Senate Democrats introduced legislation Monday that would give Puerto Rico a temporary stay on litigation while Congress figures out a plan to address the island’s debt crisis.
The island owes over $70 billion in public debt with a $950 million payment due Jan. 1, which Puerto Rico Gov. Alejandro Garcia Padilla has said it may not be able to meet.
The Puerto Rico Emergency Financial Stability Act, spearheaded by Democrat Sens. Richard Blumenthal, Elizabeth Warren, Chuck Schumer and Minority Leader Harry Reid, would block creditors from the commonwealth through March 31.
House Minority Leader Nancy Pelosi introduced similar legislation in the House Friday.
Democrats have pushed to allow the commonwealth to restructure its debt, a decision many conservatives don’t agree with. Puerto Rico’s governor failed to get a provision extending bankruptcy rights added to the end-of-the-year spending bill passed by Congress last week, despite lobbying efforts.
“The chances of this bill making any progress would appear to be slim since the Republicans are opposed to a bailout and they are also opposed to allowing Puerto Rico to avail itself of Chapter 9 bankruptcy procedures,” Desmond Lachman, a resident fellow at the American Enterprise Institute, told The Daily Caller News Foundation.
Senate Republicans introduced a bill earlier this month that would provide the island with $3 billion in aid and would establish a board to help advise Puerto Rico on its budget to get back on a path to fiscal sustainability.
Salim Furth, a fellow at the Heritage Foundation, told TheDCNF bad progressive policies led to the island’s economic issues in the first place, and throwing more money at the issue will not solve the problem in the long run.
Despite the financial hardships the island is facing, Padilla will still dole out Christmas bonuses to government workers, reported Bloomberg.
Furth said the island needs to develop a long-term economic reform plan that will work in 30 years, not just 30 days. “I think it is going to be a very close call as to whether Puerto Rico will default at the beginning of the year,” Lachlan told TheDCNF. “If it does, that would be very unsettling for the U.S. municipal bond market.”
House Speaker Paul Ryan said the island’s debt crisis will be a priority in the first quarter of next year.
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