Hensarling Votes To Prevent Taxpayer Bailout of Puerto Rico
WASHINGTON –Today, the House passed, and Congressman Jeb Hensarling (R-TX) voted for, the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA, H.R. 5278), a bill that will prevent a taxpayer bailout for Puerto Rico and avoid further default.
“Puerto Rico is in a financial crisis,” said Rep. Hensarling. “The island’s government has already defaulted on millions it borrowed, and without action, it is set to default yet again.
“When Puerto Rico defaults on its debt, it not only hurts the 3.5 million American citizens of the island but also the countless other Americans who have invested in Puerto Rican bonds through their retirement accounts and mutual funds. The government of Puerto Rico has abdicated responsibility for dealing with its spending-driven debt crisis and since Article IV, Section 3, Clause 2 of the Constitution gives Congress the power to ‘make all needful rules and regulations respecting the territory or other property belonging to the United States,’ Congress is forced to act.”
Under the U.S. Constitution, states are considered sovereign, but territories are not. Therefore, it is well-within Congress’ Constitutional power to address Puerto Rico’s spending-driven debt crisis with a structured bankruptcy through PROMESA. However, Congress could not take similar action involving a state.
“East Texans are sick and tired of taxpayer bailouts that raid their wallets and force them to pay for the bad decisions of others. I voted for PROMESA because this bill will impose fiscal responsibility on Puerto Rico’s government and will create a pathway to a non-bailout bankruptcy process which will allow Puerto Rico and its creditors to avoid further default on its debt. I led the opposition to the 2008 bailout and have consistently opposed bailouts throughout my time in Congress. This bill provides Puerto Rico and its creditors a workout, not a taxpayer bailout.”
The PROMESA Act also includes the following provisions:
- Forms a seven person oversight board that is charged with enforcing fiscal reforms, imposing balanced budgets, negotiating and enforcing debt restructuring agreements, and preventing the island from taking on more debt that would undercut economic growth
- Prevents the Department of Labor’s overtime rule from going into effect in Puerto Rico
- Expedites the permitting process for infrastructure and energy projects on the island
- Launches a bicameral Congressional Task Force to report on impediments in current federal law to economic growth in Puerto Rico.
The bill passed in the House 297 to 127 and now heads to the Senate for a vote.