[Congressional Record (Bound Edition), Volume 161 (2015), Part 15]
[Senate]
[Pages 21449-21454]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              PUERTO RICO

  Mr. NELSON. Mr. President, a number of my colleagues will be coming 
to the floor in just a while to talk about the crisis that is going on 
in the island territory of Puerto Rico. Remember, Puerto Rico is a 
territory. Its citizens are U.S. citizens, and we often forget that, 
particularly as they are now facing economic challenges that are 
growing worse by the day.
  Although we just had an opportunity in the Omnibus appropriations 
bill to address Puerto Rico's fiscal crisis, it appears that Congress 
is going to go home without having done the bare minimum for Puerto 
Rico. In the meantime, Puerto Rico is going to start the New Year on 
the verge of default as the Governor faces the troubling choice of 
whether to pay for essential public services or make a $1 billion debt 
payment to Wall Street creditors. The public services include those for 
health, fire, police, water, et cetera, versus paying the bonds that 
are coming due.
  Many of us have been urging our colleagues for months--Senator 
Durbin, Senator Cantwell, Senator Schumer, and myself--to meaningfully 
address this fiscal crisis by providing Puerto Rico with the same debt 
restructuring authority that is available to any other State under 
chapter 9 of the Bankruptcy Code. This is the authority that Puerto 
Rico had until it was taken away by Congress without any explanation 30 
years ago.
  That is why I have joined Senator Cantwell, who is here, and Senators 
Schumer and Blumenthal, in introducing legislation that would allow 
Puerto Rico's municipalities and public corporations to restructure its 
debt under the watchful eye of the Federal bankruptcy judge.
  This is not a bailout. Providing Puerto Rico with an opportunity to 
orderly manage its debt as we do for every State under chapter 9 of the 
bankruptcy laws costs the Federal Government nothing. It also prevents 
Puerto Rico from having a drawn-out battle with bond holders following 
a potential default. Yet nowhere in the Omnibus appropriations bill, 
where we have a lot of other stuff--nowhere in the omnibus 
appropriations bill--is there anything to give Puerto Rico the 
legitimate orderly process of chapter 9 in bankruptcy that it needs. 
There are a few provisions to help Puerto Rico's hospitals, but even 
they don't go far enough.
  It deeply troubles me that we will celebrate the holidays knowing 
full well that there is so much more that the Congress could have done.
  I would like to put this in perspective. Just a few weeks ago we met 
with a group of Floridians who were here for the National Day of Action 
for Puerto Rico. What they describe--and what this Senator has seen in 
a visit to Puerto Rico and the government in San Juan a month ago--is a 
humanitarian crisis due to the crushing government debt, a failing 
economy, and a growing poverty.
  What is the result? Thousands of Puerto Ricans--U.S. citizens--are 
coming to my State. They are certainly welcome, but these are often the 
very talented, educated people that are so desperately needed for the 
well-being of the population on the island. Some that come are 
fortunate to move in with relatives. Others are living in motels. 
Others are even living out of their cars. A lot of them come to central 
Florida to the metro Orlando area, where there is a huge Puerto Rican 
population. What we see in the discrepancy and the economic despair 
that is happening on the island is absolutely heartbreaking. How in the 
world can we fail our fellow Americans like this?
  Notice who have been the most courageous in the military? It has 
often been the soldiers who are Puerto Rican. These Americans have 
contributed to the diverse fabric of our country, and they proudly 
serve in so many Federal responsibilities, including our military. We 
should be doing all that we can to provide them with the tools

[[Page 21450]]

