Expect the Puerto Rican debt crisis to move up the list of legislative priorities. While the White House is busy with criminal justice reform, the opiate epidemic, an upcoming election and closing Guantanamo Bay they're also discussing another patch of colonial patch of land, the Territory of Puerto Rico. Concern over Puerto Rico isn’t just being felt by Democrats, Republicans on The Hill are working on the problem as well. On Monday, House Republicans said that they too are focused on finding a solution to the island’s “death spiral ” public service reductions and mass emigration.
The causes of Puerto Rico’s woes are many -- poorly managed public utilities, arcane seafaring laws and chronic borrowing -- but the options on the table in Washington are few. Senate Democrats proposed a temporary freeze on litigation against the island. Puerto Rico Gov. Garcia Padilla is asking congress to pass that bill to give time for congress to pass a comprehensive overhaul of the way the territory is treated in the legal/financial spheres by giving it equal right to U.S. states, such as by allowing Chapter 9 bankruptcy.
Puerto Rico, which does not have congressional representation, is flexing its muscles politically and by threatening to stop all debt payments. On Monday, Puerto Rican officials released a proposal aimed at creditors to cut the debt down from around one third to around one fifth of the island’s income. The proposal would restructure around $49 billion of the island’s $79 billion dollars of debt, with additional repayments triggered if the island can regain its eroding tax base.
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