House Natural Resources Committee Chairman Rob Bishop (R-Utah) said “political ineptitude” has failed Puerto Rico’s “state-run” economy from all sides.
“There is no clear picture of the scale and scope of this crisis since Puerto Rico has failed to provide an audited financial statement for the last two years, so it’s a problem,” Bishop said on a conference call with reporters.
“But as long as Puerto Rico and its state-owned entities continue to lose money and run deficits, debt restructuring alone is not going to help the territory and it’s not going to help the people find stability they need to build for growth,” he added.
Bishop argued that considering bankruptcy alone as a solution would not fix the financial situation in Puerto Rico.
“If you’re simply looking at bankruptcy alone that may be oversimplifying the issue, and it doesn’t really solve the problems,” he said.
The proposal released by Puerto Rico’s government would reduce its debt but ultimately leave bondholders with less money than they are owed.
“This proposal is a reflection of our commitment to work with our creditors on a sustainable solution that does not place the burden on one stakeholder group alone,” said Victor Suarez, the island’s secretary of state.
Congressional Republicans are considering a plan to put a U.S. authority in place to oversee the debt restructuring process. However, Bishop said Congress should not rule out any steps at this stage of the game and that there would be no “sacred cows” during the decision-making process.
“If you do go to some kind of advisory board or some kind of strong control board they also have the avenue of dealing with bankruptcy at the same time – that would be in their scope of authority,” he said.
Senate Majority Leader Mitch McConnell (R-Ky.) said Congress would not spend taxpayer funds on Puerto Rico’s crisis.
“No solution to the Puerto Rico problem that involves the use of U.S. taxpayer dollars is going to be passed in this Congress,” he said.
In December 2015, Puerto Rico Gov. Alejandro García Padilla predicted that the island would default in January or May of this year if Congress does not help.
“There’s no money. I have no printing machine. There’s no money and the Constitution guarantees the people of Puerto Rico to provide essential services and I have no money to provide essential services and to pay the creditors, and they [Congress] need to understand that,” he said at the National Press Club.
Padilla said he has made budget cuts but cannot fire people because it will hurt the economy further.
“I will get to that death spiral, and that will be choosing them [creditors] against Puerto Ricans and I will not do that,” he said. “We are about to get into a humanitarian crisis. Just compare it to an atmospheric disaster in Puerto Rico. Just compare it to that.”