Menendez rails against Puerto Rico bill for 4 hours on floor

Sen. Robert Menendez (D-N.J.) held the Senate floor for more than four hours Tuesday as he hammed a House-passed Puerto Rico debt relief bill. 

"I have called this legislation the ultimate neocolonialism that we as a Congress would be passing. It treats the citizens of Puerto Rico like subjects," the New Jersey Democrat said from the Senate floor. "It's a power play, leaving the people of Puerto Rico unable to make their own government, make their own decisions, do what they believe is right."

Menendez, who is seeking build opposition to the bill before a vote on Wednesday, warned his colleagues that he would be speaking for "some time." He started his speech shortly before 3:30 p.m., and yielded the floor around 7:40 p.m. 

 

Sen. James Inhofe (R-Oka.), asking how long Menendez was planning to speak, tried to get permission to talk about a different subject. Menendez, however declined his request, noting he could only yield for a question and still control the Senate floor. 

 

The Senate is scheduled to take a procedural vote on the House legislation ahead of a Friday deadline for Puerto Rico to make a roughly $2 billion debt payment. Island officials have said they cannot make the payment.

 

The New Jersey Democrat has filed dozens of amendments to the Puerto Rico bill, none of which are currently expected to get a vote. 

 

Majority Leader Mitch McConnell (R-Ky.) has defended the current schedule, telling reporters: "We do not have time for amendments. This has been negotiated fully." 

 

Menendez and Sen. Roger Wicker (R-Miss.) circulated a letter this week pushing leadership to allow for amendments to the legislation. The New Jersey Democrat charged Tuesday that the legislation went against McConnell's promise for an open amendment process under a GOP-controlled Senate. 

 

"We have a legislation drafted over in the House for which there is no opportunity ... to have full debate and full airing of amendments," he added.  

 

Menendez is urging his colleagues to vote against the legislation on Wednesday in an effort to make changes to the bill. His push comes as key Democrats — including Minority Leader Harry Reid (D-Nev.) — said Tuesday they would back the bill as is.

But Menendez is facing pressure back in his home state to back down in the Puerto Rico fight. The Newark Star Ledger, New Jersey's largest newspaper, said while his concerns are "reasonable" that critics are "playing with fire."

"We can't compare this to a perfect bill; we have to compare it to the likely alternative, which is inaction," the newspaper's editorial board added.

At one point during his floor speech, Sen. Maria Cantwell (D-Wash.) came to the Senate floor to speak with Menendez.  

Critics of the House bill complain about its creation of a federal oversight board. Because members of the board are selected by the president and Congress, they argue it cuts Puerto Ricans out of deciding the direction of their territory. 

 

Democrats have also criticized a provision that allows some federal workers to be paid below the minimum wage. 

 

Menendez was temporarily joined by Sen. Bernie Sanders (I-Vt.) who questioned what sort of morals Congress would be backing if they pass the House bill.

 

"From a moral prospective, should the United States be supporting legislation which allows vulture capitalists, some of whom are billionaires, to make huge profits while at the same time nutrition programs and educational programs for low income children in Puerto Rico are cut?" he asked.

 

Leadership will need 60 votes to get the Puerto Rico bill over Wednesday's procedural hurdle. 

 

Menendez has introduced his own broader Puerto Rico bill, which — unlike the House bill —would extend the Earned Income Tax Credit and the Child Tax Credit to the island territory. 

 

That proposal was almost immediately rejected by key Republicans earlier this year, who pledged to introduce their own measure. 

 

Updated at 7:47 p.m. 

By Jordain Carney
Menendez rails against Puerto Rico bill for 4 hours on floor

Congress clears Puerto Rico rescue bill, sends to president

Congress delivered relief to debt-stricken Puerto Rico on Wednesday, sending President Barack Obama a last-minute financial rescue package to help the U.S. territory of 3.5 million Americans.

The Senate passed the bill on a bipartisan 68-30 vote, three weeks after the House overwhelmingly backed the measure. The vote came two days before the island is supposed to make a $2 billion payment to creditors.

Puerto Rico is in a decade-long recession and has $70 billion in debt. Thousands have fled the territory for the U.S. mainland. Businesses on the island have closed, schools have struggled with limited electricity and hospitals have asked for cash payment in advance for some medication.

The White House and Republican and Democratic leaders in Congress have warned that without help from Washington, the island could descend into economic chaos, with signs already pointing to a humanitarian crisis. In a rare feat of election-year unity, all four Republican and Democratic leaders in Congress supported the bill, which would create a control board to oversee the U.S. territory's finances and supervise some debt restructuring.

President Obama said after the vote that he would sign the bill and commended Congress for passing it.

"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.

The legislation would not provide any direct financial aid to the territory, but leaders warned that a bailout could eventually become necessary if Congress doesn't take this step.

"If we don't act before the island misses a critical debt payment deadline this Friday, matters will only get worse — for Puerto Rico and for taxpayers," warned Senate Majority Leader Mitch McConnell, R-Ky.

The control board would be similar to one that oversaw the District of Columbia in the late 1990s. Its seven members would oversee negotiations with creditors and the courts over reducing some debt. In addition to creating the board, the bill would require the territory to create a fiscal plan and fund public pensions, which the Puerto Rico government has shorted by more than $40 billion.

Gov. Alejandro Garcia Padilla said that with passage of the bill, "we are starting to take the island back from creditors and giving it to Puerto Ricans." He has warned the U.S. territory would face multiple lawsuits if the bill is not approved, especially following Friday's anticipated default on $1 billion in general obligation bonds. The legislation would temporarily block creditor lawsuits from being filed until February 2017.

The general obligation bonds are backed by the island's constitution, but Garcia has said the government has no money to honor that debt despite the implementation of new taxes and recent increases in utility rates. Garcia hasn't said if the island will default on the other $1 billion that is due.

"Puerto Rico cannot endure any more austerity," Garcia said in an editorial published Wednesday.

