House Natural Resources Hearing on Puerto Rico with Antonio Weiss
House Natural Resources Committee
“The U.S. Department of the Treasury’s Analysis of the Situation in Puerto Rico”
Thursday, February 25, 2016
Key Topics & Takeaways
- Restructuring Debt and Oversight Board: Rep. Don Beyer (D-Va.) asked about the prospect of Puerto Rico reentering the bond market in a meaningful way after write-offs and fiscal restructuring. Weiss responded by emphasizing that the “tried and true combination” of pairing oversight and with restructuring debt will enable Puerto Rico to establish economic growth and reenter the bond market.
- Economic Measures of Growth: Rep. Darin LaHood (R-Ill.) asked how Congress can change the culture in Puerto Rico to get the private sector to flourish and reduce barriers. Weiss explained investors’ uncertainty due to the economy and stated that if the debt is not restructured, investors will not have anything to plan against.
- Outmigration:Weiss explained that citizens in Puerto Rico are “acutely aware” of the kind of trade off that the government could face if the maturities come due, litigation builds, and services build off constitutionally aided debt. Additionally, he said the Puerto Ricans leaving the island are young and of working age, leaving no revenue base to construct a viable economy.
Witness
- Antonio Weiss, Counselor to the Secretary, U.S. Department of the Treasury
Opening Statements
In his opening statement, Chairman Rob Bishop (R-Utah) discussed the Obama’s Administration’s role and plan to address the Puerto Rican debt crisis. Bishop stated that the committee’s purpose is to produce a bipartisan bill that will secure the country’s future and instill principles of good governance and fiscal transparency. Bishop’s focus was to ensure that a solution promotes long-term growth.
Resident Commissioner Pedro Pierluisi (D-Puerto Rico), in his opening statement, stated that over the years the people of Puerto Rico have been “poorly served.” Furthermore, he lamented that “Puerto Ricans are American enough to fight for the United States, but not American enough to vote for President.” He stressed that the oversight board will have to be carefully calibrated to ensure it is serving Puerto Rico’s best interest. Pierluisi said Puerto Rico “cannot cut its way out of this crisis or tax its way out of this crisis, the only way is to grow.” He added that the oversight board can take all essential actions, but there has to be assurance that Puerto Rico has the necessary access to the markets.
Testimony
Antonio Weiss, Counselor to the Secretary, U.S. Department of the Treasury
In his testimony, Weiss stressed that the Puerto Rican crisis is an American crisis, urging for an immediate call to assess and act. Weiss stated that “what started as a recession has turned into a fiscal and liquidity crisis.” Weiss noted that Puerto Rico is facing more than a $70 billion debt and will more than likely fail to make May and July debt payments. He added that though the Puerto Rican government remains open, the governor has authorized emergency liquidity. The focal point of his testimony was that the pairing of restructuring debt and an oversight board will not burden U.S. taxpayers.
Questions and Answers
Restructuring Debt and an Oversight Board
Rep. Cresent Hardy (R-Nev.) asked Weiss about who would participate on the oversight board. Weiss explained that the majority of the board should be Puerto Rican residents, debt restructuring and economic experts, thus highlighting that no elected officials are to be on the board.
Rep. William Lacy Clay, Jr. (D-Mo.) expressed concern over the increase in borrowing costs for the island if debt is restructured. Weiss affirmed that if debt is not restructured, the alternative is no access to the markets, a cascading series of defaults and mounting litigation.
Rep. Don Beyer (D-Va.) asked about the prospect of Puerto Rico reentering the bond market in a meaningful way after write-offs and fiscal restructuring. Weiss responded by emphasizing that the “tried and true combination” of pairing oversight with restructuring debt will enable Puerto Rico to establish economic growth and reenter the bond market. Weiss gave examples of the strategy working domestically and nationally in Philadelphia and New York, and explained that major companies have gone through restructuring and reentered markets.
Rep. Paul Gosar (R-Ariz) asked Weiss about the core explicit powers the federal oversight board should have. Weiss explained that the federal government is in agreement that a federal oversight board is insufficient to fix the crisis in Puerto Rico, though it will serve to ensure that whatever is promised by the Puerto Rican government is adhered to.
