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house Bill H.R. 4900

Does Puerto Rico Need Help Curbing its Debt Crisis and Boosting the Economy?

Argument in favor

This bill offers the best path forward in resolving Puerto Rico’s debt crisis without a bailout or financial market turmoil. It provides Puerto Rico with a process to collaboratively restructure its debt with creditors, and enacts reforms to boost the economy.

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04/19/2016
“Right now in Puerto Rico, the government is struggling with an unsustainable amount of debt… These creditors must be forced to negotiate a debt repayment plan that is fair to both sides – the people of Puerto Rico deserve nothing less.”
 [berniesanders.com]
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Emily's Opinion
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04/15/2016
Puerto Rico is a Territory of the United States, although they are still required to abide by most rules and do pay taxes, they do not have the ability to seek out loans and don't have access to the same resources as a state. Truly, the best option would be to make it a full state with all the rights they deserve and have earned,
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Alis's Opinion
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04/23/2016
We broke it, we bought it. (To quote Steven, who is absolutely correct.) Fix this. These are Americans--let's not turn PR into another Detroit/Flint & perpetuate a situation that will harm the citizens of PR but not the incompetent politicians & oligarchs who caused the problem. NOTE: the hedge funds are circling & people are dying. Get off your lazy self-righteous Congressional butts & fix this! These are citizens of the United States. Not that it counts for much these days. When did it become your job to sell out citizens for your own comfort? The day you decided to run from office or the day you were elected? SHAME ON YOU ALL!!
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Argument opposed

The Oversight Board this bill creates would have too much control over Puerto Rico’s finances, and if it sides with creditors in negotiations then the Puerto Rican government may not receive as much debt relief as it needs. This is a bailout by another name.

operaman's Opinion
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04/15/2016
Absolutely no! Puerto Rico has miles and miles of property and it's time for a garage sale. PR spent the money so they have the problem. Personally, I'm looking for a few acres with water/beach access. Maybe Robert "Bob" Menendez D-NJ and Rep Charles Rangel D-NY could toss in a few $Mil. It's time the power players of Washington DC eat their poor decisions.
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AndrewGVN's Opinion
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04/14/2016
Why is the United States expected to fix all these other problems instead of actual internal issues. We can't be providing all of this aid for something that wasn't the United States fault. Sorry Puerto Rico, you are off on your own to fix your own economic issues, you're a territory, fix it yourselves.
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IllWill's Opinion
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04/28/2016
This sounds like a way to impose harsh austerity measures on Puerto Rico, especially with this Oversight Board. I don't think so. Puerto Rico needs our help, but not like this.
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What is House Bill H.R. 4900?

This bill seeks to assist Puerto Rico handle the U.S. territory's $70 billion debt crisis by creating an Independent Oversight Board to approve and execute fiscal plans. The bill would create a process for the Commonwealth to further restructure its debt with creditors if necessary. It also contains regulatory reforms aimed at boosting Puerto Rico’s economic growth.

The seven member Independent Oversight Board would be composed of financial and management experts appointed by the President and nominated by congressional leadership. The Speaker of the House and Senate Majority Leader would each have two of their suggestions on the board, whereas the minority leaders of the House and Senate would each have one recommendation selected.

While the Oversight Board would be considered an entity within the government of Puerto Rico, it wouldn’t be subject to the control of the Governor or Legislative Assembly. The board would make use of the government’s audited financial statements to assist in the preparation of fiscal plans and budgets. It would also work with government agencies and public corporations to improve operational efficiencies and accountability, optimize revenues over expenses, and make public services more reliable for constituents.

If it becomes necessary for Puerto Rico to further restructure its debt, three conditions must be met before any restructuring can take place:

  • Required audited financial statements must be provided;

  • A fiscal plan and budget must be in place;

  • There must be mediation among the various debtors and creditors.

To be approved, a debt restructuring proposal must be agreed to by a two-thirds vote from Puerto Rico’s creditors, who would voluntarily restructure the Commonwealth’s debt. If an agreement on additional restructuring can’t be reached, the Oversight Board would be able to file a petition in U.S. district court for supervised restructuring that would be distinct from a Chapter Nine bankruptcy.

