An editorial from The New York Times.
Members of Congress finally appear to be getting serious about helping Puerto Rico to reduce its mountain of debt and revive its economy. They need to act soon because the financial situation is deteriorating rapidly.
The island’s economy has been in recession for a decade. Its government owes about $72 billion to bondholders, and public pensions are short $43 billion. Puerto Rico has already defaulted on some of its debt and most likely will miss several big bond payments in May and July.
It has delayed tax refunds to residents, hospitals have had to close wards,and money has been withdrawn or borrowed from pension and workers’ compensation funds. The island also is facing a potentially big public health emergency as the Zika virus spreads, according to the Centers for Disease Control and Prevention.
Residents are increasingly moving to the mainland in search of work and a better life. Lawmakers have raised taxes and cut spending sharply to cope with the crisis. Not surprisingly, that has depressed the economy further.
What is needed is clear: an orderly restructuring of debts and a financial control board to help the territory fix its finances and economy. That is what the Obama administration urged in October, but both steps require legislation. Last year, Speaker Paul Ryan pledged that the House would produce a bill to address the problems by the end of March, and the Natural Resources Committee has a measure that could be introduced this week. Rob Bishop, the Utah Republican who leads the committee, has acknowledged the need for both restructuring and a board.
The bill should give the island the ability to go to federal court so that a judge can oversee the restructuring and impose new terms on creditors who refuse to negotiate. Puerto Rico has been in talks with creditors for months with little progress. Many creditors are unwilling to compromise in the hope that they can recover more money if the island is forced into asset sales, higher taxes or more spending cuts.
Congress should also put in place a control board that can give residents and investors confidence in the territory’s future. Such a board needs representatives from the island who understand its economy and are accountable to its people. It should also have financial experts who have experience dealing with similar problems elsewhere.
There is no reason Congress cannot work in a bipartisan way to help Puerto Rico. Passing legislation now will help improve the lives of 3.5 million Americans at no cost to the federal government.