House GOP reworking Puerto Rico bill as conservatives balk

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WASHINGTON (AP) — Faced with opposition from conservatives, House Republicans said Friday they are rewriting legislation to help Puerto Rico out of its $70 billion debt.

The territory is facing a default in early May on a $422 million bond payment, and another $780 million is due to creditors in July. Congressional Republicans and the Obama administration agree that the island could face total financial collapse if Congress doesn't step in.

House Speaker Paul Ryan is pushing the bill, which would create a new control board to manage the territory's finances and allow the board to supervise some court-ordered debt restructuring. But he is facing an ideological battle that has plagued the House for several years — a small group of conservatives challenging leadership and demanding changes.

Republican leaders hope to placate the conservatives and secure their support. Rep. Rob Bishop of Utah, chairman of the House Natural Resources Committee, said he expects the basics to stay the same: A strong control board, with the ability to facilitate some debt restructuring, along with some provisions designed to give creditors more of a say on debt plans.

The bill would allow creditors a preliminary vote on whether they want to voluntarily restructure debt, a concession for Republicans concerned the debt restructuring would be harmful to the bond market.

To make the bill more palatable to conservatives, Bishop has suggested that he and sponsor Sean Duffy, R-Wisc., could try to add additional language on oversight of the control board. The seven-member board would be partially appointed by Republicans and Democrats in Congress.

"If I can figure out language to force them to be smart and do things well — I don't quite know how to do that but that is a concern," Bishop said of the proposed board.

He said he thinks the majority of lawmakers want to see a bill pass, but that some are wary because the issue is complicated. Many haven't been following the problems in Puerto Rico.

"Intellectually I think everyone is there," he said. "They just have to be comfortable about it."

Puerto Rico has been mired in economic stagnation for a decade. The financial problems worsened as a result of setbacks in the broader U.S. economy, and government spending in Puerto Rico continued unchecked as borrowing covered increasing deficits.

Republicans met Friday morning to discuss the issue, and Ryan and Bishop told colleagues that the U.S. could eventually have to bail out the territory if Congress doesn't act soon to prevent collapse.

Ryan has pressed the point that the bill does not bail out the territory — or give any direct financial aid. Instead, he and Bishop are pitching the control board as a "conservative solution to decades of liberal mismanagement" in Puerto Rico.

As with many issues in the House, some conservatives are vocally skeptical.

"This could be a first step toward a bailout. And that's a problem, and it's going to have to be worked out," said Louisiana Rep. John Fleming, a Republican on the Natural Resources panel.

After the meeting, some Republicans said the back-and-forth is a familiar story from recent years: "Everyone knows we need to act, everyone says they want to act, when it comes time to voting I suspect we're going to need a whole lot of Democrats to help us pass," said Charlie Dent, R-Pa., a more moderate member of the caucus.

That could also be a challenge: Democrats worry the control board would be too powerful, want an easier route to restructuring and have expressed concerns about a provision that would lower the minimum wage for some workers on the island.

Texas Rep. Bill Flores, head of a group of around 170 House Republicans that had expressed concerns about the restructuring provisions, said after the meeting Friday that he thinks the next draft may address conservative concerns. He called Puerto Rico a "wayward child" and said Congress probably hasn't exercised enough oversight over the territory in the past.

"That said, we still have a responsibility to help," he said.

Also complicating the Republican effort is an advocacy group called the Center for Individual Freedom, which is running ads in various congressional districts that claim the bill is a bailout.

As Republicans met Friday, the group issued a statement quoting senior vice president Timothy Lee: "Members of Congress should not be fooled by leadership's attempts to persuade them that this bill is not still a bailout," he said.

The Senate has not yet acted on the issue.


Associated Press writers Erica Werner in Washington and Danica Coto in San Juan, Puerto Rico, contributed to this report.


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