The bipartisan deal to tackle Puerto Rico’s debt crisis represents Paul Ryan first big victory as Speaker.
While the Wisconsin Republican has notched other wins on highway, education and government funding during his short, nearly seven-month tenure, former Speaker John BoehnerJohn (R-Ohio) had a hand in all of those negotiations.
The Puerto Rico pact, coming in the middle of a contentious presidential election year, is Ryan’s, and Ryan’s alone.
The agreement to restructure the island’s $70 billion in debt fulfills a promise the Speaker made to Minority Leader Nancy Pelosi (D-Calif.) and Democrats during spending talks last December. And it shows that Ryan’s approach to the leadership job — empowering committee chairmen — can work, to a certain extent.
For months, Ryan deferred questions about Puerto Rico to Natural Resources Committee Chairman Rob Bishop, letting the Utah Republican spearhead talks with both Democrats and Republicans on his panel. But when negotiations got bogged down by a few sticking points, including the creation of an independent fiscal control board, Ryan stepped in to close the deal.
Ryan spoke with White House chief of staff Denis McDonough last week as the accord neared the finish line. One recent weekend, Ryan spoke by phone with Treasury Secretary Jack Lew while mowing his lawn at his home in Janesville, Wis., according to sources familiar with the discussions. Ryan and Lew, two policy wonks, had crossed paths in 2011, when Ryan was the chairman of the Budget Committee and Lew the White House’s top budget official.
Democrats, however, portray the Speaker as much more involved in the day-to-day negotiations than he lets on. Pelosi and Ryan were in frequent contact throughout the entire process, holding many phone calls and instructing their staffs to meet regularly to discuss specific provisions, such as the control board.
“A lot of things needed to be worked out at the leadership level,” a Democratic aide said. GOP aides characterized those conversations as status updates, though they acknowledged that Bishop kept Ryan in the loop.
Lawmakers on both sides of the aisle have appreciated Ryan’s communication, which members have said is a significant improvement from Boehner’s reign.
The Puerto Rico legislation still hasn’t been scheduled on the House floor. Bishop will mark up the bill in his committee on Wednesday, leaving the full chamber just one day to take it up before lawmakers leave town Thursday for the Memorial Day recess.
Some lawmakers want a quick vote on Puerto Rico this week. The longer it hangs out there, the thinking goes, the more time political foes will have to try to stir up opposition. On the left, Sen.Bernie Sanders (I-Vt.), a Democratic presidential candidate, urged his Senate colleagues Monday to oppose the legislation, ripping the oversight board as “undemocratic” because it’s comprised of “unelected” appointees.
One option would be passing the House bill on suspension, which requires a two-thirds majority. It wouldn’t be impossible given Ryan’s prediction that a majority of House Republicans will support the legislation; most Democrats have signaled they’re on board as well. Language affecting Puerto Rico’s minimum wage and keeping a wildlife reserve in federal hands helped cement Democratic support.
But GOP leadership sources said a floor vote isn’t expected until after the weeklong break. Lawmakers want to act before July 1, when the cash-strapped territory is at risk of defaulting on another $2 billion in payments.
Ryan made a handful of strategic moves to ensure some conservatives wouldn’t derail the legislation. In news conferences and statements, the Speaker used his bully pulpit to aggressively refute TV ads from an outside group that blasted the package as a taxpayer “bailout.”
And Ryan invited influential members of the far-right Freedom Caucus to the negotiating table. Rep. Raúl Labrador (R-Idaho), a Puerto Rico native who serves on the Natural Resources panel, successfully inserted a firewall between payments to bondholders and pensioners. Payments to bondholders are guaranteed by the Puerto Rican Constitution, and the new language ensures pension payments cannot be prioritized.
Ryan and his leadership team “have been working closely with me. They’ve done a great job of making sure that all the concerns that I had about the bill have been addressed,” Labrador said.
Another Freedom Caucus leader, Rep. Mick Mulvaney (R-S.C.), a member of Ryan’s informal group of advisers, helped Labrador with research, speaking to experts on the effects of restructuring the bond markets.
Bond markets, Mulvaney found, worried that protecting pensions over secured debt could start a dangerous pattern for cash-strapped cities and states. Though Detroit’s prioritization of debt payments was seen as an anomaly, traders feared that doing the same in Puerto Rico would set a precedent for future cases.
The Freedom Caucus, a collection of nearly 40 ultraconservative lawmakers, has thwarted Ryan on getting a budget done this year, but it’s staying neutral on the Puerto Rico bill — in part because some of its leaders took part in negotiations.
Rep. Mark Meadows (R-N.C.), a member of the group, said he’s leaning yes. “I am favorably disposed to it,” Meadows said, “because Raúl Labrador has said that he’s optimistic about the bill.”
Texas Rep. Bill Flores, chairman of the 170-member Republican Study Committee and a member of Ryan’s group of advisers, said the legislation still has some “soft spots that we’re concerned about.”
But he added that lawmakers should act quickly to solve the debt crisis and then move on to more critical issues.
“In terms of the issues that the U.S. House of Representatives needs to be worrying about right now, Puerto Rico is not highest on the list,” Flores said in an interview Monday. “I don’t think it’s anything where we need to have a giant food fight.”
By Scott Wong and Sylvan LaneRyan secures big win with bipartisan Puerto Rico deal
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