Treasury Secretary Jacob Lew visited Capitol Hill on Tuesday in a bid to persuade some reluctant Democrats concerned that the board would be too powerful. Democrats have also opposed a provision that would allow the island's government to lower the minimum wage for some younger workers.

Lew urged senators to vote for the bill even though it isn't perfect, saying that if the island defaults, the government may be forced to shut public transit, close a hospital or send police officers home.

Democratic Sen. Bob Menendez of New Jersey was staunchly opposed to the bill, monopolizing the Senate floor for more than four hours Tuesday evening, arguing that the bill adopts a colonial approach.

Sen. Bernie Sanders, I-Vt., also opposed it.

"In my view we need austerity not for the people of Puerto Rico, but for the billionaire Wall Street hedge fund managers who have exacerbated the crisis on the island," Sanders said on the floor.

In the days before the vote, some bondholder groups worked to turn senators against the bill, arguing it doesn't sufficiently protect creditors and is tantamount to a bailout for the territory. Several labor unions also lobbied against the measure, arguing that a lower minimum wage could take money out of the Puerto Rican economy.

The legislation is needed because Puerto Rico cannot declare bankruptcy under federal law. Mainland municipalities and their utilities can, while municipalities and utilities in Puerto Rico cannot.

Some Republicans who opposed the bill said the bill could set a bad precedent for financially strapped states.

"They'll say, 'if a territory can receive unprecedented authority from Congress, then why shouldn't a state?'" said Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa.

Congress clears Puerto Rico rescue bill, sends to president


By MARY CLARE JALONICK

Senate passes Puerto Rico financial rescue bill

Legislation to place debt-swamped Puerto Rico on a path to fiscal sustainability sailed through the U.S. Senate with solid bipartisan support Wednesday.

President Obama is expected to sign the bill into law before Friday, when Puerto Rico was expected to default on $2 billion in debt payments.

The legislation — called the Puerto Rico Oversight, Management and Economic Stability Act, or PROMESA — establishes a board to oversee the U.S. territory's finances, including an orderly debt restructuring process and annual budgeting.

Puerto Rico has more than $70 billion in traditional bond debt. It defaulted on debt payments multiple times — including a failure May 2 to pay hundreds of millions of dollars to financial creditors.

A borrowing binge, population loss, sky-high taxes and burdensome bureaucracy have conspired to plunge Puerto Rico into an economic crisis. A failure to pay secured debts due Friday likely would have spawned a legal brawl between major financial creditors and the U.S. territory's government.

“The alternative to this bill was to throw this into the courts, where creditors would be seeking protections of their individual interests even if orders to pay creditors meant leaving no funds to pay for schools, hospital and police and fire,” Treasury Secretary Jacob Lew said in an interview.

Leaders from both parties in the House and Senate backed the bill, which the Senate passed in a 68 to 30 vote Wednesday night after the measure passed a key procedural hurdle earlier in the day.

“I am pleased that the Senate has passed PROMESA, the result of months of work by the House," House Speaker Paul Ryan, R-Wisconsin, said in a released statement. "This bipartisan legislation addresses the fiscal crisis in Puerto Rico while protecting American taxpayers from a bailout of the territory."

Ryan added: "The legislation creates an oversight board that will institute the necessary reforms so Puerto Rico can begin to turn its economy around and get on a path to fiscal health. Congress has fulfilled our constitutional obligation and I urge President Obama to sign PROMESA immediately.”

“Puerto Rico currently spends over a third of its budget on debt payments alone," U.S. Sen. Majority Leader Mitch McConnell, R-Kentucky, said on the Senate floor. "By restructuring Puerto Rico’s financial debt and helping reform its operations, this bill will allow the territory to instead invest more of its resources in growing the economy and creating more opportunities for its residents."

Sen. Minority Leader Harry Reid, D-Nevada, backed the bill because of the "humanitarian disaster" facing Puerto Rico, in which funds are drying up for public safety, hospitals and schools.

But Reid said the bill is "far from perfect" because of provisions such as one allowing employers to pay first-time workers below minimum wage. He also criticized McConnell for not allowing votes on proposed amendments.

By establishing an oversight board for Puerto Rico, Congress followed a well-worn path in the world of municipal debt crises. Following New York's brush with insolvency in the 1970s and Detroit's bankruptcy in 2013, oversight boards were installed to monitor those cities' finances.

What’s unclear is how much debt Puerto Rico needs to shed. Gov. Alejandro Garcia Padilla, who backed the bill, told USA TODAY in December that the island needs $14 billion in savings through debt cuts and economic reforms.

“We wouldn’t have been pursuing this restructuring authority if we didn’t think it was essential to have a substantial restructuring to have a sustainable path forward,” Lew told USA TODAY on Wednesday.

To be sure, the island’s own political leaders are expected to implement sweeping budgetary reforms and policy measures to jolt the economy and encourage more people to join the workforce.

One particularly vexing issue is the Puerto Rico's massive pension deficit, fueled by the government’s failure to devote enough money to pay the promises it has made to its employees and retirees.

The bill requires the oversight board to ensure that Puerto Rico’s fiscal turnaround plan provides “adequate funding for public pension systems.”

One of the bill’s opponents, Sen. Chuck Grassley, R-Iowa, blasted the bill for enabling Puerto Rico’s irresponsible spending and for preserving pensions at the expense of cuts to bonds held by other retirees.

“I fear we’re simply pushing this problem down the road and have failed to address the root cause of Puerto Rico’s fiscal crisis at the expense of uncalled for risks and precedent,” Grassley said.

