- Key House Republican says panel would be advisory only
- Republicans say bankruptcy legislation is no panacea
The chairman of a U.S. House subcommittee that has balked at legislation that would let some Puerto Rico government agencies seek bankruptcy said he’s instead pushing for the creation of a federal board to advise the island on its finances.
Representative Tom Marino, a Pennsylvania Republican, said in an interview Thursday that the panel would be appointed by Congress and the Obama administration. He said it would suggest how the territory could cut spending and take other steps -- such as seeking an exemption from the minimum wage -- to put an end to its chronic budget deficits and spur the economy. It wouldn’t take direct control.
"Strictly advisory," he said. "This takes it out of the hands of the passions of the people of Puerto Rico."
Republican majorities in the House and Senate have faced criticism from Democrats for showing little urgency to aid Puerto Rico, which has been pushed to the brink by $73 billion of debt. Puerto Rico is pressing Congress to boost the funding it receives from federal programs and allow its publicly owned corporations, such as the power company, to file for Chapter 9 bankruptcy protection, as U.S. cities can.
The crisis has escalated since June, when Governor Alejandro Garcia Padilla said the island can’t afford to pay its debts. It defaulted on some bonds for the first time in August and is planning to push for investors to accept less than they’re owed. Without an influx of funds, the government may run out of cash by the end of the year.
Marino chairs the House Judiciary Committee on Regulatory Reform, Commercial and Antitrust Law, which held a February hearing on the bankruptcy bill. The legislation hasn’t moved forward because of objections from some Republicans.
U.S. Treasury Secretary Jacob J. Lew said in July that no federal bailout is being considered, though the administration supports the bankruptcy bill.
Marino’s interest in a federal advisory board comes after Senator Charles Grassley, an Iowa Republican who chairs the Senate Judiciary Committee, suggested a similar move during a hearing on the island’s fiscal crisis Tuesday. Garcia Padilla has proposed his own version of a control board for the island, with members that would be selected by the governor.
Marino said that the bankruptcy bill, if considered at all, would have to be part of a broader program to help Puerto Rico deal with its long-building financial strains. Puerto Rico’s debt has swelled as the government borrowed to cover budget shortfalls amid a lackluster economy and an exodus of residents to the U.S. mainland.
He said an advisory board of experts could help provide a path forward, and even offer some proposed actions for Congress to take. The details about how such a board would operate have not been decided.
"It has to be clear that bankruptcy is not the panacea here,” he said. "It’s taken a long time for Puerto Rico to get into this debt, and it will take a long time to get out."