they need--the financial tools Puerto Rico needs to emerge from its 
current economic challenges--and debt restructuring authority is one of 
those things.
  I want to urge our colleagues, since we didn't get it into the 
omnibus, in the spirit of our patriotic unity to help each other and 
that unity that binds all Americans, to come together and help Puerto 
Rico at this critical time.
  I see my colleague from the State of Washington. I appreciate the 
leadership that she has taken. My State is one of the ones that is most 
affected. Her State is not as affected, and yet the Senator from 
Washington has stepped up and done this because she knows it is the 
right thing to do.
  Mr. President, I yield the floor and look forward to hearing from the 
Senator.
  The PRESIDING OFFICER. The Senator from Washington.
  Ms. CANTWELL. Mr. President, I thank the Senator from Florida for 
coming to the floor and speaking so articulately about the need for 
help for Puerto Rico. His State is the most impacted State in the 
United States when it comes to our policy as it relates to Puerto Rico. 
He is right that there are not many Puerto Ricans in the State of 
Washington. But as the Ranking Member of the Senate Committee on Energy 
and Natural Resources, which has jurisdiction for the territories, I 
can tell you territorial oversight is about giving people who are U.S. 
citizens fair access to the law. If we are not going to help people who 
are U.S. citizens have fair access to the law, I am not sure why we are 
continuing to say that they are a territory of the United States of 
America.
  What we are talking about, and the Senator from Florida understands 
this, is if you don't give them fair treatment under the law, just as 
we do with individual citizens who need to reorganize their debt, 
businesses who need to reorganize their debt, municipalities that need 
to reorganize their debt, or even the United States of America in the 
big bank bailout basically allowing a lot of people to reorganize their 
debt, then we won't let the people in Puerto Rico come to a resolution 
of their debt in bankruptcy. It is a hypocrisy that is unexplainable at 
the moment. We should get to the bottom of this because we want to give 
fair treatment to Puerto Rico so they can solve their own problems.
  What my colleague mentioned is that a restructuring authority for 
Puerto Rico costs the U.S. taxpayers zero. Zero dollars. That is to 
say, we are not proposing, at least on our side of the aisle, that we 
give them immediate funds to restructure. We are simply saying: Give 
them the tools of bankruptcy so they can restructure. My colleagues 
think this is important because we know that the mass exodus from 
Puerto Rico, which has been about 300,000 people in the last several 
years, will continue if we don't give them the tools to reorganize 
their debt. What that will mean, as the Senator from Florida mentioned, 
is that people will come in droves to Florida and continue to impact 
that economy by asking for federal social services that are capped in 
Puerto Rico. They will come to Florida and ask for those services. So 
the United States, by denying Puerto Rico the bankruptcy tools, 
actually will be impacted economically. Some people have estimated the 
impact will be as much as $10 to $20 billion over a 10-year period of 
time. I would say we have a lot of skin in the game to get people to 
reorganize this debt.
  Many newspapers across the United States also believe that we should 
give Puerto Rico these tools to reorganize. In an editorial recently in 
the New York Times, which talked about the President's proposal, it 
said: ``Crucially, it asks Congress to change the law so that Puerto 
Rico's territorial government and municipalities can seek bankruptcy 
protection.'' They understood this issue, as did the Washington Post 
when they wrote: ``. . . letting an impartial bankruptcy judge sort out 
the competing claims on a failed public entity is the fairest, most 
efficient approach; without that option, Puerto Rico has no leverage in 
debt negotiations, and litigation could ensue.''
  So there are newspapers throughout the United States of America that 
are looking at this issue and saying: Give them the ability to 
reorganize their debt.
  Why is this so important? Because the Puerto Rican government may 
default on its debt as early as January 1, when nearly $1 billion in 
payments are due.
  Many of us here want to see a resolution of this issue now, giving 
them the tools to avoid that. Once they default, the economic impact to 
the rest of us and the U.S. taxpayers will be far greater. Why do I say 
that? Because if you look at the inaction that takes place, U.S. 
taxpayers contribute $6.4 billion to Puerto Rico's annual budget, 
funding these various programs. If you default, that means we will be 
spending more than $6.4 billion.
  I know some of my colleagues want to protect the hedge funds from 
being a part of the bankruptcy reorganization. But, when you are 
protecting the hedge funds from being a part of the bankruptcy 
reorganization, you are adding costs for the U.S. taxpayers. That is 
something we cannot afford.
  If Puerto Rico is allowed to restructure their debt, they could make 
these decisions and save us money as U.S. taxpayers. In the long run, 
as I said, it would prevent the mass exodus from the island to many 
other States and provide Puerto Rico with the tools they need. Yet some 
in Congress are more comfortable with inaction, which basically is just 
bad public policy. Why is this? Because 20 to 50 percent of the 
island's debt is owned by hedge funds. These hedge funds swoop in to 
buy cheap Puerto Rican debt and are using their influence here in 
Washington, DC, to block Puerto Rico from access to bankruptcy 
protection that is allowed in other places. It is no secret that the 
solution will require sacrifice by everyone, and that is what we want 
to see. If Congress continues to protect these hedge funds and fails to 
act, it will be at both the expense of the Puerto Rican people, who 
have already suffered immensely, and of the American taxpayer.
  Sitting by idly is not a solution. We should remind our colleagues 
that Puerto Rico had preexisting bankruptcy authority which was taken 
away in 1984, mysteriously. Nobody knows why, or how, or any 
justification for it. They just know that it disappeared. Congress 
should reinstate that authority that was taken away. As the Governor of 
Puerto Rico said before the energy committee, quoting another leader: 
``Give us the tools, and we will finish the job.''
  Now is the time to act, before we see a greater mass exodus of 
people.
  This chart shows the migration between Puerto Rico and the United 
States. You see that it continues to grow. It has grown 500 percent in 
the last 10 years. The issue is that now government workers are being 
cut to three days a week, patients are waiting for months without basic 
medical care, hospitals are going bankrupt, and the health industry is 
about to collapse.
  On the other side of the aisle there is talk about the humanitarian 
crisis that might occur next year and how they might want to respond to 
it, but they don't want to stand up and say to the hedge funds that 
they also have to take some responsibility in this issue. Forty-five 
percent of the population in Puerto Rico is now living in poverty, 
including 58 percent who are children. Unemployment is in double 
digits, and it is, if you compare it to all our States, very high in 
the ranking of States in the United States. As a result, 80,000 people 
are leaving the island each year as part of a mass migration.
  So what is the solution? As we said: Restructure their debt; give 
them the tools to restructure their debt. It costs nothing to the U.S. 
taxpayer, saves us money in the long run, prevents a mass exodus from 
the island, and prevents more spending on Federal benefits to people 
who might migrate to the United States.
  We think this ought to be a lot of motivation to sit down and solve 
this issue today. In fact, now we are hearing from different 
businesses, and I will submit one letter for the Record, in the United 
States that do business in

