The current discussion draft bill to address Puerto Rico’s debt crisis doesn’t stay within the red lines set by the conservative Republican Study Committee, RSC Chairman Bill Flores of Texas said Wednesday.
“The discussion draft legislation regarding Puerto Rico’s fiscal situation includes provisions that essentially provide for a federally forced restructuring of the island’s debt,” Flores said in a statement. “This approach is inconsistent with the Republican Study Committee’s (RSC) position on this issue. The RSC has taken a clear position that unilaterally changing the rules to address Puerto Rico’s fiscal irresponsibility is the wrong approach.”
The RSC, an influential group of more than 170 House Conservatives, last month announced it opposes granting Puerto Rico the authority to declare Chapter 9 bankruptcy or “access to similar forced restructuring of debt.” The current draft legislation, which House Natural Resources Committee Chairman Rob Bishop (R-Utah) officially unveiled Tuesday, contains a debt restructuring mechanism but doesn’t allow San Juan to declare Chapter 9.
“While the draft proposal does include some positive, pro-growth policies to restore Puerto Rico’s stagnant economy, such as reducing burdensome federal regulations, the draft bill still needs work to prevent a bankruptcy-style involuntary restructuring,” Flores said in today’s statement.
The RSC’s current opposition adds to the political headaches for advocates of a Puerto Rico package. Conservative groups and some bondholders have voiced their opposition to the current version of the debt restructuring mechanism. Democrats, including the White House and House Minority Leader Nancy Pelosi (D-Calif.) are pushing for a less powerful fiscal control board to oversee the commonwealth’s finances.
Still, lawmakers will continue tweaking the draft’s language between now and mid-April, when key lawmakers hope to see a final bill introduced and marked up with a broader base of support.