Rep. Darin LaHood (R-Ill.) asked how Congress can change the culture in Puerto Rico to get the private sector to flourish and reduce barriers. Weiss explained investors’ uncertainty due to the economy and stated that if the debt is not restructured, investors will not have anything to plan against. He included that the oversight board will ensure reforms are implemented and that the Puerto Rican government avoids overpromising and under delivering.
LaHood then asked Weiss if the administration has a concrete proposal for economic growth. Weiss said that he believes the earned income tax credit (EITC) will be effective and accomplish three things in Puerto Rico: 1) placing money in the pockets of hard working families; 2) providing an incentive to participate in the formal workforce; and 3) over time expanding the revenue workforce.
Rep. Niki Tsongas (D-Mass.) inquired about the growing outmigration from Puerto Rico to the mainland and asked what the most productive way to move forward is. Weiss explained that fellow citizens in Puerto Rico are “acutely aware” of the kind of trade off that the government could face if the maturities come due, litigation builds, and services build off constitutionally aided debt. Additionally, he said the Puerto Ricans leaving the island are young and of the working age, leaving no revenue base to construct a viable economy.
In regard to urgency, Rep. Jared Polis (D-Colo.) asked Weiss about Congress’ next steps. Weiss explained that “urgency could not be more apparent” as he believes there are already signs of a humanitarian crisis.
Puerto Rico’s Autonomy
Rep. Garret Graves (R-La.) asked Weiss how to balance autonomy against an oversight board that would have the ability to trump the Puerto Rican constitution. Weiss answered that the Administration is not proposing a “one size fits all” solution. He continued that the federal government and Congress will have to collaboratively work to design a restructuring where everyone is part of the discussion, including the people of Puerto Rico.
Beyer asked what would happen if the oversight board had no Puerto Rican autonomy to work with, and Weiss replied that it was not an option.
Rep. Rob Bishop (R-Utah) asked if there was anything “so sacred that we must not put on the table.” Weiss ensured that the oversight board shall secure Puerto Rico’s self-governance.
For more information on this hearing, please click here.
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House Natural Resources Committee
“The U.S. Department of the Treasury’s Analysis of the Situation in Puerto Rico”
Thursday, February 25, 2016
Key Topics & Takeaways
- Restructuring Debt and Oversight Board: Rep. Don Beyer (D-Va.) asked about the prospect of Puerto Rico reentering the bond market in a meaningful way after write-offs and fiscal restructuring. Weiss responded by emphasizing that the “tried and true combination” of pairing oversight and with restructuring debt will enable Puerto Rico to establish economic growth and reenter the bond market.
- Economic Measures of Growth: Rep. Darin LaHood (R-Ill.) asked how Congress can change the culture in Puerto Rico to get the private sector to flourish and reduce barriers. Weiss explained investors’ uncertainty due to the economy and stated that if the debt is not restructured, investors will not have anything to plan against.
- Outmigration:Weiss explained that citizens in Puerto Rico are “acutely aware” of the kind of trade off that the government could face if the maturities come due, litigation builds, and services build off constitutionally aided debt. Additionally, he said the Puerto Ricans leaving the island are young and of working age, leaving no revenue base to construct a viable economy.
Witness
- Antonio Weiss, Counselor to the Secretary, U.S. Department of the Treasury
Opening Statements
In his opening statement, Chairman Rob Bishop (R-Utah) discussed the Obama’s Administration’s role and plan to address the Puerto Rican debt crisis. Bishop stated that the committee’s purpose is to produce a bipartisan bill that will secure the country’s future and instill principles of good governance and fiscal transparency. Bishop’s focus was to ensure that a solution promotes long-term growth.
Resident Commissioner Pedro Pierluisi (D-Puerto Rico), in his opening statement, stated that over the years the people of Puerto Rico have been “poorly served.” Furthermore, he lamented that “Puerto Ricans are American enough to fight for the United States, but not American enough to vote for President.” He stressed that the oversight board will have to be carefully calibrated to ensure it is serving Puerto Rico’s best interest. Pierluisi said Puerto Rico “cannot cut its way out of this crisis or tax its way out of this crisis, the only way is to grow.” He added that the oversight board can take all essential actions, but there has to be assurance that Puerto Rico has the necessary access to the markets.
