The Obama administration issued Wednesday its most vigorous call yet for intervention in Puerto Rico's debt crisis, which it says is unsustainable without congressional action. Although the Republican-controlled Congress has been devoted to limiting government spending, the Obama administration maintained the U.S. territory has been entrenched in a decadelong recession and urgently requires Congress' cooperation in preventing a financial disaster.
"Only Congress has the authority to provide Puerto Rico with the tools required to lay the foundation for the Commonwealth’s recovery, and Congress must act," read a joint statement released Wednesday evening by U.S. Treasury Secretary Jacob J. Lew, NEC Director Jeff Zients, and Health and Human Services Secretary Sylvia Mathews Burwel. "Without congressional action, Puerto Rico will face a long and difficult recovery that could have harmful consequences for the residents on the island and beyond."
The White House has previously worked with Puerto Rican officials on forming political solutions to its economic downturn, such as job creation investments, infrastructure projects and lowering energy costs. The territory is home to 3.5 million Americans, and has seen an exodus of approximately 300,000 people throughout the past decade amid a shrinking economy and high unemployment rates.
The Puerto Rican government is seeking Congress' help in restructuring its $72 million of debt, after the territory's Government Development Bank announced Wednesday it would end negotiations with a group of bondholders without reaching a debt restructuring deal.
In its statement, the White House laid out its four-step proposal to Congress, which includes providing Puerto Rico with a restructuring regime, providing independent fiscal oversight, reforming the Commonwealth's Medicaid program and providing access to the Earned Income Tax Credit (EITC).
The administration said it will present its plan to the Senate Energy and Natural Resources Committee, the body that oversees Puerto Rico and other American territories.