By Colin Wilhelm
05/27/2016 05:02 AM EDT
The last time Congress considered a debt-restructuring bill for Puerto Rico after lawmakers returned from a two-week recess, the measure died in committee.
Now, with a new bill to help the commonwealth avert a historic default facing a House vote next month after the Memorial Day break, House Speaker Paul Ryan and Minority Leader Nancy Pelosi want to make sure the legislation doesn’t stall again.
Ryan, who hammered out a deal with the White House on the legislation in an early test of his leadership, will have to rely on Pelosi’s Democrats to help pass it, lawmakers and staff on both sides of the aisle agree.
Though the bill cleared a big hurdle when it was approved Wednesday by the House Natural Resources Committee, fewer Republicans than expected voted in favor, raising pressure on Pelosi to limit defections from her own caucus, where some also remain wary of the measure.
Should the House approve the legislation, it will mark a rare show of bipartisan cooperation in Congress on an issue that has pitted Wall Street lobbyists against lawmakers and featured blistering ads in congressional districts over the Easter recess warning that the deal amounted to a “bailout.”
The Obama administration on Thursday continued to pitch the bill to House Democrats, with Treasury official Antonio Weiss, the point man on the Puerto Rican debt crisis, briefing the Congressional Hispanic Caucus.
“We’re not going to have unanimity in the Hispanic Caucus, but I think a majority will probably vote in favor of it,” said Caucus Chair Linda Sanchez (D-Calif.), who helps whip votes for Democrats. “And I think the Democratic side of the aisle will probably be the same.”
The legislation would help Puerto Rico restructure its $73 billion in debt and establish a federal oversight board to supervise the process. Pensions and social services would receive a measure of protection, while bondholders would probably be forced to accept less money than they’re owed. The bill would not spend any federal money on the debt.
Even though Pelosi and House Minority Whip Steny Hoyer (D-Md.) have voiced support for the bill, some lawmakers in the party remain uncomfortable, especially with the federally appointed oversight board, which some say will exert too much power over Puerto Rico.
“There’s going to be a lot of members on the House floor, on the Democratic side, that are going to have to have a true gut check when it comes to this,” said Ruben Gallego (D-Ariz.). Gallego voted for the bill in committee after attaching amendments he drafted. He also received a call from Treasury Secretary Jack Lew asking him to support the legislation.
“It was very difficult for me to not vote for this bill in the end because I couldn’t let my personal political ideology stand in the way of relief for 3.5 million people,” Gallego said.
Many members of the Congressional Hispanic Caucus remained noncommittal even after Treasury’s Weiss briefed them, Luis Gutierrez (D-Ill.), an opponent of the bill, said.
Gutierrez and Sen. Bob Menendez (D-N.J.) held a news conference immediately after the meeting to blast the bill, calling it “neocolonial” because of the powers granted to the oversight board to overrule Puerto Rican elected officials on revenue, spending and budgetary matters.
“I’m going to actively work amongst my Democratic colleagues in the House to defeat” the bill, said Gutierrez.
Sources on both sides of the aisle have indicated that a bill introduced by Rep. Nydia Velazquez (D-N.Y.), an influential member among Democrats on Puerto Rico, will be considered the same week as the debt legislation as a way for Democrats to claim a minor victory. The bill ends an exemption in financial regulation that allows investment firms to both underwrite and sell municipal bonds on Puerto Rico. Critics of the exemption say it creates a conflict of interest.
“As there may yet be further changes, I will withhold judgment until the legislation is finalized and I can fully weigh the bill’s benefits against my remaining concerns,” Velazquez said in an email regarding the debt compromise. Among her concerns are whether the debt restructuring can work and that the oversight board will enjoy too much sway over Puerto Rico.
Allowing Velazquez’s bill to come to the floor signals the realization among Republican leaders that they may not get a majority of their members to vote for the Puerto Rico legislation before a $2 billion payment comes due for the commonwealth on July 1.
In a possible preview of a House floor vote, all 10 members voting against the bill in the Natural Resources Committee were Republican, a higher number than the panel had hoped. Two others, Reps. Alex Mooney (R-W.Va.) and Paul Cook(R-Calif.) did not vote.
TV, radio and social media ads, some directly targeting members in their districts, have now been joined by automated phone calls telling constituents to call their congressional office in opposition to the bill, a last-ditch effort to make the vote more painful for House conservatives.
Few Republicans outside of those on natural resources wanted to talk about Puerto Rico after the bill passed committee, saying they hadn’t had a chance to catch up on the current legislation, even though the panel’s staff had briefed members again this week.
Formal vote-counting has yet to start but the Puerto Rico debt bill is expected to come to the House floor in the second week of June, when Congress returns from the break.
Republicans on the natural resources panel hesitated to project much more than cautious optimism.
“I think we’re going to be ok,” said Rep. Cynthia Lummis (R-Wyo.) said Thursday. Yet she added, “I think there will be some attempts at some floor amendments,” with Republicans who couldn’t change the bill in committee, most of whom were opposed to the underlying measure.
“It should pass with the majority on both sides,” said Rep. Rob Bishop (R-Utah), chair of the natural resources panel and one of its main salesmen within his caucus. “There’s no reason to vote against the bill.”