U.S. Senate Finance Committee Chairman Orrin Hatch (R-UT) disclosed today that he will introduce a new bill to address Puerto Rico’s fiscal problems.
“I’m trying to get this done before the end of March” he said during a Committee hearing on President Obama’s Fiscal Year 2017 Budget sent to the Congress yesterday.
With the Obama Administration’s point person on Puerto Rico’s fiscal problems, Treasury Secretary Jacob Lew, sitting in the witness chair, Hatch criticized the Administration for not being “straightforward” about the debt restructuring that it is seeking for Puerto Rico. The Utah Republican charged that the Administration’s proposal would prioritize payment of pensions over bonds issued or guaranteed by the Government of Puerto Rico although the constitution of the territory prioritizes payment of those bonds — vs. bonds of Government instrumentalities — over any other expenditure. He pointed out that much of the bond debt is owned by retirees.
Hatch noted that the budget proposal included substantial new healthcare funding for Puerto Rico but did not dispute the request. Instead, he recalled that he had asked the Obama Administration months ago what additional healthcare funding Puerto Rico might need and had not received an answer.
Last year Hatch, along with the chairs of the Energy and Natural Resources and Judiciary Committees, Lisa Murkowski (R-AK) and Chuck Grassley (R-IA), respectively, introduced a bill that would have granted Puerto Rico $3 billion, cut the Social Security tax of residents of territories in half for five years, and established a Federal Financial Authority to supervise Government of Puerto Rico fiscal decisions.
Also this morning Hatch, released a letter that he sent Puerto Rico Governor Alejandro Garcia Padilla (Popular Democratic Party/PDP) making an extensive information request. The letter: reiterated Hatch’s months-old request for audited financial statements; asked for details on government debt in the territory, including pension obligations, and on government spending; asked about advice from the U.S. Treasury Department; and asked for the Governor’s views on recommendations made by a team of former International Monetary Fund economists under contract with Puerto Rico’s Government Development Bank (GDB).
The recommendations included changes in the application of the Federal minimum wage and in rules in Federal programs, such as Medicaid and assistance for families with no working parent as well as changes in local policies, such as providing free electricity. Hatch additionally inquired about Puerto Rico’s 10% increase in the number of teachers as the student population decreased 40% and Gov. Garcia Padilla’s failure to try to reform two government pension systems after Puerto Rico’s Supreme Court ruled that reform laws he got enacted were largely unconstitutional.
View the Hatch letter here.