Puerto Rico Oversight, Management, and Economic Stability Act
Floor Speech
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Mr. DUFFY. Mr. Chair, I thank Congressman Bishop and the whole Natural Resources Committee for all of the hard work they put into this bill.
This has been a months-long process of working with Democrats and Republicans, the administration, Treasury, Puerto Rican elected officials, all coming together to negotiate, to discuss, to philosophize and then eventually come up with what I think is an excellent resolution to the burning crisis in Puerto Rico. I want to take a moment to talk about what is actually happening on the island.
Puerto Rico is $73 billion in debt. That is over 100 percent of GNP. They have almost $2 billion of unpaid bills to their vendors. So what does that mean? That means schools are closing down because we don't have fuel for energy in the schools or for school buses. Hospital wings are closing. Emergency vehicles aren't being run because the island doesn't have money to pay its bills. This is a true economic crisis. It is a true humanitarian crisis that is taking place in Puerto Rico.
So the question becomes: Does this institution act to help Puerto Rico, or do we continue to negotiate and refine and tweak a bill that will never come to the floor, that will never make it to the Senate, that will never gain the President's signature? Do we let perfect be the enemy of the good?
I think this is a great bill that is going to actually get Puerto Rico on a path to prosperity, opportunity, and economic growth; that is going to help the people in Puerto Rico who have a dream of living in Puerto Rico stay in Puerto Rico with their families in their communities on the island that they love.
Right now, there is despair. We have thousands of people leaving Puerto Rico every month to come to the mainland because there is no opportunity. This is what debt does to economies. It absolutely crushes them, and it crushes people.
So what do we do? Well, we have a two-pronged approach. Number one, the elected officials in Puerto Rico have known that this issue has been coming for years, and they haven't been able to get their hands around it, haven't had the political will to fix the burning problem. So we are going to put into effect an oversight board to actually work with the island government to get its finances and its budgets under control.
That oversight board is going to have an opportunity to work on debt restructuring, which is the second prong of this bill. $73 billion in debt, they can't pay it. People might want to wish that all the bondholders could be paid. They might dream about all the bondholders being paid, but the bottom line is Puerto Rico doesn't have enough income to pay its bondholders. They can't pay their vendors, let alone their bondholders.
So we set up a system where the island and the bondholders have a forum in which to negotiate a settlement, a resolution to this massive debt. And if they can't come up with a resolution or a solution to the debt, they can access the court system, and the courts can help them resolve the disputes in regard to this massive debt. It is that system that is going to allow for debt restructuring and an oversight board that is going to bring Puerto Rico to a place of economic health. When you can get to a place of economic health, you can start to have a conversation about economic growth; and when you have economic growth, you actually help people, you help families, and you help communities.
Now, there are some who have said that this bill is a bailout. Let me tell you what. I have the definition of a bailout, and a bailout happens when this institution sends taxpayer monies to somewhere else or to somebody else. The bottom line is this bill doesn't spend any taxpayer money bailing anybody out. There is no taxpayer money that is involved.
What we do here is say: Hey, listen. If you invested in Puerto Rican bonds and you might have gotten a great upside, a great return on your bonds that you maybe bought at 50 or 60 cents on the dollar, you took that risk; and if there is a loss, you, the bondholder, are going to bear the loss on that bond, but the taxpayers aren't going to bear that loss for you.
So I think this is a great compromise, a great package that is going to bring economic health and growth back to Puerto Rico.
I want to thank Mr. Pierluisi for all of the insight that he has given to both sides of the aisle on what needs to be done to make this work, and the elected politicians, the Speaker of the Puerto Rican House, who has been so gracious with his insight into how we structure a package that is going to grow Puerto Rico.
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Mr. DUFFY. Mr. Chair, the Puerto Rico unemployment rate is double the national average. Nearly one in every two residents lives below the poverty line. Economic growth is in the negative. We have heard about that all day today. Now, PROMESA will stop the bleeding, but there isn't an easy solution to jump-start the economy. We have a down payment in a commission, but this is, I think, a real step in the direction of trying to kick-start economic growth.
My amendment, with my colleague from Puerto Rico (Mr. Pierluisi), will provide modest assistance to Puerto Rico by removing an impediment to the Small Business Administration's HUBZone program that limits the number of businesses on the island that are eligible for the program.
This idea was brought to me by my friend Jaime Perello, the speaker of the Legislative Assembly of Puerto Rico, and it is a good one. What does it do? The HUBZone program is a small business, Federal contracting assistance program, whose primary objective is job creation and increasing capital investment in distressed communities.
Now, there is a 20 percent cap. So that 20 percent cap for this program might not affect Minneapolis or Chicago or Milwaukee because you don't even have 20 percent of the communities that are distressed.
However, in Puerto Rico you have far more than 20 percent of the communities that are distressed. You have 80 percent of them that are distressed. So by removing this cap, you have a larger part of the community that qualifies to access this program.
This is, I think, a very good solution and downpayment on economic growth and investment in Puerto Rico. Not only that, but there have been some noted problems with the program. GAO has made some recommendations. We have solidified those recommendations in this bill not just for Puerto Rico, but for the Nation as a whole to make sure there are better checks and balances in the HUBZone program.
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Mr. DUFFY. Mr. Chair, I yield 2\1/2\ minutes to the gentleman from Puerto Rico (Mr. Pierluisi).
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Mr. DUFFY. Mr. Chair, who has the right to close?
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Mr. DUFFY. Mr. Chair, I appreciate the comments by Chairman Chabot, and I would just note that I know his committee hasn't had oversight hearings on this issue. The GAO has done extensive studies, and the Small Business Administration has not implemented those recommendations. I think the most salient recommendations made by the GAO have been included in this bill and go a long way to improving the program, but if we are going to fix Puerto Rico, debt restructuring is imperative.
This oversight board is key, but we need economic growth. And I think this is the right downpayment to help kick-start some economic growth on the island, that the people in Puerto Rico know that we understand that. And we are taking one small step today to show that we are going to help them get from that 20 percent cap to allow 80 percent of the island to access this HUBZone program because we care about growth, we care about opportunity, and we care about jobs on the island.
Mr. Chair, I yield back the balance of my time.
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