would have to be taken. The road ahead is not a smooth one, with Representative Luis Gutierrez (D-IL) and Senator Robert Menendez (D-NJ) already expressing their opposition, and wish to either amend, or stop the bill.
For now, Congress is moving slowly, but surely, towards approving legislation regarding Puerto Rico’s economic crisis.