Congressional leaders and the president will each be authorized to appoint members of the oversight board, who will serve 3-year terms.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

Nathan Bomey
Senate passes Puerto Rico financial rescue bill

The Implications of the ‘Brexit’ Vote, Stress Tests and Puerto Rico: This Week

ECONOMY

Portugal Hosts Annual Banking Forum

On Monday, Janet L. Yellen, chairwoman of the Federal Reserve, will be among those at the European Central Bank’s annual gathering of economists and central bankers in Sintra, Portugal. Officially, the high-level thinkers and policy makers will be discussing macroeconomic policy and financial regulation at the three-day meeting. But it’s a safe bet that the buzz will be about the implications of Britain’s vote to leave the European Union, which some blame partly on poor crisis management in the eurozone. Mario Draghi, the president of the European Central Bank, is scheduled to speak Tuesday morning, and Ms. Yellen will be on a panel Wednesday afternoon. JACK EWING

BANKING

Annual Bank Stress Tests, Part 2

The Federal Reserve will tell the nation’s largest banks on Wednesday whether they passed or failed their annual stress tests. The 33 largest banks learned last week how they broadly performed when the Fed announced the first round of test results. But on Wednesday, they will find out whether they got a passing or failing grade, and whether they will be able to follow through with their plans to distribute money to shareholders through dividends and share buybacks. Most of the banksdid well on the first round of tests, which has many analysts expecting that the banks will win approval for their distribution plans. NATHANIEL POPPER

TECHNOLOGY

Yahoo Asset Sale a Likely Topic at Annual Meeting

Yahoo will hold its annual shareholder meeting on Thursday. There are no big questions on the ballot since the company avoided a threatened proxy fight in April after agreeing to appoint four directors chosen by the Starboard Value hedge fund to the board. Still, executives and board members are likely to face questions from restive stockholders about Yahoo’s slow progress in selling its core internet business, even as that business continues to deteriorate. Final bids are due in early July, with Verizon and several private equity consortia remaining top contenders. VINDU GOEL

PHARMACEUTICALS

F.D.A. Considers Language for Diabetes Drug Label

Last year, Jardiance became the first modern diabetes drug to demonstrate in a clinical trial that it could reduce deaths from heart attacks and other cardiovascular causes. On Tuesday, a committee of expert advisers to the Food and Drug Administration will discuss whether those results can be included in the drug’s label. If so, that could give a big boost to sales of the product, which is sold jointly by Eli Lilly and Company and Boehringer Ingelheim.

Like other drugs for type 2 diabetes, Jardiance, also known as empagliflozin, was allowed onto the market based on its ability to lower blood sugar, not to reduce complications of diabetes.

In documents released on Friday, the F.D.A. said there were various shortcomings in the data from the trial. For instance, Jardiance did not reduce the risk of nonfatal heart attacks and strokes, and the study was not designed to measure its effect on heart failure. Still, the staff acknowledged that looking only at death from cardiovascular causes, the drug was effective. “We believe these documents should be a relief,” Vamil K. Divan, an analyst at Credit Suisse who follows Lilly, said in a note on Friday. ANDREW POLLACK

AIRLINES

United Flight Attendants May Get Details on New Contract

Ever since United merged with Continental in 2010, their flight attendants have been operating as if they still work for two separate airlines — pre-merger United flight attendants can only work on legacy United planes, and former Continental flight attendants work exclusively on Continental planes. The divided work force has led to operational challenges, including flight delays. But the Association of Flight Attendants, the union representing those employees, said it had reached a preliminary deal with the airline on Friday. Union leaders will meet in Chicago on Monday and Tuesday to finalize the contract before it is sent to the company’s 25,000 flight attendants for a vote on its final approval. ANNALYN KURTZ

BOND FINANCING

Puerto Rico Likely to Default on $1.9 Billion

On Friday, Puerto Rico is expected to default on scheduled debt payments totaling $1.9 billion, its biggest and most consequential default to date. In April, the island’s legislature gave Governor Alejandro García Padilla the power to declare a debt moratorium, and to bar creditors from suing to get their money. It is not clear that the law is constitutional.

Some of Puerto Rico’s creditors are still trying to negotiate debt restructuring. In Washington, legislation to give Puerto Rico debt reliefhas passed the House of Representatives and was expected to be taken up by the Senate this week, but it is unclear if that will happen by Friday. The bill would bar creditor lawsuits and give Puerto Rico certain restructuring powers normally available only in bankruptcy. It would also establish a federal oversight board for the island. MARY WILLIAMS WALSH

By THE NEW YORK TIMES

The Implications of the ‘Brexit’ Vote, Stress Tests and Puerto Rico

Puerto Rico Governor suspends payments on infrastructure debt

Puerto Rican Governor Alejandro Garcia Padilla late on Friday declared a suspension of any payments on some debt issued by the US territory's infrastructure financing authority, citing the authority granted under a local emergency debt moratorium law. Garcia Padilla signed an executive order that applies to "certain Puerto Rico Financing Authority (PRIFA) notes," a statement from the government said. "With this action, all obligations to transfer revenues or funds related to the PRIFA BANs (bond anticipation notes) are suspended," the statement said. Garcia Padilla said in the statement that the PRIFA notes were now covered obligations "pursuant to the Puerto Rico Emergency Moratorium and Rehabilitation Act," which the Puerto Rican legislature passed in April. That act grants the governor the authority to declare a moratorium on any debt payment he deems necessary. However, creditors have filed lawsuits in the US courts, calling the measure illegal as Puerto Rico, and its debt, is subject to US statutes rather than local law. Puerto Rico, with 3.5 million US citizens, a 45 percent poverty rate and rising emigration to the mainland that cuts into economic growth, has $70 billion worth of debt is says it cannot repay in full. Earlier this month, the US House of Representatives passed legislation aimed at creating a federal oversight board to oversee a restructuring of the island's debt, while putting in place a suspension on any past and future lawsuits related to the non-payment of some of its debts. The US Senate is slated to vote on the measure before Puerto Rico is scheduled to make July 1 debt payments of nearly $2 billion. President Barack Obama's administration has backed the measure, calling it a compromise deal. Garcia Padilla reiterated his desire for the senate to pass the bill known as the "Puerto Rico Oversight, Management and Economic Stability Act," or PROMESA. "In facing this crisis, we urge the US Senate to act on PROMESA, which although imperfect, offers an effective solution to address the fiscal emergency we face," Garcia Padilla said.