A Revitalization Coordinator would be established under the Oversight Board to vet proposed infrastructure projects and work with federal agencies when necessary to accelerate mandatory reviews. The coordinator would make recommendations to the board about a project that could be given access to expedited permitting and regulatory processes if the proposal addresses several factors:

  • Economic support provided by the project;

  • The project’s access to private capital for financing;

  • Whether the project addresses a flaw in Puerto Rico’s infrastructure.

To encourage hiring, Puerto Rico would be able to adjust its minimum wage from $7.25 per hour to $4.25 per hour for workers up to age 25 for a five-year period, as the current minimum is seen as too high to compete with neighboring islands. The Commonwealth would also be exempt from the Dept. of Labor’s proposed increase in the pay threshold that’s exempt from overtime requirements.

Impact

People who live and work in Puerto Rico; members of the Independent Oversight Board; Puerto Rico’s creditors; and the Puerto Rican government.

Cost of House Bill H.R. 4900

A CBO cost estimate is unavailable.

More Information

Of Note: Puerto Rico’s debt crisis began with an over-reliance on issuing tax-advantaged municipal bonds to finance government spending. When its economy declined and tax revenues fell, the condition of Puerto Rico’s public finances worsened as its population declined and more citizens required government assistance. These circumstances have aggravated Puerto Rico’s overall  economic woes, as the island faces a 12 percent unemployment rate and a 45 percent poverty rate.

As it stands, Puerto Rico owes creditors around $70 billion in debt — a total that is nearly 70 percent of the Commonwealth’s entire economy — a substantial increase from 2000, when its total debt was only $24 billion. Most of the bonds issued by the government and other public institutions has been downgraded by credit rating agencies to junk status, with only $1.7 billion of its total debt still considered investment grade.

There are several looming payment deadlines that Puerto Rico must meet to cover its obligations, with $422 million due on May 1 and another $2 billion to be paid July 1. The Commonwealth recently enacted legislation allowing it to delay debt payments and has its released its own proposal for restructuring debt, but investors and members of Congress worry that bond markets would be thrown into turmoil if it proceeds.

In-Depth: Sponsoring Rep. Sean Duffy (R-WI) introduced this bill to put Puerto Rico on a reasonable path to resolving its debt crisis while balancing the needs of creditors owed money by the Commonwealth’s government:

“The three and a half million Americans living in the U.S. territory deserve the attention and support of Congress. After decades of mismanagement, Puerto Rico’s investors also deserve better. A protracted and chaotic legal battle would not serve the interest of creditors or the island. Worse would be a mutli-billion dollar taxpayer bailout thrust on the shoulders of America’s taxpayers and retirees. The PROMESA Act will ensure that the island meets its debt obligations in a controlled, responsible manner, without saddling the U.S.  taxpayers with the bill.”

While the House initially set an end of March deadline for passing a solution for Puerto Rico’s debt crisis, negotiations over the nature of that solution have been protracted and contentious. Some Republicans have expressed concerns that the is a bailout by another name, while Democrats worry that it infringes on the Commonwealth’s autonomy to benefit investors. Rep. Nydia Velazquez (D-NY) called the involvement of an outside oversight board “insulting”, while adding her belief that Congress is implying “we have a colony in the Caribbean.”

The Counselor to the Secretary of the Treasury, Antonio Weiss, disputed claims that this bill represents a bailout at a House Natural Resources Committee hearing on the matter:
"this legislation costs taxpayers nothing and in fact what it does is preclude 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."
Media:Summary by Eric Revell
(Photo Credit: Flickr user Kyle Smith)

