Tough Financial Discipline, but No Bailout for Puerto RicoBrady: “U.S. taxpayers will send no money, or accept any of the territory’s debt. I voted to prevent a bailout by the American taxpayers by giving this U.S. territory a blueprint to fix their financial crisis.”
“I voted to prevent a bailout by the American taxpayers by giving this U.S. territory a blueprint to fix their financial crisis. Not a single tax dollar is spent in this bill. This is a conservative approach that forces Puerto Rico to balance its budget, enact serious spending reforms, while exempting the island from federal minimum wage rules and reams of red tape. Congress also puts an independent oversight board in place to provide the tough financial discipline that Puerto Rico needs.”
Today, the U.S. House of Representatives passed HR 5278, the Puerto Rico Oversight, Management, and Economic Stability (PROMESA) Act. Under the bill, no U.S. taxpayer dollars are being sent to the financially troubled territory, nor will the U.S. accept any of the debt of Puerto Rico. U.S. Congressman Kevin Brady released the following statement.. “I voted to prevent a bailout by the American taxpayers by giving this U.S. territory a blueprint to fix their financial crisis. Not a single tax dollar is spent in this bill. This is a conservative approach that forces Puerto Rico to balance its budget, enact serious spending reforms, while exempting the island from federal minimum wage rules and reams of red tape. Congress also puts an independent oversight board in place to provide the tough financial discipline that Puerto Rico needs.” Background: Puerto Rico, a territory of the United States, is facing a full scale economic collapse. The island is home to 3.5 million American citizens, but its economy has been shrinking for a decade. Unemployment is double the national average and the poverty rate is at 45 percent, including the majority of the island’s children. The government has amassed over $118 billion in debt in the form of bonds and unfunded pension liabilities. Puerto Rico has already defaulted on portions of its debt, including millions on May 2, 2016. On July 1st, the island is likely to default on an additional $2 billion. PROMESA · Establishes an Oversight Board – A strong and independent Oversight Board will oversee the development of fiscal plans for Puerto Rico, incorporate pro-growth reforms to ensure fiscal responsibility, balance the budget, and facilitate the Island's access to capital markets. · Provides for Debt Restructuring – Creditors can negotiate voluntary restructuring agreements through collective action clauses and avoid forced restructuring. The Oversight Board determines if debt restructuring is necessary after voluntary negotiations. Access to debt restructuring ensures debt is at a sustainable level and prevents a government bailout. · Infrastructure Revitalization – Puerto Rico’s infrastructure is outdated, energy costs are high, and development has been limited due to the fiscal crisis. Establishes a Revitalization Coordinator to identify projects that improve Puerto Rico’s infrastructure and energy development under an expedited review and permitting process.
Additional Provisions - Allows Puerto Rico to reduce the minimum wage for workers under 25 years old, provides an exemption to the Department of Labor’s overtime rule, and creates a Congressional Task Force on Economic Growth. Links CBO Cost Estimate – “no significant net effect on the federal deficit” Citizens Against Government Waste
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