Puerto Rico Governor suspends payments on infrastructure debt

This week: Zika, Puerto Rico fights loom ahead of recess

Majority Leader Mitch McConnellMitch McConnellJuan Williams: GOP sounds the sirens over TrumpThis week: Zika, Puerto Rico fights loom ahead of recessTrump flexes new digital muscleMORE (R-Ky.) teed up a procedural vote on the House-Senate deal, which is attached to a larger military and veterans spending bill.

The agreement would give the Obama administration $1.1 billion to fight the Zika virus heading into summer.

The House passed the legislation late last week over the protest of Democrats before leaving town early for the break.

McConnell will need 60 votes to get the legislation over an initial procedural hurdle, expected on Tuesday.

He’s also tried to stamp down criticism of the current deal, saying it is the “only chance to put Zika control money to work right now.”

But Senate Democrats have balked at supporting the legislation, making it increasingly likely Congress won't be able to get an agreement to Obama's desk by the July 4 recess.

Senate Minority Leader Harry ReidHarry ReidWeek ahead: Court watchers await abortion ruling; Zika fight heads to SenateThis week: Zika, Puerto Rico fights loom ahead of recessHispanic Caucus PAC looks to flex its muscles in 2016MORE (D-Nev.) called the GOP-backed deal a "disgrace."

"It's a mockery of how Congress should treat an emergency," he said from the Senate floor last week. "This is something that I'm sorry to say is part of the McConnell-[Donald] Trump tactics we've found lately."

Though the Senate previously approved $1.1 billion in Zika money, Democrats take issue with how the current House-Senate agreement is paid for.

In addition to taking money currently earmarked to fight the Ebola virus, the GOP bill would also likely restart a fight over Planned Parenthood because it includes language that prevents funding from going to it and other family planning groups.

If Republicans are able to win over enough Democratic support—an uphill battle—they’ll also face opposition from Obama.

"The president would veto it if it ever got to his desk," White House spokesman Eric Schultz told reporters.

Puerto Rico debt crisis

The Senate is going down to the wire on a House-passed Puerto Rico relief bill ahead of a critical July 1st deadline.

GOP leadership is pledging to take up the legislation this month, giving them a matter of days to get a proposal to President Obama’s desk before leaving for the holiday break.

Though it passed overwhelmingly in the lower chamber, Senate Democrats have steadfastly refused to publicly warm up to the legislation.

Reid downplayed suggestions that Democrats would use procedural tactics to stall the bill, but said lawmakers had “some serious concerns.”

“We need some amendments to make sure that people understand what is not in that bill,” he told reporters last week.

According to Reid, one change Democrats will push for will relate to the federal oversight board created by the House legislation. Democrats argue the board, with members selected by the president and Congress, cuts Puerto Ricans out of deciding the direction of the island territory.

Any changes to the legislation would require it to be sent back to the House. The move would guarantee that legislation doesn’t reach Obama’s desk until next month.

Alejandro Garcia-Padilla, the governor of Puerto Rico, is urging senators to pass the House bill ahead of the deadline to make a roughly $2 billion debt payment.

“We do not have the cash to make those payments. A default of that magnitude... will affect our ability to pay our public workers, including police, nurses and therapists for special need children,” he wrote in a letter last week.

Treasury Secretary Jack LewJack LewThis week: Zika, Puerto Rico fights loom ahead of recessFed, Group of 7 monitoring markets after Brexit voteSenate Dem won't rule out blocking Puerto Rico debt reliefMORE also met with Senate Democrats in a closed-door meeting urging them to support the House bill.

Sen. Robert MenendezRobert MenendezThis week: Zika, Puerto Rico fights loom ahead of recessOvernight Cybersecurity: Senate narrowly rejects expanding FBI surveillance powersSenate narrowly rejects new FBI surveillance MORE (D-N.J.)—a vocal opponent of the House bill who has introduced his own alternative proposal—isn’t ruling out placing a “hold” on the Puerto Rico bill. The procedural move that would require McConnell to file cloture and eat up limited floor time.

But he added that “there's no reason to put a hold on the bill if you're given opportunities for amendments.”

Gun control

Supporters of a compromise bill to block suspected terrorists from being able to buy a gun are searching for a path forward.

A bipartisan proposal from Sen. Susan CollinsSusan CollinsThis week: Zika, Puerto Rico fights loom ahead of recessGun-control supporters plan next steps versus NRAHouse Republicans pushing gun control billMORE (R-Maine) survived a test vote late last week. Senators voted 46-52 against tabling the measure, which would have effectively pigeonholed it.

The legislation would allow the attorney general to block the sale of firearms to anyone on the no-fly list or what's called the selectee list, which designates people for additional screening airports.

It would also allow the decision to be appealed and would notify the FBI if someone who was the subject of a terrorism investigation within the past five years buys a gun.

Senate Democrats tried to gain momentum off of Thursday’s vote demanding that McConnell gives the proposal—being offered as an amendment to the Commerce, Justice and Science appropriations bill—a “real vote.”

"[McConnell] has a responsibility to bring the Collins' bill to this floor for a real vote,” said Reid, referring to last week’s floor drama as a “show vote.”

The Republican leader hasn’t moved to end debate on the broader spending bill, which could give supporters more time to press the issue in the wake of the worst mass shooting in U.S. history and the sit-in by House Democrats.

But, with the Senate measure failing to get 60 votes it appears to be stuck in legislative limbo. According to Reuters, Sen. John CornynJohn CornynJuan Williams: GOP sounds the sirens over TrumpThis week: Zika, Puerto Rico fights loom ahead of recessGun-control supporters plan next steps versus NRAMORE (R-Texas), the Senate's No. 2 Republican, told reporters that he didn't expect the Senate to have another vote on gun control.

Asked about additional votes on the Collins’ proposal, Don Stewart, a spokesman for McConnell, said “I don’t have any scheduling announcements on that (or the other amendments that have majority support but not 60).”

But supporters of the gun control bill are showing no signs of backing down.

Collins said late last week that there were approximately 10 GOP senators that are “on the cusp” of supporting her amendment, and that she planned to “keep working” to try to get additional support.

“I'm very pleased with where we stand. Obviously, I'd like to get to 60, but this is a good day," Collins told reporters after last week's vote.

