Democrats muscled an emergency aid package for Puerto Rico heavy with tax breaks through the House on Friday, brushing aside Republican critiques that there's enough money already in the pipeline and that several provisions have little to do with disaster relief.
The White House has threatened to veto the $21 billion package, and with little Republican support its future in the GOP-controlled Senate appears dim. “Until we answer some questions, the administration’s not going to sign it,” said House Rules Committee ranking member Tom Cole, R-Okla., adding he doubts the Senate is going to take it up.
The House vote was 237-161, with 17 Republicans voting for it.
Puerto Rico's resident commissioner, Republican Jenniffer González-Colón, backed federal support for the embattled island territory, which has suffered through numerous recent earthquakes compounding the damage from major hurricanes in 2017. She offered an amendment, which was adopted by voice vote, to add $170 million for nutrition assistance to Puerto Rico residents.
But ultimately as a nonvoting delegate, González-Colón couldn't add to the bill's margin on the floor.
In a statement Wednesday, the White House budget office complained that tax provisions in the bill, which account for about three-quarters of the measure's 10-year cost, “are unrelated to immediate disaster relief and recovery.”
Most of the tax provisions' cost stems from two provisions intended to expand earned income and child tax credits to territorial residents, including in the U.S. Virgin Islands, Guam, American Samoa and the Commonwealth of the Northern Mariana Islands as well as Puerto Rico. The Joint Committee on Taxation estimates those two provisions, which would be permanent, would cost a combined $13.5 billion.
The bill would also enlarge and make permanent the rum excise tax "cover-over" which sends revenue back to Puerto Rico and the Virgin Islands for rum produced there, at a $1.7 billion cost. Democrats have pushed similar provisions since well before the recent earthquakes, as part of legislation unrelated to natural disasters.
A spokesman for Senate Finance Chairman Charles E. Grassley, R-Iowa, who would need to sign off on the tax measures in his chamber, wrote in an email that his boss agrees with the White House position. “Unfortunately, Senate Finance Committee Republicans were not consulted as House Democrats hurriedly cobbled together their bill," he said.
González-Colón acknowledged some of her GOP colleagues' argument that the tax provisions don't belong on an emergency aid bill, but she stressed they are "vital for the long-term recovery of the island."
Other amendments adopted include one from freshman Texas Reps. Daniel Crenshaw, a Republican, and Lizzie Fletcher, a Democrat, that would add $45 million to ensure that Hurricane Harvey victims who received Small Business Administration disaster loans can access housing relief funds. SBA loan recipients had been barred from such aid under "duplication of benefits" provisions prior to a 2018 law which loosened such restrictions, but implementation of the fix has been slow, lawmakers said.
The chamber also adopted by voice vote an amendment from Del. Stacey Plaskett, D-V.I., to add $3 million for technical assistance related to electrical grid fixes in U.S. territories.
The debate renewed friction over Puerto Rico between the parties with Democrats criticizing the White House for being slow to deliver aid following the devastation to the island from hurricanes Maria and Irma in 2017, and the administration repeating its claims of waste, fraud and abuse staunching the flow of generous disaster aid already approved by Congress.
House Appropriations Chairwoman Nita M. Lowey, D-N.Y., said the latest disasters make a quick response imperative. “In recent weeks, thousands of families in Puerto Rico were forced from their homes, schools were flattened, roads and infrastructure were severely damaged,” Lowey said. “While President [Donald] Trump has finally released some of the aid Congress appropriated … more support is clearly needed,” she added.
The White House argues $44 billion has already been set aside from prior appropriations acts for Puerto Rico relief and recovery. Of that funding about half has been committed to specific uses, but $8 billion remains unspent, the Statement of Administration Policy said.
"When disasters strike, it is our job to ensure that the federal government helps those in need. But we also have a duty to ensure that taxpayer dollars are used in a fiscally responsible manner," said House Appropriations ranking member Kay Granger, R-Texas. "Unfortunately, including tax breaks unrelated to disaster recovery and funds for disasters that haven’t even occurred is not a good use of taxpayer funds."
The disaster portion of the package amounts to roughly $4.8 billion, including almost $3.3 billion in Community Development Block Grant funds and $1.25 billion for road repairs. There's also $210 million in food aid, including the floor amendment from González-Colón.
Rep. Tom Rice, a Ways and Means Republican from South Carolina, questioned Puerto Rico’s need compared with sections of coastal South Carolina that he represents.
Disaster applicants from Puerto Rico have received average assistance of $42,000 per person, compared with the $14,000 average South Carolina applicants received following both Hurricane Matthew in 2016 and Hurricane Florence in 2018, according to government data tallied by Rice's office.
Rice also complained about the tax provisions added to the bill, assisting Puerto Rico and other U.S. territories and possessions by picking up much of the cost of expanded earned income and child tax credits.
“These tax issues really have nothing to do with disaster and they’re not a one-time thing,” Rice said. “They go on as continuing benefits.”
Rice also complained about the bill dedicating a disproportionate amount of the New Markets Tax Credit to Puerto Rico. In December, Congress extended and expanded the credits, which provide incentives to investors for projects in low-income areas. The credits are given out annually through a competition and there is more demand for them than availability.
With a $5 billion New Markets credit limit in fiscal 2020, the emergency supplemental would dedicate $500 million of that to Puerto Rico.