Treasury Secretary Says Puerto Rico Faces Chaos Without Congressional Action

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Jack Lew visited a San Juan hospital affected by the debt crisis and urged Congress to act.

SAN JUAN, Puerto Rico –  Treasury Secretary Jack Lew said Monday that if Congress doesn’t act soon to give Puerto Rico powers to restructure its mountainous debt, the island will face two choices – “chaos and a bailout.”
“We are now at a moment of necessity and crisis,” Lew told reporters during a daylong visit to the commonwealth. Lew said he’s optimistic lawmakers will make progress toward a solution once the House returns from recess this week.
Puerto Rico has been gripped by an economic recession that’s worsening as residents leave. That, in turn, deepens the financial crisis for the government, which can’t afford payments on its $70 billion of debt.
Republicans this week are likely to unveil a third draft of legislation that would give Puerto Rico powers to restructure its debt, establish an oversight board to help the island’s government, and craft a broader Puerto Rico economic reform plan.
Rep. Rob Bishop (R-Utah) told Reuters on Monday that the House Natural Resources Committee, which he chairs, will release the revised legislation on Wednesday. Like Lew, he argued that without swift congressional action, a bailout could become the only option.
The bill includes language that may allow Puerto Rico to seek bankruptcy protection, worrying conservatives that it may set precedent for other debt-ridden states. Proponents of the legislation argue that no taxpayer dollars would be needed to bail out Puerto Rico.
Puerto Rico defaulted on nearly $400 million in debt payments due on May 1, and owes a $2 billion bond payment on July 1.
Lew spoke to reporters after visiting Centro Medico, the third-largest Level 1 trauma center in the U.S. and its territories. The 22-acre campus houses 18 health institutions, and cares for more than 7,400 patients per year. The center has said it may need to reduce services beginning in July without congressional action, and has been unable to post job vacancies due to a shrinking budget.

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