But critics—including GOP senators—argue that many people on the terrorist watchlist are put there unfairly and so the proposal would infringe on the Second Amendment.

The measure has also drawn criticism from outside groups on both sides, including the National Rifle Association and the American Civil Liberties Union (ACLU).

The Senate is heading toward a fight over funding to combat the Zika virus ahead of the July 4th recess

By Jordain Carney

This week: Zika, Puerto Rico fights loom ahead of recess

Menendez pushes to amend Puerto Rico bill even as threat of default looms

Despite the threat of a historic default looming for Puerto Rico, Senate Democrats are pushing to amend key provisions of a House-passed rescue bill that they say run counter to the party's core principles.

Sen. Robert Menendez (D-N.J.), one of the bill's most vocal critics, has prepared amendments that he says he will try to attach even if it means passing the debt-relief package after July 1, when the commonwealth faces a $2 billion debt payment. Amending the bill would require sending it back to the House of Representatives for approval, yet the House is adjourned until July 5.

Though Menendez is a member of the minority party, he could place a hold on the bill, which the Senate leadership would need 60 votes to break. He declined to say whether he would use that parliamentary maneuver, though he didn’t rule it out.

"There's no reason to put a [hold] on the bill" if there's an opportunity for amendments, he said.

The resistance from Menendez and other Democrats is the latest hurdle for a bill that has set off a furious lobbying battle in Washington and was stalled in the House until Speaker Paul Ryan and the Obama administration struck a compromise to break the impasse. The House voted to approve the legislation on June 9.

Yet Menendez says he’s dissatisfied and will try to add measures to the House bill to create what he says is a "clearer pathway to restructuring." He will propose that the island’s government and agencies be able to restructure their debt without a supermajority vote of approval by a federally appointed oversight board that the legislation will set up. He also wants to add two seats to the board to be nominated and approved by Puerto Rico’s governor and senate. And he or another Democrat will propose eliminating overtime and minimum wage provisions.

"Hopefully, we're going to get a chance for amendments," Menendez said.

Menendez is working to rally Democrats to join him in pushing for those changes, even if it means slowing the bill's progress. He will need to persuade some Republicans too, given their majority and the 60-vote threshold that most measures must currently clear in the Senate.

Menendez said he is not concerned about pushing past the deadline for Puerto Rico's next big debt payment, saying it's more important to get the bill right.

"Puerto Rico's going to have a liquidity challenge no matter what,” he said. The bill contains language that would make a stay on lawsuits from creditors retroactive to December 2015, meaning it would catch new litigation in addition to suits that have already been filed, he said.

Sen. Sherrod Brown (D-Ohio), who cosigned a letter Menendez sent Senate Majority Leader Mitch McConnell calling for immediate consideration of the bill to allow more time to debate amendments, said he would likely support changes along the lines of what Menendez said he will introduce.

"I'm thinking of supporting it, but I'm very unhappy with the labor provisions and the way the [oversight board's] made up," Brown said. "[Republicans] want to make Puerto Rico into a little test-case laboratory that will make it even poorer than it is."

Sen. Debbie Stabenow (D-Mich.) echoed Brown and Menendez's dissatisfaction, saying she hadn't made up her mind on the bill but was sure she would support amendments similar to those Menendez had proposed.

"We have a growing number of people" supportive of efforts to weaken the board and eliminate the minimum wage and overtime positions, said Menendez, who added that he has persuaded several senators to support some of his changes. Menendez spoke to colleagues about his proposals following a briefing by Treasury Secretary Jack Lew at a Democratic caucus meeting last week.

Lew and his point man on Puerto Rico, Treasury counselor Antonio Weiss, have made personal entreaties to Senate Democrats to quell discontent over those provisions. In addition to Lew's weekly caucus meeting, Weiss has made calls and spoke at a Center for American Progress event with the goal of winning over progressive skeptics.

"We need to put this legislation into place and we need to pass it by July 1," Weiss said at the Thursday morning event, where he spoke on a panel with Puerto Rico's Gov. Alejandro Garcia Padilla and the commonwealth's nonvoting delegate in Congress, Rep. Pedro Pierluisi.

Pushing passage of the bill past July 1 may play into the hands of some creditors, who could file an emergency injunction to prevent Puerto Rico from spending money on anything other than its debt if no stay is passed before then. Better Markets, a nonpartisan group that pushes for Wall Street reform, has advocated against amending the bill because that could delay it. In a lawsuit filed against the commonwealth last week, a group of hedge funds holding general obligation debt argued that under the Puerto Rican constitution payments owed to them take precedence over governmental services.

Brown sounded less sure than Menendez about trading off timeliness for amendments.

"There's certainly fear" of going past July 1, he said. "There's fear of us going too slow."

Though McConnell has not announced a specific introduction date, he appears ready to aim for passage before July 1.

Given objections from Menendez and Sen. Bernie Sanders (I-Vt.), McConnell may file cloture on Monday, meaning final passage of the bill would come Thursday, after a required intervening day and 30 hours of debate time. To block any changes, McConnell could fill the amendment "tree," precluding any further attachments to the bill that could slow its passage. A spokesperson for the majority leader did not comment.

The expedited consideration may also give Democrats political cover to rail against a process that didn't grant them a chance to change the legislation, while still reluctantly voting yes to a bill they see as imperfect, just as a majority of their House counterparts did.

"Given the growing bipartisan realization that Puerto Rico's economic woes are giving way to a humanitarian crisis, I think the Senate will ultimately pass [the bill] before breaking for July 4 recess," said former New Hampshire Sen. Judd Gregg, who has lobbied senators on behalf of a group of creditors supportive of the bill. "With the strong leadership support and bipartisan coalition, passage should be swift and uninterrupted, which is obviously what the situation needs."

