Rep. Tulsi Gabbard: Why I Voted for PROMESA Act
Washington, DC—Today, Rep. Tulsi Gabbard (HI-02) released the statement below after voting in favor of H.R.5278, the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). The bill passed by a vote of 297-127.
“Make no mistake—the PROMESA Act is not a perfect bill. Unfortunately, the alternative to passing the PROMESA Act is worse. If Congress does nothing, Puerto Rico’s future will be placed in the hands of a federal judge negotiating with expensive lawyers representing hedge funds and creditors.
“Puerto Rico teeters on the brink of economic and humanitarian disaster. Puerto Rico’s unemployment rate is more than double the national average, and the child poverty rate is close to 60%. The median household income hovers around $19,000 a year, compared to $51,000 in the United States. More than 100 schools and hospitals have closed due to lack of funding, and since 2008 foreclosures have increased by nearly 90%.
“The problems facing Puerto Rico today are a result of bad decisions made by leaders in Puerto Rico, in Washington, DC, and Wall Street—not the actions of the Puerto Rican people. It breaks my heart to see how families in Puerto Rico are suffering as a result — kids who can’t go to school, teachers out of work, law enforcement sidelined, and sick people with no access to health care as more hospitals close their doors.
“It is because of this humanitarian and economic emergency that I voted for this bill. At this hour, there is no better alternative for the people of Puerto Rico. Puerto Rico has been fighting for more than a year to find a workable solution to its financial crisis. This compromise bill takes the first step forward toward restructuring 100% of Puerto Rico’s debt and setting it on a path toward recovery.
“However, the problems that exist in this legislation and the plight of the Puerto Rican people cannot be ignored. I will work with my colleagues as we move forward to address the following issues, among others:
Reinstate the federal minimum wage requirements in Puerto Rico;
Require companies operating in Puerto Rico to respect the same labor protections, including overtime requirements, that exist in the rest of the United States;
Address Puerto Rico's healthcare crisis and ensure Puerto Ricans are treated fairly under Medicare and Medicaid;
Provide economic support to help Puerto Rico's economy get moving again and drive investment to the island;
Reduce sky-high energy prices by supporting their capacity expansion and move toward renewable energy sources.”
A section-by-section summary of the bill is available below:
Title I creates a process for the Commonwealth and the four other U.S. Territories to restructure their bond debts under the direction of a seven-member Financial Oversight and Management Board, which would have broad powers over the island’s budget and finances. An Oversight Board is automatically created for Puerto Rico, leaving the other Territories with the option to create an Oversight Board if their Governor and legislature request one.
Title II authorizes the Oversight Board to approve annual fiscal plans and budgets for the Commonwealth and prescribes its duties regarding restructuring of outstanding debt. The bill requires the fiscal plan to “provide adequate funding for public pension systems,” meaning that the pension system must be made solvent enough to fund accrued pension benefits owed under current law.
Title III describes the conditions and methods by which Puerto Rico’s outstanding debt could be restructured in federal court.
Title IV includes miscellaneous provisions: Sec. 403 expands application of the existing federal subminimum wage ($4.25/hr. for the first 90 days of employment) from covering those under the age of 20 to covering those under the age of 25 in Puerto Rico. It further extends application of the subminimum wage from 90 days to as long as four years, if the Governor requests the extension and the Oversight Board approves; Sec. 404 provides for a delay on the new Department of Labor rule on overtime pay for the island until a GAO study is completed and the DOL determines whether the rule could negatively impact the economy of Puerto Rico; Sec. 405 provides a temporary stay on litigation, which is important for the Oversight Board to begin its work.
Title V establishes a process through which a “Revitalization Coordinator,” together with the Oversight Board, determines which proposed infrastructure projects will be able to bypass local and commonwealth-level environmental, public health, and consumer protection laws.
Title VI provides a process whereby the different categories of creditors can be segregated into pools for the purpose of collectively reaching voluntary agreements to modify or restructure the total debt of each group or pool.