AKA

PROMESA

Official Title

To establish an Oversight Board to assist the Government of Puerto Rico, including instrumentalities, in managing its public finances, and for other purposes.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Committee on Education and Labor
      Committee on Natural Resources
      Committee on the Judiciary
      Antitrust, Commercial and Administrative Law
    IntroducedApril 12th, 2016
    “Right now in Puerto Rico, the government is struggling with an unsustainable amount of debt… These creditors must be forced to negotiate a debt repayment plan that is fair to both sides – the people of Puerto Rico deserve nothing less.”
 [berniesanders.com]
    Like (94)
    Follow
    Share
    Absolutely no! Puerto Rico has miles and miles of property and it's time for a garage sale. PR spent the money so they have the problem. Personally, I'm looking for a few acres with water/beach access. Maybe Robert "Bob" Menendez D-NJ and Rep Charles Rangel D-NY could toss in a few $Mil. It's time the power players of Washington DC eat their poor decisions.
    Like (12)
    Follow
    Share
    Puerto Rico is a Territory of the United States, although they are still required to abide by most rules and do pay taxes, they do not have the ability to seek out loans and don't have access to the same resources as a state. Truly, the best option would be to make it a full state with all the rights they deserve and have earned,
    Like (15)
    Follow
    Share
    We broke it, we bought it.
    Like (9)
    Follow
    Share
    We broke it, we bought it. (To quote Steven, who is absolutely correct.) Fix this. These are Americans--let's not turn PR into another Detroit/Flint & perpetuate a situation that will harm the citizens of PR but not the incompetent politicians & oligarchs who caused the problem. NOTE: the hedge funds are circling & people are dying. Get off your lazy self-righteous Congressional butts & fix this! These are citizens of the United States. Not that it counts for much these days. When did it become your job to sell out citizens for your own comfort? The day you decided to run from office or the day you were elected? SHAME ON YOU ALL!!
    Like (8)
    Follow
    Share
    Why is the United States expected to fix all these other problems instead of actual internal issues. We can't be providing all of this aid for something that wasn't the United States fault. Sorry Puerto Rico, you are off on your own to fix your own economic issues, you're a territory, fix it yourselves.
    Like (7)
    Follow
    Share
    Puerto Rico, like many other territories that the US holds, is full of people who don't work or produce anything. Instead they sit on their asses and collect a paycheck from the government. It's time to get to work!
    Like (6)
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    This sounds like a way to impose harsh austerity measures on Puerto Rico, especially with this Oversight Board. I don't think so. Puerto Rico needs our help, but not like this.
    Like (6)
    Follow
    Share
    Puerto Rico's debt is unpayable. It is the direct result of more than 117 years of colonialism, that have shrunk our economy and allow vulture funds to make profit of it. Although the bill may sound like a lifesaver to Puerto Rico, the Independent Oversight Board will only impose extreme austerity measures to be able to recover the debt at the expense of our suffering. The food, health, housing, education, and social programs should go first than to keep enriching the bonds holders. We cannot combat anorexia with hunger, specially in an economy built to merely benefit the American bonds holders. What Puerto Rico really needs is our independence to have the sovereignty to take the decisions to protect our people and develop our economy.
    Like (5)
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    It is clear that many don't realize Puerto Rico is a territory of the USA and our policies have directly contributed to their debt crisis. YES we should be helping because it is our problem. They are a part of the USA and should have the same rights accorded to them.
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    I don't see the Obama Administration bending over backwards to curb the American debt crisis and boost the American economy! OBAMA IS DOING JUST THE OPPOSITE FOR THE U.S.A.! And if you vote for Clinton or Sanders, our situation will only get worse!!! Puerto Rico must learn from their mistakes; bailing them out will not teach them a good lesson in economics or encourage them to live within their means.
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    Control board and austerity measures in this bill are not a good deal for Puerto Rico. There are better options that Congress is ignoring due to politics and being in bed with hedge fund managers.
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    They got themselves into this mess let them get out of it on their own.
    Like (3)
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    It makes no sense for the Federal Government to turn its back on the people of Puerto Rico, just as it makes no sense for it to turn its back on the people of New York or Illinois if they were in a similar situation.
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    This is a bad bill - Puerto Rico deserves true help; not another imperialistic sledgehammer.
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    Helping Puerto Rico get back on track seems like a good thing to do and it seems like a good investment.
    Like (2)
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    Puerto Rico's debt crisis?! Try being 20+ trillion in debt like the US is! The only real reason the US is even considering this is because of control.
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    No! This would just start the dominos falling. PR, then Detroit, then Baltimore, then California, and every other metropolis or pension plan that politicians have been mismanaging for the past fifty years.
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    Puerto Rico has been our sister country for many years. Our economies are directly linked and turmoil on their part will affect the money they use to support our country. While helping them will ensure that they are stable, and that we can both continue to benefit from each other.
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    Some seem to not understand that this is a territory of the United States of America and we have a responsibility to it. In a way it has all the liabilities that any state can have without the advantages. The economic situation that they have now is untenable.
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