"Puerto Rico's going to have a liquidity challenge no matter what,” Sen. Robert Menendez says. | AP Photo

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By Colin Wilhelm

Menendez pushes to amend Puerto Rico bill even as threat of default looms

PROMESA: Puerto Rico's "Restructure" at $4.25 an Hour

In the last few months Puerto Rico’s economic crisis has become pretty famous. People talk about the financial instability of the islands of Puerto Rico, as much as they used to dance the Gasolina of Daddy Yankee, or La Vida Loca from Ricky Martin. Truth is, things are rough and now more than ever Puerto Ricans need to dance. Not just for fun, but to escape from the reality of a precarious livelihood and an uncertain future.

Some people say that the United States Territory of Puerto Rico has around a 72 billion dollar debt to bond holders. It is still not clear how the Puerto Rican government acquired so much debt, or how the money was spent. Most of this seems to be an Odious Debt, in which citizens of the islands have not benefited from the borrowed money. The money was not necessarily used to build roads, schools, and hospitals or to create projects of public interest. This is why this debt needs to be audited, first of all.

But most people in the United States and in Puerto Rico accept the narrative of the 72 billion dollar debt as they would accept Medalla beer or a Malta for those who don’t drink. Without necessarily understanding or questioning the debt accumulated and where it comes from.

This is the case of Pulitzer-prize winner, Lin-Manuel Miranda who humbly kneeled before Speaker Paul Ryan to ask for mercy and approve a bill that will ease Puerto Rico’s economic crisis and pay the debt. He even offered free tickets for his Broadway show Hamilton in order to push legislation for Puerto Rico (this would be considered extortion in other scenarios). But if Miranda wants to contribute something to his Puerto Rican people, he should stop offering free tickets and maybe use some of those royalties from Hamilton’s costly tickets to start a fund that could help the soon starving young workers and students of Puerto Rico.

In Miranda’s own words “The good news is that Speaker Paul Ryan has fulfilled his promise: he worked together with Republicans and Democrats, and has created a bill that will determine the immediate future of Puerto Rico.” This bill (H.R. 5278) is the Puerto Rico Oversight, Management, and Economic Stability Act, better known as PROMESA, which was developed by the Committee of Natural Resources under Chairman Rob Bishop, and recently approved in the United States House of Representatives with a vote of 297 to 127.

PROMESA proposes the establishment of an Oversight Board with seven members appointed by the United States President, who will be granted totalitarian control over Puerto Rico’s finances in order to restructure the Puerto Rican debt, which equals to: “Fuck you pay me”. Section #4 of the bill says, “The provisions of this Act shall prevail over any general or specific provisions of territory law, State law, or regulation that is inconsistent with this Act.”

Nevertheless, the creation of an apparatus like PROMESA should not be a surprise. The United States Congress had total control over the insular government of Puerto Rico, ever since the Foraker Act was approved in 1900. It wasn’t until the creation of the Free Associated State Constitution (ELA) in 1952, that Puerto Ricans were granted the right to elect their own governor and handle the internal administration of the country. Still when the United States Congress approved this, they sustained the capacity of imposing legislation over Puerto Rico’s Government and retaining ultimate power over all of Puerto Rico’s affairs.

Today is a historical moment: we are seeing how the United States Congress is making use of that supremacy they secured more than half a Century ago. The consequences are still to be seen. Some people talk about an ongoing humanitarian crisis, but the real humanitarian crisis is going to come when seven business men come to Puerto Rico to elaborate an economic plan as they get drunk on Barrilito in the beach of the San Juan Hotel.

However, many Puerto Ricans in the homeland have a welcoming sentiment towards the Oversight Board. According to a recent poll from El Nuevo Día, 46% of the citizens in Puerto Rico favor the Oversight Board or Junta de Control Fiscal, as it is locally known. Fed up with corruption and incapacitated officials administering the territory, it is understandable the frustration among the islanders and their lack of faith in the local government. A weak leadership on the left also aggravates this, which for decades has been unable to present itself as viable alternative to the country’s development.

This puts all the pieces in the right place for a checkmate!

According to many members of the Democratic Party, PROMESA is the only help the Republican-Controlled Congress is willing to enact on Puerto Rico and we must make “Lemonade out of Lemons”. Ironically on June 9th, more Democrats than Republicans voted in favor of this bill in the House of Representatives (158 Democrats versus 139 Republicans).

Puerto Rican workers have been making lemonade out of pee since the economic crisis started to hit in 2006. Precarious jobs are on the rise, professional services are not paid well and employment opportunities are scarce. PROMESA does not propose to do anything about this, on the contrary it will make the economic crisis worse on workers, while rewarding corporations and making sure that bondholders keep receiving monthly payments.

One of the most controversial provisions of the bill is the reduction of the federal minimum wage from $7.25 to $4.25 an hour for workers 25 years old and younger. The last time hourly wages were this low was about 20 years ago. Gas, tripletas and condoms are more expensive now. Still, employers can pay $4.25 an hour to workers 20 years old and under, but they can only do so for the first 90 days of employment. PROMESA changes that for Puerto Rico; it doesn’t establish a cap on days and elevates the age to 25.

The side effects of a $4.25 an hour to young workers, are more than we can think of. It represents the postponement of economic independence for young adults, and in many cases limits the capability of contributing economically to their household. The bill doesn’t take into consideration parents under 25 or young workers who their own parents rely on, with all the layoffs in recent years and pensions at risk. The necessities of college students are also outside of the map inside this provision, not taking into account how many of them rely on their wages to pay for university studies, books and housing.

$4.25 x 40 hours = $170 of weekly gross income.

If you’re a full-time worker, $170 (before taxes) is what as a young worker you will have pa’ resolvértelas in the most expensive country of Latin America. Isla del Encanto, where gas, utilities and groceries are more expensive than the average in the United States. $170 a week, that’s if you’re lucky.

As the deregulation of labor continues to be the trend in this century, employers hire less full-time workers and young workers need to conform with only working 15 to 35 hours a week with no benefits or regularity. You make the math for that one. PROMESA promises: to give corporations a legal tool on “How to Make More Profit Out of the Sweat of Young Puerto Ricans”.

