WASHINGTON, D.C.: The US Senate passed a bipartisan measure on Wednesday (Thursday in Manila) that would allow Puerto Rico to restructure its $70-billion debt just two days before the island was to careen into massive default.
The bill, which easily passed by a vote of 68 to 30, has now cleared both chambers of Congress and will go to the White House for President Barack Obama’s signature.
Lawmakers spent weeks debating how to craft a package that would help the US territory which has been locked in recession for more than a decade.
Increasingly unable to service its debt, Puerto Rico is blocked by US law from getting formal bankruptcy protection, which would allow a court to force creditors to write off large amounts of its debt.
The island already missed several deadlines for payment and risked defaulting on a $2 billion payment due July 1.
But lawmakers came together to shepherd through a compromise bill before closing up shop for the Fourth of July holiday week.
House Speaker Paul Ryan had lobbied vigorously for the so-called Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which establishes a special committee to negotiate with the island’s creditors and does not involve financial assistance.
Ryan hailed the bill’s passage in the Senate, saying it addresses Puerto Rico’s fiscal crisis while “protecting American taxpayers from a bailout of the territory.”
While the legislation is seen as an impressive compromise between bickering congressional Republicans and Democrats during a heated presidential election year, many who voted for the legislation expressed reservations.
“If Democrats had written this bill, it would be very different than what we are voting on today,” said top Senate Democrat Harry Reid.
But “not acting today to provide Puerto Rico with debt relief and protection from creditors’ lawsuits will have dire consequences and only worsen the crisis.”
Another yes vote came from Republican Senator John McCain, who supported the measure because “the bill is not a bailout.” “Not a single taxpayer dollar will be used to address Puerto Rico’s bad financial choices. Instead, this bill will create a financial control board and advance pro-growth labor reforms that will go far to restore fiscal discipline in Puerto Rico,” McCain added.