Just two days before Puerto Rico was expected to default on a $2 billion payment to creditors, Senators passed a bill that will provide the commonwealth with some relief as it struggles under the weight of $72 billion in debt.
The bill, called PROMESA (the Puerto Rico Oversight, Management and Economic Stability Act), creates a seven-member control board that will oversee creditor and court negotiations with the goal of reducing the debt. It also mandates that Puerto Rico’s leaders must create a plan that will keep the territory from slipping back into debt.
It passed in the Senate yesterday (June 29) via a 68-32 vote, a few weeks after House members voted for it. Both affirmations were via largely bipartisan votes, but NBC News notes that Senator Bob Menendez (D-NJ) has been vocal about what he perceives as the bill’s shortcomings. “I’m afraid this bill provides little more than a Band-Aid on a bullet hole with regard to Puerto Rico’s unsustainable debt,” Menendez, whose family is from Cuba, said during debate on the legislation in May. “Mark my words—if we don’t seize this opportunity to address this crisis in a meaningful way, we’ll be right back here in a year from now picking up the pieces.”
But PROMESA did receive the backing of two Puerto Rican senators: Nydia Velázquez (D-NY) and José Serrano (D-NY). Earlier this month, Velázquez issued a statement about why she supports the bill, despite her reservations:
So we find ourselves at a fork in the road. One path leads us to PROMESA and the ability for the island to restructure 100 percent of its debt. The only other route sends Puerto Rico to the courthouse where it will be at the mercy of its well-heeled creditors and their legion of lawyers. Some would have you believe that if we only yell louder, there will be a third option. But let me tell you, I have screamed so loud that I no longer have a voice…. The stark reality we now face is that, other than PROMESA, there are simply no other politically feasible options left on the table….
It is important to emphasize this again—PROMESA provides the island with the ability to restructure 100 percent of its debt. This sounds esoteric to many, but I can assure it is not. It is the only viable way for the island to reduce the billions it owes. Yes, billions. By doing so, you give the island the hope for a future where its budget is not consumed by interest payments, but instead provides funding for schools, hospitals and roads. While far from perfect, PROMESA, as reported by the Natural Resources Committee, is the only option that can save the island’s public pension system and give its working families a shot at a better future.
Am I angry that the bill contains labor provisions that are not only obnoxious, but counterintuitive? Yes. Am I outraged that Puerto Rico will have to foot the $370 million price tag for an Oversight Board that many do not want? Yes. Do I believe that the creditors, who lent the island money and bought debt on the cheap, should wait in line behind retirees even though the Puerto Rico’s own constitution says otherwise? Yes, I do. Should the bill include incentives for economic growth and parity for health care? Of course it should. But, we do not live in a perfect world.
Regardless of what’s ahead, one thing is clear. This current saga has demonstrated the steep price the island is paying for its colonial status. This muddled situation has made it impossible for Puerto Rico to develop a lasting economic model that works and that reflects its hopes and aspirations. Instead, corporate America—from sugar, to oil, to pharma—has exploited the island’s resources and its labor force for its own benefit—leaving behind destruction and poverty…. Until the U.S. government ends these colonial conditions, there will be no long-term recovery. This is why my colleagues need to rise to this challenge in the next six months and pass another bill addressing Puerto Rico’s deep-seated economic challenges and health care crisis.
President Barack Obama says he will sign the bill into law: