Senate Democrats sent a united message Wednesday to Majority Leader Mitch McConnell: Allow Puerto Rico to declare bankruptcy on its massive $72 billion debt.
Puerto Rico faces more than $400 million in debt service due in May and another $1.9 billion due in July, when even bigger defaults are almost certain.
“We urge you to commit to working with us to swiftly enact legislation to give Puerto Rico access to appropriate restructuring tools,” said a letter to McConnell that was signed by all 44 Senate Democrats and two independents -- Maine’s Angus King and presidential hopeful Bernie Sanders.
This is the only way Puerto Rico can avert a “growing financial and social catastrophe,” the group’s letter warned.
House Speaker Paul Ryan promised last month to deliver legislation to aid Puerto Rico by the end of March.
But on the Senate side, McConnell (photo) has been silent, thus ignoring the near total economic collapse of a territory with 3.5 million U.S. citizens.
This month, Puerto Rico’s government defaulted for the second time in five months on a portion of its debt payments.
Another $400 million payment is due in May, and $1.9 billion in July, which means bigger defaults are almost certain.
Senate Democrats wrote a letter to Senate Majority Leader Mitch McConnell, urging him to work with them on legislation that would give Puerto Rico the means to declare bankruptcy.
“When it comes to Puerto Rico, it’s time get real,” Sen. Chuck Schumer told the Daily News.
Only legislation that will restore the island government’s ability to use bankruptcy laws to negotiate with its creditors will provide a way out of the crisis, the New York Democratic senator said.
The letter to McConnell noted that Puerto Rico did have the right to use federal bankruptcy laws until 1984 “when Congress inexplicably excluded it from the nationwide approach to resolving municipal insolvency.”
Back then, Strom Thurmond, the Republican senator from South Carolina, inserted an amendment into federal law that stripped Puerto Rico of that option.
“The 1984 Amendments deprived Puerto Rico of a fundamental and inherently managerial function over its municipalities,” U.S. Circuit Court Judge Juan Torruella said in a blistering opinion last July in a lawsuit that bondholders filed against Puerto Rico. The bondholders prevailed in that case, but the Supreme Court will soon decide an appeal by the Puerto Rico government.
Island Gov. Alejandro Garcia Padilla is only asking Congress to restore a legal right it took away in 1984 — and he is now joined by Senate Democrats.