President Barack Obama on Thursday signed into law legislation aimed at rescuing Puerto Rico from its debt crisis.
The measure cleared by the Senate on Wednesday would put a halt to creditor lawsuits against the island and would provide a pathway for debt restructuring. It would also establish a seven-member oversight board to manage its finances. The House acted earlier in June.
Facing a $72 billion public debt, Puerto Rico defaulted on $422 million payment this year, stoking fears that the commonwealth’s fiscal situation needed drastic intervention.
Obama acted just one day before the territory was expected to default on another debt payment, this one for $2 billion.
Senate Majority Leader Mitch McConnell of Kentucky addressed concerns from some that the bill would amount to a “bailout.” Indeed, an intense advertising campaign this spring from a group known as the Center for Individual Freedom had described the rescue package as such.
“It won’t cost taxpayers a dime,” McConnell said. “It prevents a bailout. And it offers Puerto Rico the best chance to return to financial stability and economic growth over the long term so we can help prevent another financial crisis like this in the future.”
That fiscal oversight board that would be created by the bill rankled many Democrats, who also objected to provisions like one that would allow the governor of Puerto Rico to lower the minimum wage for some young workers and also block workers from a new overtime rule issued by the Labor Department.
“The legislation before us is far from perfect. Oh, is it far from perfect,” Senate Minority Leader Harry Reid of Nevada said ahead of the vote, taking note of those provisions. “I share my colleagues’ really deep concerns about this compromise legislation.”