The $4.25 wage also poses a threat to older workers. Even though the bill states, “No employer may take any action to displace employees (including partial displacements such as reduction in hours, wages, or employment benefits) for purposes of hiring individuals at the wage authorized ($4.25)” it is easy for an employer to do exactly that, they just need to find ways around the legality of their intentions. Union jobs could be safer in this sense, but non-unionized workers on a precarious situation could be fired or punished for any fault that goes against the employer according to their established policies.

Then, there will be a job opening starting immediately at $4.25 an hour for a: “committed, motivated and energetic individual, who is able to work under-pressure and enjoys working flexible hours”. Isn’t this what most job postings say?

Something else that the PROMESA sponsors don’t take into consideration is the chance of delinquency increment in the islands of Puerto Rico if a sector of the population was to make less money. This is what happens when you have Republicans from Utah and Wisconsin writing a legislation that concerns a Caribbean Third-World Colony of the United States. There is already lack of employment opportunities in Puerto Rico, and unfortunately many youngsters who’ve been abandoned by the education system struggle even more.

Puerto Rico has decaying public education system, and a bill like PROMESA facilitates the closing of schools and education programs in order to pay the debt. This could represent many more school dropouts in the upcoming years that will enter the labor world of $4.25 an hour. Between a job that offers $4.25 an hour versus a robust and stable underground economy in Puerto Rico with opportunities of advancing, hustling in the streets becomes very tempting. Young people don’t want to be 425 slaves.

I don’t think that most candidates aspiring for Puerto Rico’s governance understand the social impacts of a $4.25 minimum wage, but they all have expressed their opposition to it (there are many voters between ages 18 and 25). This is the only provision in PROMESA’s bill that requires the governor of Puerto Rico to directly sing on, any other administrative decisions of the Oversight Board can be done without the authorization or approval of Puerto Rico’s governor. This is not a guarantee that a $4.25 minimum wage will not be implemented.

For example, we’ve seen in the past how gubernatorial candidates have expressed their opposition of adopting sale taxes, and once in office they’ve done the entire opposite. Such is the case of former governor Anibal Acevedo Vilá, who said he would never approve a 7% sales tax and later argued he had no choice. Alejandro García Padilla, the current governor brought a VAT of 11.5%.

A waiver to the federal minimum wage doesn’t only represent a threat to the Puerto Rican people; this could also establish a precedent for other states in the union. While in the United States workers are fighting for a $15 dollar an hour minimum wage, young Puerto Ricans face the possibility of less than $5 in the upcoming years. This is why labor unions are very attentive to this case, including the SEIU and the UAW who have opposed this bill. But, Hillary Clinton (the presidential candidate they’ve endorsed) said “While I have serious concerns about several provisions in this bill, including the creation of an oversight board that would exert substantial control over Puerto Rico, I believe that we must move forward with this legislation”.

Soon, PROMESA will be discussed in the United States Senate. Sources say that the Senate will try to pass this like Steph Curry on a fast break ahead of Puerto Rico’s next bond payment in July 1st.

At this stage, the only hope to kill this bill inside Congress lies possibly on Senator Bernie Sanders, who the Puerto Rican democrats didn’t favor in the presidential primaries of the territory. Clinton won big in Puerto Rico, but it seems that Sanders didn’t take it personal. In opposition to PROMESA, he has done more than proposing amendments to the bill. Sanders, has introduced the Puerto Rico Humanitarian Relief Act, which doesn’t establish an Oversight Board or includes a $4.25 minimum wage reduction. Still, Sanders legislation needs to be expanded upon according to Natasha Lycia Ora Bannan, president of National Lawyers Guild.

Meanwhile in Puerto Rico, groups are organizing, coalitions have been formed, and the possibility of practicing civil disobedience to challenge the Oversight Board it’s been openly discussed. A massive people assembly to organize against PROMESA has been called for June 25th by Puerto Rico Contra la Junta at the Roberto Clemente Coliseum in the Capital City of San Juan. In the Puerto Rican Diaspora, groups are organizing too. The fight against PROMESA could be the next Vieques, the next Adjuntas, or the next student movement.

 



Juan C. Dávila

PROMESA: Puerto Rico's "Restructure" at $4.25 an Hour

Let Puerto Rico help itself - Sun Sentinel

he Supreme Court this month sent two very clear messages to Puerto Rican officials wrestling with a crippling debt crisis that underscore what advocates for the island commonwealth have long known – Puerto Rico is simply a colony,

In the first case, the court ruled that Puerto Rico could not try two men on gun charges because they had already pleaded guilty in federal court — something every state in the union would be able to do without violating double jeopardy proscriptions.

The decision written by Justice Elena Kagan ruled that it did not matter that the United States Congress authorized Puerto Rico to create its own government and its own constitution. Kagan acknowledged that the 1952 Puerto Rican constitution authorized the commonwealth to bring criminal charges, but Congress remains the overseer of Puerto Rico's rights to govern itself.

"The island's constitution, significant though it is, does not break the chain," Kagan wrote.

Jaime Estades

Let Puerto Rico help itself - Sun Sentinel

Puerto Rico sued by bondholders after debt negotiations break down

A group of bondholders on Tuesday sued Puerto Rico’s government as debt negotiations fell apart less than two weeks ahead of what would be the largest default in the island’s history.

The suit filed in New York by holders of general obligation bonds seeks to invalidate a debt moratorium and fiscal emergency law passed in early April as the island struggles to restructure $70bn in public debt.

While Governor Alejandro García Padilla has not yet implemented a temporary debt moratorium, many speculate he will soon because Puerto Rico is expected to default on a payment of nearly $2bn on 1 July. That amount includes more than $700m in general obligation bonds that are supposed to be guaranteed under the island’s constitution.

The lawsuit said bondholders relied on that key protection when they bought general obligation bonds two years ago.

“Plaintiffs have an absolute right to be paid first among all obligations of the Commonwealth, to be paid in full, and to be paid on time,” the lawsuit states. “When Puerto Rico approached the capital markets in late 2013 to issue the 2014 GO Bonds, Governor Garcia Padilla trumpeted the bonds’ constitutionally guaranteed priority.”

