Congress delivered some much-needed relief to debt-straddled Puerto Rico by approving an eleventh-hour financial rescue deal days before a $2 billion payment deadline.
The Senate voted 68 to 30 Wednesday for legislation that would create a control board to oversee the U.S. territory’s $70 billion in debt and stave off what the White House and some political leaders say could become a full-blown humanitarian crisis.
Under federal law, Puerto Rico, which has a $2 billion payment due to its creditors Friday, cannot declare bankruptcy.
The House passed the bill earlier this month, meaning the Senate’s approval sends it to President Obama’s desk for his signature.
“This bill is not perfect, but it is a critical first step toward economic recovery and restored hope for millions of Americans who call Puerto Rico home,” Obama said, commending Congress and saying that he would sign the bill.
A decade-long recession has left the Caribbean island buried in debt, causing residents to flee, schools to struggle with limited electricity, hospitals to reduce the distribution of medications and businesses to shutter.
“Puerto Rico cannot endure any more austerity,” said Alejandro Garcia Padilla, the island’s governor, warning of even more dire circumstances.
Under the legislation, a control board will oversee negotiations with creditors and the courts over reducing some debt. It also temporarily blocks creditor lawsuits from being filed until February 2017.
Treasury Secretary Jacob Lew pleaded Puerto Rico’s case during a visit to Capitol Hill on Wednesday, saying that if the government defaults public transit might be shut down, schools closed and police officers told to go home.
But many lawmakers said they are troubled by the U.S. intervening in Puerto Rico’s finances.
Sen. Bob Menendez (D-N.J.) took to the Senate floor Tuesday evening to argue the bill adopts a colonial approach.
“I think the 3.5 million United States citizens who call Puerto Rico home deserve more than being jammed in a legislative process where their lives and their futures are going to be dictated for some time by a control board,” he said.
In a rare sign of bipartisanship, Senate Minority Leader Harry Reid joined Republican counterpart Mitch McConnell in imploring lawmakers to approve the legislation.
“This economic crisis is a humanitarian disaster,” the Nevada Democrat said.
With News Wire Services