[[Page 21451]]

Puerto Rico and that don't want to lose their investment because they 
are so concerned about the level of collapse that could happen in 
Puerto Rico, and the loss of infrastructure and infrastructure 
investment.
  So why do we need to continue to move forward? Well, inaction, 
basically, is to say that the hedge funds have won in this game. Twenty 
to fifty percent of the island's debt is owned by the hedge funds, and 
hedge funds are using their influence in Washington to block a Puerto 
Rico bill from coming to the floor. Failure to act would be at the 
expense, as I said, of taxpayers and individuals.
  Just yesterday, a leader who has been supportive of reorganization of 
a task force in New York that was under a budget crisis said: ``The 
hedge funds got their way in Congress.'' That is referring to the fact 
that we were not able to get, as my colleague from Florida said, this 
legislation as part of the budget omnibus bill or other bills moving 
through the process.
  So now is the time to act to give Puerto Rico the tools. Now is the 
time for all of those who have made investments to say ``we all have to 
come to the table and resolve this issue.'' The longer we wait, the 
greater the risk for the United States of America--to say nothing of 
the issue of a territory that we lay claim to, giving them the ability 
to solve their problems.
  I ask my colleagues to come to a commonsense resolution on this 
issue. Stop protecting these hedge funds and start working for people 
who are called U.S. citizens.
  Mr. President, I ask unanimous consent to have printed in the Record 
the articles and the letter I mentioned.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               [From the Washington Post, Oct. 24, 2015]

                     A Rescue Plan for Puerto Rico

                          (By Editorial Board)

       There was long-overdue drama at a Capitol Hill hearing 
     Thursday. We are referring, of course, to Treasury Department 
     counselor Antonio Weiss's testimony before the Senate 
     Committee on Energy and Natural Resources, in which he warned 
     of a looming ``humanitarian crisis'' in the financially 
     distressed commonwealth of Puerto Rico. Mr. Weiss's words 
     marked a break with the Obama administration's previous low-
     key approach to the island's debt crisis, and if he resorted 
     to hyperbole to compensate for that, it was only slightly. 
     Having already cut spending, jacked up taxes and postponed 
     various bill payments, Puerto Rico is out of cash and facing 
     a year-end liquidity crunch that could lead to a breakdown in 
     public services, or even public order.
       Mr. Weiss backed up his words with the administration's 
     most comprehensive policy proposals yet, the most important 
     of which would require congressional action. Specifically, he 
     advocated not only permitting Puerto Rico's municipalities 
     and public corporations to file for bankruptcy, which would 
     affect about a third of its $73 billion debt, but also 
     extending the bankruptcy option to the commonwealth 
     government itself. He called for a permanent fix to the 
     island's Medicaid program, which faces crippling uncertainty 
     because of limits on federal assistance unlike those of the 
     50 states. And to address its lagging labor force 
     participation--a huge drag on economic growth--he proposed 
     creating an Earned Income Tax Credit to encourage low-wage 
     workers' return to the job market.
       In short, for the first time the executive branch has put 
     its weight behind solutions that would cost money, billions 
     of dollars of it. A good benchmark would be Gov. Alejandro 
     Garcia-Padilla's projection of a $14 billion hole in the 
     island's finances over the next five years. The 
     administration's plans for Medicaid and an EITC would put 
     U.S. taxpayers on the hook. Bankruptcy would be the mechanism 
     through which creditors chip in; an average 40 percent 
     ``haircut'' on their bonds is probably in order, according to 
     a recent study by BlackRock. As the example of Detroit shows, 
     letting an impartial bankruptcy judge sort out the competing 
     claims on a failed public entity is the fairest, most 
     efficient approach; without that option, Puerto Rico has no 
     leverage in debt negotiations, and litigation could ensue.
       Which brings us to what can fairly be expected of the 
     commonwealth itself. Its predicament is due to many forces 
     beyond its control, starting with the anomalous semi-
     sovereign political status that traps it--like Greece in the 
     European Union--in a monetary union with the far larger and 
     more competitive United States. Still, Puerto Rico has 
     squandered vast resources on mismanagement and anti-growth 
     policies. Therefore, it may appropriately be held to a 
     structural adjustment program that ensures it uses fresh cash 
     efficiently. For that program, in turn, to have credibility, 
     it must be subject to oversight by a truly independent body; 
     indeed, if oversight doesn't work, nothing in Mr. Weiss's 
     plan can work, either economically or politically, since buy-
     in from Republican fiscal hawks is needed. Designing that 
     institution is the task to which Congress, Puerto Rico and 
     the administration must now turn in a spirit of cooperation, 
     but also urgency.
                                  ____