Testimony
Antonio Weiss, Counselor to the Secretary, U.S. Department of the Treasury
In his testimony, Weiss stressed that the Puerto Rican crisis is an American crisis, urging for an immediate call to assess and act. Weiss stated that “what started as a recession has turned into a fiscal and liquidity crisis.” Weiss noted that Puerto Rico is facing more than a $70 billion debt and will more than likely fail to make May and July debt payments. He added that though the Puerto Rican government remains open, the governor has authorized emergency liquidity. The focal point of his testimony was that the pairing of restructuring debt and an oversight board will not burden U.S. taxpayers.
Questions and Answers
Restructuring Debt and an Oversight Board
Rep. Cresent Hardy (R-Nev.) asked Weiss about who would participate on the oversight board. Weiss explained that the majority of the board should be Puerto Rican residents, debt restructuring and economic experts, thus highlighting that no elected officials are to be on the board.
Rep. William Lacy Clay, Jr. (D-Mo.) expressed concern over the increase in borrowing costs for the island if debt is restructured. Weiss affirmed that if debt is not restructured, the alternative is no access to the markets, a cascading series of defaults and mounting litigation.
Rep. Don Beyer (D-Va.) asked about the prospect of Puerto Rico reentering the bond market in a meaningful way after write-offs and fiscal restructuring. Weiss responded by emphasizing that the “tried and true combination” of pairing oversight with restructuring debt will enable Puerto Rico to establish economic growth and reenter the bond market. Weiss gave examples of the strategy working domestically and nationally in Philadelphia and New York, and explained that major companies have gone through restructuring and reentered markets.
Rep. Paul Gosar (R-Ariz) asked Weiss about the core explicit powers the federal oversight board should have. Weiss explained that the federal government is in agreement that a federal oversight board is insufficient to fix the crisis in Puerto Rico, though it will serve to ensure that whatever is promised by the Puerto Rican government is adhered to.
Rep. Darin LaHood (R-Ill.) asked how Congress can change the culture in Puerto Rico to get the private sector to flourish and reduce barriers. Weiss explained investors’ uncertainty due to the economy and stated that if the debt is not restructured, investors will not have anything to plan against. He included that the oversight board will ensure reforms are implemented and that the Puerto Rican government avoids overpromising and under delivering.
LaHood then asked Weiss if the administration has a concrete proposal for economic growth. Weiss said that he believes the earned income tax credit (EITC) will be effective and accomplish three things in Puerto Rico: 1) placing money in the pockets of hard working families; 2) providing an incentive to participate in the formal workforce; and 3) over time expanding the revenue workforce.
Rep. Niki Tsongas (D-Mass.) inquired about the growing outmigration from Puerto Rico to the mainland and asked what the most productive way to move forward is. Weiss explained that fellow citizens in Puerto Rico are “acutely aware” of the kind of trade off that the government could face if the maturities come due, litigation builds, and services build off constitutionally aided debt. Additionally, he said the Puerto Ricans leaving the island are young and of the working age, leaving no revenue base to construct a viable economy.
In regard to urgency, Rep. Jared Polis (D-Colo.) asked Weiss about Congress’ next steps. Weiss explained that “urgency could not be more apparent” as he believes there are already signs of a humanitarian crisis.
Puerto Rico’s Autonomy
Rep. Garret Graves (R-La.) asked Weiss how to balance autonomy against an oversight board that would have the ability to trump the Puerto Rican constitution. Weiss answered that the Administration is not proposing a “one size fits all” solution. He continued that the federal government and Congress will have to collaboratively work to design a restructuring where everyone is part of the discussion, including the people of Puerto Rico.
Beyer asked what would happen if the oversight board had no Puerto Rican autonomy to work with, and Weiss replied that it was not an option.
Rep. Rob Bishop (R-Utah) asked if there was anything “so sacred that we must not put on the table.” Weiss ensured that the oversight board shall secure Puerto Rico’s self-governance.
For more information on this hearing, please click here.