To recap, the Puerto Rico Oversight Act as it currently stands will:
- Give Puerto Rico a six-month stay on all debt payments;
- Require the Governor to create 5-year fiscal plans and submit them to an appointed Oversight Board for approval;
- Require the Legislature to submit all passed budgets to the Oversight Board for approval;
- Allow the Board to unilaterally cut budgets if the Governor submits a budget that does not comply with the fiscal plan;
- Allow the Board to negotiate with creditors to restructure debts (which usually means reducing them in net-present value terms);
- Allow the Board to suspend certain federal labor regulations on the island, including the federal minimum wage;
- Grant bankruptcy protection to Puerto Rico (without using the term) and give the Oversight Board the ability to intervene in litigation against the island.
Without (1) and (7) the island goes to pieces right quick. You can see a (rather misleading) summary of what Republican supporters say the bill will do here.
My worry about the Oversight Board is not that it will cut budgets more drastically than an elected Puerto Rican government. The examples of Portugal, Spain, and Greece are pretty clear: when they cannot borrow anymore, elected officials do a fine job of imposing austerity. Maybe too fine a job. Rather, I worry that they won’t negotiate as hard as the government would. On the other hand, as Felix Salmon points out, the Board will consist of seasoned professionals who may be able to drive a harder bargain than Puerto Rican officials. So it is a bit of a wash.
But ... weirdly ... Republicans kept trying to neuter the bill in committee! (The link takes you to a blow-by-blow of the action.)
Consider the McClintock amendment. (Rep. McClintock, R-California, has in fact offered several amendments.) It would clarify that the bill would not apply to Puerto Rico debt obligations that are supported by a pledge of “full faith, credit and taxing power,” meaning, like, all of them. It would also clarify that nothing in the bill would alter debt holder rights or guarantees under Puerto Rico’s constitution or other laws. Which would, in effect, nullify bankruptcy protection by insuring that creditors could sue under Article 6, Section 8, of the Puerto Rican constitution.
Pretty blatant. Rejected 12 to 27. 12 Republicans in support, 16 Democrats opposed, 11 Republicans opposed.
Which Republicans opposed the amendment? Well, there was the committee chair, Rob Bishop (R-Utah). Good for Rob! The other Republicans that opposed it consisted of a collection of retirees on their way out (so under no political pressure), Raúl Labrador (R-Idaho, but born in Puerto Rico), Amata Radewagen (R-American Samoa), and a handful of others.
For most of the markup the Chairperson Bishop has been able to beat back amendments with points of order, but the more senior Republicans (including McClintock, obviously) lined up behind these poison pill amendments. The final vote was 29 to 10 and basically split the Republicans.
You gotta wonder what it will look like on the floor. If Paul Ryan lets it move without the majority of the caucus behind it, then he will have earned my respect. Sure, I may be a little disgusted at his resorts to magic asterisks to justify his silly budgets, that cut social insurance not because we have to but because he wants to ... but hey, reasonable people can disagree. If he gets this bill through and refrains from helping the Drumpfster this year, well, then the man will deserve to be the GOP nominee in 2020. Honorable opposition indeed!
Good luck with that, Paul.