                [From the New York Times, Oct. 24, 2015]

                 Save Puerto Rico Before It Goes Broke

                        (By the Editorial Board)

       Puerto Rico's government is on the verge of running out of 
     money. A messy default is in nobody's interest, which is why 
     Congress ought to move swiftly to provide the American 
     territory with a way to restructure its huge debt and revive 
     its economy.
       The Obama administration last week offered the outline of a 
     rescue plan to help the island and the 3.5 million American 
     citizens who live there. The plan would impose new oversight 
     on the island's finances and expand access to government 
     programs like Medicaid and the earned-income tax credit. 
     Crucially, it asks Congress to change the law so that Puerto 
     Rico's territorial government and its municipalities can seek 
     bankruptcy protection.
       Political leaders in Puerto Rico and many financial and 
     legal experts have been saying for months that the territory 
     cannot repay the approximately $72 billion it owes to hedge 
     funds, mutual funds and other investors. Its economy is not 
     growing, and tens of thousands of residents are leaving every 
     year for the mainland to look for work. More than 300,000 
     have left in the last 10 years.
       Its public pension plans need a cash infusion of about $44 
     billion. Puerto Rico has cut spending and raised taxes in the 
     hope of saving itself, but that hasn't worked, and it won't 
     work in the foreseeable future given the sorry state of the 
     island's economy.
       Bankruptcy seems inevitable. But under federal law, Puerto 
     Rico's government, its municipalities and its government-
     owned utilities cannot go to bankruptcy court--hence the 
     administration's request for a new bankruptcy process for 
     territorial governments and a change in the law to allow 
     Puerto Rican cities and public utilities to seek Chapter 9 
     protection, much as local governments like Detroit and Orange 
     County, Calif., have done.
       Many investors who have lent money to Puerto Rico and stand 
     to lose under any debt restructuring are bitterly opposed to 
     the Obama plan. They say Puerto Rico can repay all of its 
     debt if it tightens its belt and privatizes utilities and 
     other government-owned businesses. Changing the law now, they 
     argue, is deeply unfair. But the record of what has happened 
     in troubled countries like Greece is clear: Austerity 
     policies have only worsened the crisis. As for the fairness 
     argument, legislators change laws all the time to meet new 
     circumstances.
       What investors must realize is that an orderly 
     restructuring is a far better alternative than the long and 
     complex legal battles that would inevitably follow a sudden 
     default. American bankruptcy courts have a good track record 
     of resolving complicated debt cases. And if, in addition to 
     reworking the bankruptcy law, Congress also created an 
     oversight board, as the Obama administration recommends, 
     investors could have some confidence that Puerto Rico's 
     politicians would make needed policy changes.
       There is no doubt that Puerto Rican leaders have mismanaged 
     the island's finances and economy. What's at issue now, 
     though, is not Puerto Rico's past but its future and that of 
     its inhabitants. If Congress doesn't like the 
     administration's ideas, it needs to come up with its own.
                                  ____

                                                 December 9, 2015.
     Hon. Paul Ryan,
     Speaker of the House, Washington, DC.
     Hon. Mitch McConnell,
     Senate Majority Leader, Washington, DC.
     Hon. Nancy Pelosi,
     House Minority Leader, Washington, DC.
     Hon. Harry Reid,
     Senate Minority Leader, Washington, DC.
       Dear Mr. Speaker, Leader Pelosi, Leader McConnell, and 
     Leader Reid: As senior executives of companies that are based 
     in the U.S. mainland and that conduct extensive business in 
     the U.S. jurisdiction of Puerto Rico, we write to 
     respectfully urge you to swiftly enact a legislative package 
     that will promote economic growth and fiscal stability in the 
     territory.
       We are extremely concerned about the situation in Puerto 
     Rico for both humanitarian and business reasons. The current 
     economic, fiscal and demographic crisis is harming the 3.5 
     million U.S. citizens that reside on the island, compromising 
     their quality of life and causing thousands to relocate to 
     the U.S. mainland in search of better opportunities. It is 
     also hurting private sector businesses that manufacture 
     products in Puerto Rico, depend upon Puerto Rico's consumer 
     base, or seek to contract with the central government of 
     Puerto Rico or its public corporations to provide public 
     services on a more cost-efficient basis.
       This letter is also endorsed by the Jacksonville Port 
     Authority (JAXPORT), which is the U.S. mainland hub for trade 
     with

