White House: U.S. must act on Puerto Rico debt

WASHINGTON — The Obama administration Thursday told Congress that Puerto Rico’s economic woes could quickly turn into a humanitarian crisis unless Congress adopts a blueprint for dealing with the island’s crushing $72 billion debt burden.

Antonio Weiss, a Treasury Department official, called on lawmakers to create a new territorial bankruptcy regime that would allow Puerto Rico to restructure its debt. The plan would also impose new oversight on the island’s finances, expand Medicaid benefits and allow residents to qualify for the same low-income tax credits that are offered to other American citizens through the Earned Income Tax Credit.

Weiss told the Senate Energy and Natural Resources Committee, which has jurisdiction over U.S. territories, that “In the very near future, Puerto Rico will face impossible choices among providing essential public services, delivering promised pension benefits and paying its debt.”

The committee chairwoman, Sen. Lisa Murkowski, R-Alaska, told Weiss that while Congress wants to be helpful, she and other lawmakers will need to see verifiable data on the island’s financial condition. The administration’s proposal faces an uncertain future in a Republican-controlled Congress.

Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., who is seeking the Democratic presidential nomination, argued that the administration needs to make sure any rescue plan protects the island’s 3.5 million residents, rather than just investors who have purchased the government’s bonds at a discount.