Rep. Sean Duffy proposed a bill last week, titled the Puerto Rico Financial Stability and Debt Restructuring Choice Act. He suggested that people were leaving Puerto Rico even though they would prefer to remain in in their homes. “We don’t want to force people away from their families, their neighbors, and their communities because they don’t have economic opportunities,” Duffy said.
The bill lays out a process to set up a financial oversight board and describes how it will function, including penalties for failure to follow through on decisions by the board. The board as described in the bill will be in place for at least three years and may not be dissolved until “it has certified to the President that the government of Puerto Rico has made meaningful progress in its budgeting practices, tax collection, and its fiscal condition, including access to the capital markets at a reasonable interest rate,” and the President has approved that certification.
The bill also makes chapter 9 bankruptcy protection available to Puerto Rico. If the U.S. doesn’t allow this, Duffy said, “we’re turning out backs on our fellow American citizens… and that’s not who we are.”
Duffy presented his plan as an alternative to a bail out, but also a compassionate action.
“Our fellow Americans in Puerto Rico are going through tough times,” Duffy said. “It’s our job to stand with them, not to turn our backs.”
Puerto Rico’s only, non-voting representative in Congress, Resident Commissioner Pedro Pierluisi, offered muted praise for the proposal in a written statement while pointing out flaws in the proposal’s oversight function: “Congressman Sean Duffy, Republican from Wisconsin, filed the Puerto Rico Financial Stability and Debt Restructuring Choice Act. The bill would provide Puerto Rico with the same ability to restructure debt as the states have, while establishing a temporary financial stability council to assist Puerto Rico in managing its finances. The Puerto Rico government could opt not to use the restructuring authority, in which case the council would not be established. However, if Puerto Rico does elect to use the restructuring authority, the council would take effect for a period of time. The choice would be Puerto Rico’s. I commend Congressman Duffy for his leadership in acknowledging that Puerto Rico requires a federal mechanism to restructure debt. I hope Congressman Duffy will work with me to re-calibrate the oversight portion of his bill, which I believe has problematic aspects.”
Today House and Senate negotiators are working to craft a proposal to help Puerto Rico address its fiscal and economic challenges. It remains to be seen if negotiators can agree on a path for the U.S. territory.