[[Page 21452]]

     Puerto Rico. Roughly 70% of all cargo shipped from the U.S. 
     mainland to Puerto Rico goes through JAXPORT. This trade is 
     responsible for 32,000 jobs in the State of Florida alone.
       We understand that the causes of Puerto Rico's problems are 
     complex and multifaceted. But we also believe that action by 
     the federal government is essential to enable Puerto Rico to 
     address these problems. There are many specific steps that 
     Congress could take, such as (1) fully including Puerto Rico 
     in the earned income tax credit program and the child tax 
     credit program, which incentivize work and spur consumer 
     demand; (2) providing more equitable treatment to Puerto Rico 
     under federal programs like Medicaid and Medicare, which 
     would improve patient care, reduce migration, and relieve the 
     fiscal burden on the Puerto Rico government; and (3) 
     providing Puerto Rico with state-like treatment under Chapter 
     9 of the federal bankruptcy code, which would help Puerto 
     Rico manage its debt burden and position the island to 
     achieve economic growth in the future.
       We thank you for your consideration of this important 
     request.
           Sincerely,
     Daniel Davis,
       President & CEO, JAX Chamber.
     Michael G. Roberts,
       Senior Vice President & General Counsel, Crowley Maritime 
     Corporation.
     Tim Nolan,
       President, TOTE Maritime Puerto Rico.
     Brian Taylor,
       Chief Executive Officer, Jacksonville Port Authority 
     (JAXPORT).
     John P. Hourihan, Jr.,
       Senior Vice President & General Manager, Crowley Puerto 
     Rico Services.
     Thomas J. Alcide,
       President, Saft America.

