Lew urges Senate to pass Puerto Rico rescue bill this week

Treasury Secretary Jack Lew sounded the alarm Monday on the looming deadline for the Senate to pass legislation to help Puerto Rico with its debt crisis. He said that if the island defaults on the July 1 payment, the government may be forced to shut down public transit, close a hospital or send police officers home.

If Congress does not pass the “Puerto Rico Oversight, Management and Economic Stability Act”, or PROMESA, before July 1, the island could default on all or part of the debt payment, including General Obligation bonds that are senior to all credits. Failure to pay could authorize a judge to order immediate payments, which would force the closure of public institutions.

Senate Majority Leader Mitch McConnell, R-Ky., has said the Senate will consider the House bill this week, but he will need support from both parties to surmount a certain 60-vote threshold to advance legislation. With four days remaining left before the July 1 deadline, the Senate has yet to take up the measure.

A controversial bill to create a new regulatory scheme and impose additional fees on dietary supplement firms operating in Puerto Rico was defeated this weekend.

House Minority Leader Nancy Pelosi, D-Calif., also supports the bill, despite a provision opposed by Democrats that would allow the Puerto Rican government to temporarily lower the minimum wage for some younger workers.

“The Senate should take up the matter immediately”, Lew said in a letter to McConnell.

“We are very pleased with the results of our opposition and to see that SB 1599 did not move beyond this point”, said Mike Greene, vice president of government relations, CRN. Menendez is also expected to propose eliminating provisions in the bill that would exempt companies from having to pay overtime and the full minimum wage to some employees. If the Senate passes the bill but amends it, the House will have to vote on it again next week when it is back in session, which could be too late for Puerto Rico.

Several Senators are looking to amend the legislation before a potential default on July 1.

“The bill is not flawless”. “While our creditors continue to sue the Commonwealth with the intention of collecting their balances, 45 percent of the Puerto Rican people live under the poverty level”. I do not like that it doesn’t add a mechanism to make our economy grow, but what is the alternative right now? “[Republicans] want to make Puerto Rico into a little test-case laboratory that will make it even poorer than it is”.

Investors on June 21 filed a lawsuit in US federal court calling the Puerto Rico Emergency Moratorium and Rehabilitation Act illegal. Gov. Alejandro Garcia Padilla said in Washington last week. The bill would put a stay on such lawsuits.