The case was brought by Washington-based Robbins, Russell, Englert, Orseck, Untereiner & Sauber on behalf of several investment groups.

Overall, Puerto Rico has roughly $12.5bn worth of outstanding general obligation bonds, according to the lawsuit.

The lawsuit was filed on the same day that Puerto Rico’s government announced it was ending private talks with bondholders following several failed proposals and counterproposals involving debt payments.

Puerto Rico’s Government Development Bank, which is operating under a state of emergency amid dwindling liquidity, publicly released those proposals, including one presented to bondholders a week ago that officials said was more generous than a previous proposal made in April.

Puerto Rico already faces a couple other debt-related lawsuits as the US Senate prepares to debate a bill called Promesa, already approved by the US House of Representatives, that would implement a federal control board, among other things, to address the island’s soaring debt.

Grace Santana, the governor’s chief of staff, told the Associated Press that the government is reviewing the lawsuit but accused bondholders of refusing to acknowledge the island’s fiscal crisis.

“Puerto Rico has debts it cannot pay,” she said. “This attempt by hedge funds to disrupt the Commonwealth’s ability to keep the lights on and provide essential services for the 3.5 million Americans on the island makes clear that the Senate must act and pass Promesa before July 1.”

Overall, Puerto Rico has roughly $12.5bn worth of outstanding general obligation bonds, according to the lawsuit. Photograph: Bloomberg via Getty Images

Puerto Rico sued by bondholders after debt negotiations break down

Puerto Rico: Democracy Is The Answer

Every day as I look over the deep blue waters of the Condado Lagoon I tell myself: what a privilege it is to live in Puerto Rico. But then, reality sinks in. I open the newspaper at 6 a.m. and read the headlines: “No money.” “No payment for bondholders.” “Congress owns Puerto Rico.” Where am I? Am I in a U.S. colony? No. It can’t be. Colonies don’t exist anymore, right? Aren’t Puerto Ricans Americans?

I read the newspaper again, just to double check. Yes, the people of Puerto Rico have been shortchanged not only in funding but also in civil rights by the US Congress, the US Supreme Court, and soon the U.S. Senate (expected to take up the bill before July 1st) when the PROMESA Act is finally approved and signed by President Obama.

PROMESA aims to establish an oversight board, a process for restructuring debt, and expedited procedures for approving critical infrastructure projects in order to combat the Puerto Rican government debt crisis. The same day PROMESA was approved in the House, the U.S. Supreme Court confirmed that “Congress is the original source of power for Puerto Rico” and therefore, Puerto Rico belongs to Congress. The Emperor has no clothes now. We are a colony.

As I viewed the U.S. House vote on PROMESA — I could not help but think about my son Salvador who will be 18 in 10 years and may have to face the hard decision whether to stay in Puerto Rico or leave. In 15 years he may have to build his family in the U.S. mainland - not in Puerto Rico - to secure an appropriate standard of living for his children. That is the decision that is currently made by many Puerto Ricans (who are U.S. Citizens) every day these days. Families broken, dreams shattered, and a beloved Island nation state left behind.

I have worked very hard in my life, studied hard, and in many ways my life is the American Dream. I came from very humble origins and thanks to the resilience of my family and our focus on working hard and getting an education (MIT MBA) — together we achieved unimaginable heights. Yet, when I decided to return to my community to give back, what I found was a web of complicated colonial interests canceling each other out mostly because underlying the relationships was the crude truth that none of us, really, owned our destiny.

Life in Puerto Rico these days is not as easy as it seems from the eyes of our fellow Americans who come to vacation here. Many of the things Americans take for granted in their cities and states are not true here. The current colonial arrangement means, among many other examples, that doctors get reimbursed less money, so nurses get less money, and patients of course get a service that is not at the level it should be as US Citizens.

But what does this colonial relationship mean for people who are just trying to make a living in our community? Well, what it really means is that we are constantly in a daily struggle to prove our worth as human beings, equal to our fellow citizens living in the US Mainland. We also have to struggle each day with a system imposed upon us where sometimes a law or regulation has been brewing for years suddenly is approved. Because we have no real representation and vote, we often know nothing about the law or regulation until it is legally binding.

That’s why representation exists in a democracy — so that citizens can delegate the responsibility of analyzing information, debating issues, making decisions, and having the people’s voice taken into account, without having to pay anyone (i.e., a lobbyist) to represent them.

There is intrinsic value in the democratic process, where not only do citizens vote, make amendments, and provide their input, but where there is also a true collective learning process. We don’t have this in Puerto Rico, and as a result, our people are constantly trying to catch up, constantly trying to figure out what laws were approved, who supported them, for what reason and how they impact us only after they have been approved not before or during, or when it is too late to influence the process.

The only Puerto Ricans who get a chance to influence the process are those with the resources to drive through the labyrinths of Congress or the White House. Not only do we not have representation in Congress, but we don’t have the right to vote for the U.S. President whose policies affect our daily lives.

So what to do about this? Certainly a change in the Puerto Rico-United States relationship is in order. For many years, our politicians, particularly those from the Popular Democratic Party resisted this because Puerto Rico was in a “comfortable” enough position to avoid making a final decision on our destiny. Now, our collective credit cards have been maxed out — and a lot of money was not well spent, and we are broke. We have lost our negotiating power and are faced with the difficult decision to accept a fiscal control board imposed to oversee our affairs.

Yet, the larger question remains unanswered: how can we take this opportunity that history has given us to take our society to a higher level of democracy, as an Independent nation, a state of the Union or both (similar to Ireland where the Republic of Ireland and Northern Ireland coexist)?

For Americans, a Republic of Puerto Rico means the U.S. would have an important ally in the Caribbean while a 51st state of Puerto Rico means a more diverse U.S. society and government. Either way, to address the Puerto Rican debt and economic crisis, the U.S. needs to work with Puerto Ricans to solve the democracy crisis either as a future Independent nation or 51st State of the Union. The time is now.

Antonio Sosa-Pascual

Puerto Rico: Democracy Is The Answer