  Ms. CANTWELL. I thank my colleague, and I yield the floor to any of 
my other colleagues who have come to the floor to join us.
  The Senator from New Jersey probably has the second most, if not the 
most, number of Puerto Ricans in his State.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. MENENDEZ. Mr. President, first, I thank the distinguished senior 
Democrat on the Energy and Natural Resources Committee, which has 
jurisdiction over the territories, including Puerto Rico, for her 
advocacy, for her strength of passion in this effort, and for her work. 
I also thank my colleague from Florida who has always joined me on 
issues on Puerto Rico and who has always been a strong voice for the 
island.
  I would hope to prick the conscience of the Senate about the 3.5 
million U.S. citizens who just happen to live on the island of Puerto 
Rico and to do something before this crisis transforms into a full-
blown human catastrophe. These 3.5 million Americans who call Puerto 
Rico home have a long history with the United States. Over 200,000 of 
them have served in every conflict since World War I and worn the 
uniform of the United States.
  Over 20,000 of them currently wear the uniform of the United States 
and put their lives at risk for the safety and security of all of us 
here at home. They are stationed across the globe.
  If you went with me--and I invite any colleague who wants to go to 
the Vietnam Memorial--you would see a disproportionate number of Puerto 
Ricans who served in the Vietnam war and gave their lives on behalf of 
the country. Puerto Rico is an integral part of America and its people 
are as American as you and I. They have full citizenship rights. The 
status of where they live does not alter their rights under the 
Constitution, and the fiscal timebomb that is waiting to explode in 
Puerto Rico is an American problem.
  In my time in the House of Representatives, I could never believe it 
when I would have colleagues who asked me if they needed a passport to 
visit Puerto Rico. I thought they were joking, but they were serious. 
This is an American problem.
  We not only have an opportunity, but more importantly I think we have 
a responsibility to take immediate action to stabilize the island and 
give our fellow citizens the opportunity to fix the current crisis, but 
instead of deescalating the crisis, we are demagoguing those who are 
facing it. Instead of providing the tools Puerto Rico needs to get on 
the path to solvency, we are tying our hands behind our backs.
  So let me put this plainly and simply: Puerto Rico is getting a raw 
deal. While we dither here, the island is economically in flames. We 
are about to spend over $600 billion in tax breaks but denied the 
earned-income tax credit and child tax credit equity for American 
citizens living in Puerto Rico. We are about to pass a $1.1 trillion 
budget but ignored pleas on the island to receive the same chapter 9 
treatment in bankruptcy to reorganize and restructure their debt that 
any State has and that they had at one time and was surreptitiously 
taken out. That right that they had was taken out.
  As has been said by the distinguished ranking member, giving Puerto 
Rico back the right they had will not cost the American taxpayer one 
single dime. Those bottom feeders who ultimately went and tried to buy 
enough bonds dirt cheap and now want to get paid at maximum amount, 
that should not be where the focus of the Senate is when it comes to 
these 3.5 million Americans. I am wondering if it was some other group 
of people, whether we would feel the same way. I really have to wonder. 
We are about to increase Big Oil's profits by about $170 billion over 
the next decade, but we can't do anything for the 3.5 million people 
who call Puerto Rico home, who are U.S. citizens, and who wear the 
uniform of the United States.
  I am pleased to see that the legislation will include a little piece 
of my high-tech legislation to help the hospitals in Puerto Rico, but 
that is not going to do anything as it relates to the crisis we are 
facing. This crisis didn't develop overnight--it was over several 
administrations--nor will it be fixed in a day. Governor Padilla and 
the Government of Puerto Rico have done everything they can to right 
the ship and restore a path to solvency. They have closed schools and 
hospitals. They have laid off police and firefighters. They have raised 
taxes on businesses and individuals. They have gone beyond what any 
sovereign nation would consider doing to right the economic status, but 
they are out of options.
  All the cuts and tax hikes will not make a dent in this crisis 
without the breathing room that restructuring authority provides. That 
is all we are asking for, not a single cost to the American paper. This 
problem is not going away. Mark my words, if we don't act now, this 
crisis will explode into a full-blown humanitarian catastrophe that 
isn't going to take a year or months. It is going to be right around 
the corner.
  It is pretty amazing that instead of dealing with this issue in a way 
in which we can solve it, we are basically--it is the equivalent of 
waiting for a malignant tumor to metastasize before we actually act on 
it. That is what we are doing. The sooner you act, the higher your 
chances of success are, and that is no different in the case of Puerto 
Rico. They are not asking us to pull them out of this hole. They are 
simply saying give us the tools so we can do it on our own.
  It is the same can-do spirit of the Borinqueneers, who served our 
country during the Korean war--an all-Puerto Rican division, the most 
highly decorated in U.S. military history who said: Just give us the 
tools and we will fight for our Nation--or NASA engineer and 
Exceptional Achievement Medal winner Dr. Carlos Ortiz Longo or the 
baseball great and philanthropist, Roberto Clemente. I could go on and 
on about the contributions of Americans of Puerto Rican descent to this 
country. Just give them the tools.
  Instead, this Congress is going to go home for the holidays and say 
to Puerto Rico: You get coal in your stocking, instead of giving them 
the tools to help them be able to face a better day. At the end of the 
day, believe me, if we do not act, more will come to Senator Nelson's 
State of Florida, more of them will come to New Jersey, more of them 
will come to New York, more of them will come to Ohio, and more of them 
will come to Pennsylvania--

[[Page 21453]]

which are some of the largest concentrations in the Nation--because 
they are U.S. citizens. When they come, they will have the rights to 
everything that every other citizen has.
  That is the reality, and I cannot imagine why our friends on the 
Republican side cannot get to the point of understanding that these 3.5 
million residents of Puerto Rico are U.S. citizens. They fought for 
their country, died for their country, shed blood for the country, have 
been maimed for the country, and yet we just can't give them the tools 
to get themselves into fiscal order again.
  It is pretty amazing. It is pretty amazing that we will leave for the 
holidays and actually have for some--not for those of us on the floor--
but for some no regret that we are leaving those 3.5 million U.S. 
citizens without any options.
  I don't believe in leaving any American behind. That is why I have 
voted on this floor for flood damage in the Mississippi. That is why I 
voted for wildfires in the West, to help them be dealt with. That is 
why I voted for crop damage. I have been there because I believe there 
is a reason we call this the United States of America. Puerto Ricans, 
in terms of their citizenship, they are U.S. citizens. They deserve the 
same rights as anyone else.
  With that, I see my distinguished friend and colleague from 
Connecticut, who I know feels very passionately--the way I do--about 
this issue, and I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. BLUMENTHAL. Mr. President, I am inspired by the very eloquent 
words of my colleague from New Jersey and others, from Senator Nelson 
of Florida and particularly from Senator Cantwell, and thank them for 
championing this cause.
  I am inspired by those words to begin with a story. My visit to 
Puerto Rico to the association headquarters of the Borinqueneers--
members of generations who have fought for this country, veterans of 
our wars, who had visited the White House to receive the Congressional 
Medal that we in this body voted to award them because of their service 
to our Nation. It was awarded by the President of the United States 
when they visited the White House. I visited them in Puerto Rico to say 
thank you and to recognize their service. I can tell you at the White 
House and in Puerto Rico what I saw in their faces and heard in their 
voices was a patriotism every bit as deep and passionate as any I have 
heard anywhere in this country. Puerto Ricans are not only Americans, 
they are proud to be American, and we should be proud they are 
Americans because they are hard-working, dedicated, and they believe in 
giving back to America.
  My friend from New Jersey has said that Puerto Rico is receiving a 
raw deal, and he is right. It is a raw deal and an unfair deal because 
the people of Puerto Rico find themselves in an untenable financial 
situation in large part due to circumstances beyond their control. In 
fact, in some instances, actions of this very body, in tax policies and 
health care program decisions, put them at a disadvantage and 
contributed to the fiscal situation that has put them and their economy 
in free fall today.
  So 2.5 percent of Puerto Rico's population has fled the island in 
just the last year. If Puerto Rico defaults and that default is 
permitted to continue, the ramification of additional people fleeing 
the island and the financial markets feeling the effects of that 
default will be horrendous.
  The day of reckoning for Puerto Rico is inescapable. The only 
question is whether it occurs in the courts with endless, costly 
litigation that enriches lawyers--let's face it, the lawyers will be 
better off if there is no orderly and structured process--or, when that 
day of reckoning occurs, in the bankruptcy courts where it can be 
orderly and structured and less costly. This body, the U.S. Senate, has 
the responsibility to extend to Puerto Rico the same treatment under 
Chapter 9 that any municipality and utility has around the country--
nothing more, nothing less.
  The people of Puerto Rico are already suffering because of the 
uncertainty of their financial situation. That uncertainty in turn is 
already costing them because the borrowing costs are rising as a 
disorderly default faces them. To simply provide more money is not the 
answer. There has to be a structure for orderly and planned payment of 
debts that are due. Right now, Puerto Rico is insolvent. It can't pay 
its debts on time, and that is the definition of default. Bankruptcy is 
not a safety net. It is not a bailout. It is, in fact, a reckoning.
  There has been some talk here about who is responsible. There is no 
question that some stand to profit if there is chaos--not just lawyers, 
but some of the financial interests who are holding certain of the 
financial instruments. We don't need to name names or blame them. What 
we need to do here is to solve a problem and make sure that Puerto Rico 
is treated fairly and that it is spared this raw deal that will have 
ramifications for the entire United States of America--for our 
financial markets, for our communities, and for the people of Puerto 
Rico who have families here and who will come here themselves.
  I hope we will do the right thing even in the hours--and there are 
just hours--left before the end of this year. There is too much at 
stake for either partisan differences or special interests to dictate 
the result. The day of reckoning is here. It is just a question of 
where it occurs--in a bankruptcy court or in endless litigation that is 
costly to Puerto Rico and Puerto Ricans and all Americans.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, I am happy to join my colleagues in this 
statement on the floor relative to the situation in Puerto Rico. I 
commend Senator Cantwell as well as Senator Blumenthal, who is a lead 
cosponsor of the bill that I am cosponsoring, as well as Senator Nelson 
of Florida, who has a special interest with so many Puerto Ricans in 
his State, and, of course, Senator Menendez of New Jersey with the same 
interest. I share it. It is a feeling that is based on some friendships 
with Members of Congress of Puerto Rican descent, particularly my 
friend and colleague from Illinois, Luis Gutierrez, but many others, 
such as Nydia Velazquez and Jose Serrano of New York. I have served 
with all of them, and I understand the deep personal feelings they have 
about the situation.
  The financial crisis facing Puerto Rico and its 3.5 million residents 
who are U.S. citizens demands that we not walk away but address this in 
an honest way. Congress is working to complete its legislative 
business, and it is deeply troubling that at this point we are 
preparing to leave town without resolving Puerto Rico's urgent 
situation.
  The challenges facing Puerto Rico are very serious. The island has 
been mired in an economic recession for more than a decade. Their 
unemployment rate is nearly 12 percent and the poverty rate is almost 
45 percent. Tens of thousands of Puerto Ricans are leaving the island 
each year and, as Senator Blumenthal said, 2.5 percent of the 
population left just this last year. That is the reality of this 
economic challenge. If we don't help Puerto Rico get back on its feet, 
stabilize, and grow its own economy, the alternative, sadly, will be 
many more people coming to the United States. If they wish to come, 
that is certainly their right, but we don't want to force them to come 
to this country because of dire economic circumstances in Puerto Rico 
that can be avoided.
  The island has over $70 billion in outstanding debt. According to 
Moody's, this debt load is approximately 100 percent of Puerto Rican's 
island's gross national product. Moody's also found that in fiscal year 
2015, the debt service of the territory and its agencies amounted to 
almost 40 percent of the revenues available to the government--compared 
to an average in most States of 5 percent.
  I noted an article in the Wall Street Journal not that long ago that 
quarreled with this 40 percent figure. They said it was less than half 
of that amount, and, therefore, it wasn't a dire

[[Page 21454]]

situation. Yet we had a hearing before the Judiciary Committee with 
experts present, and it was very clear that 40 percent is a valid 
figure, not arrived at by political figures but by Moody's, a firm that 
is supposed to be expert in reaching that conclusion.
  The Puerto Rican government was able to make large debt payments on 
December 1 only through some very contorted fiscal determinations. But 
another debt payment of $332 million looms on January 1, and a default 
is a real possibility.
  We had this hearing before the Senate Judiciary Committee. It was an 
eye opener. One of the witnesses that I remember specifically is 
Richard Carrion, the executive chairman of Puerto Rico's largest bank, 
Banco Popular. He testified that, as a banker, it was truly painful for 
him to ever talk about bankruptcy and not paying their debts. But Mr. 
Carrion went on to say that there needs to be some kind of bankruptcy 
or restructuring regime made available for Puerto Rico because the 
money just isn't there.
  If Puerto Rico goes into default, the ramifications are frightening. 
Not only would a default threaten the island's fiscal stability, but it 
would also cause a humanitarian crisis where we have such a high rate 
of poverty. It would threaten access to essential services, such as 
education and even basic utilities.
  It is true that there are a lot of factors that contributed to this 
financial situation, and there is no silver bullet to fix all of these 
problems. But one step that would certainly help is to allow Puerto 
Rico to use Chapter 9 of the Bankruptcy Code, and that is what Senator 
Blumenthal's legislation proposes.
  About $20 billion of Puerto Rico's $70 billion debt is debt issued by 
municipalities and public corporations. Chapter 9 creates a mechanism 
for a State to allow a municipality or public corporation to 
restructure its debts in bankruptcy. This authority has been used over 
and over again, but Congress passed an unusual law in 1984, which no 
one has been able to explain. It contained a provision that excluded 
Puerto Rico specifically from Chapter 9. No other State or territory 
was excluded except Puerto Rico. There is no legislative history to 
explain why Puerto Rico was singled out.
  It appears that the bar on Puerto Rico using Chapter 9 bankruptcy was 
either an error or it was an intentional discrimination against this 
territory and its 3.5 million American citizen residents. Either way, 
it is time we correct this inequity, if not for the simple fairness of 
the argument, then for the point being made by Senator Blumenthal 
earlier: So many of these Puerto Rican residents have literally risked 
and given their lives in defense of the United States. There is 
absolutely no excuse for discriminating against these people.
  I am a cosponsor of Senator Blumenthal's bill that would allow Puerto 
Rico to use Chapter 9. This would create a backstop to address a 
significant portion of Puerto Rico's debt.
  The availability of a bankruptcy process would also create an 
incentive for creditors, bondholders, and others to negotiate voluntary 
restructuring. The option of bankruptcy helps bring all the parties to 
the negotiating table because typically it is a dose of reality.
  I regret that not a single Republican has been willing to cosponsor 
this bill, and I don't get it. I just don't understand it. I regret 
that the Republican majority has been unwilling to bring the issue of 
Puerto Rico bankruptcy reform to the Senate floor. It should have been 
brought to the floor. It is timely, and it is important. Nobody wants 
to encourage bankruptcy, but the Founding Fathers recognized the 
importance of this legal option in giving individuals and institutions 
the ability to dig out of debt in an orderly fashion. That is why 
Congress's power to enact bankruptcy laws was actually written into the 
Constitution.
  Furthermore, the bankruptcy process is well-known and understood. It 
is not a Federal bailout because it won't cost the taxpayers a dime if 
Puerto Rico chooses bankruptcy. In contrast, if Puerto Rico defaults, 
we will face a new, uncertain future that may well require Federal 
corrective action and may cost money. These steps likely would be far 
more upsetting to creditors and taxpayers in the United States than any 
bankruptcy process.
  We know that bankruptcy reform is not the silver bullet solution. 
There are other steps that should be taken when it comes to tax laws, 
health care reform, and fiscal oversight that would help Puerto Rico. 
But it is clear that Congress has to act.
  I want to commend my colleagues again for joining me on the floor to 
raise this important issue. We cannot ignore this crisis. Puerto Ricans 
are American citizens. Puerto Rico's challenges are America's 
challenges. And the clock is literally ticking.
  I urge my Republican colleagues to support Senator Blumenthal. This 
modest bankruptcy reform bill will help us step forward to solve this 
problem. We need to work with the administration and with both 
political parties to chart a fair and responsible path forward for 
Puerto Rico.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Utah.

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