WASHINGTON, DC – In a letter sent to Speaker of the House of Representatives Paul Ryan yesterday, the Center for Individual Freedom (“CFIF”) warns against a backdoor bailout of Puerto Rico being considered by the House Natural Resources Committee.

The committee is considering the implementation of an unprecedented and broad restructuring regime for the island, which goes far beyond what is available to states under Chapter 9 of the bankruptcy code and would likely result in taxpayers being forced to assume the obligation of compensating bondholders.

“In granting the island this bailout, lawmakers would be sending a clear and decisive message to profligate states that refuse to balance their budgets: Fiscal reform is unimportant, because when push comes to shove, Congress will rewrite the rules to give you a free pass,” writes CFIF President Jeff Mazzella. “That course of action would be unwise and destructive, and not at all in accord with the conservative principles upon which this body was so resoundingly elected by the American people.”

CFIF urges Speaker Ryan to put a stop to this outrageous legislation, and make good on his promise to deliver a conservative solution to the Commonwealth’s crisis that can garner widespread support and will respect Puerto Rico’s constitutional debt.

Read the letter below.

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February 11, 2016

The Honorable Paul Ryan
Speaker of the House of Representatives
House of Representatives
1233 Longworth House Office Building
Washington, D.C. 20515

Dear Speaker Ryan,

On behalf of the Center for Individual Freedom and over 250,000 supporters and activists across the nation, I write to express our deep concern over reports that the House of Representatives is considering authorizing an unprecedented debt restructuring regime for the island territory of Puerto Rico.

It is our understanding that the House Committee on Natural Resources is drafting legislation which, if enacted, would establish a new, all-powerful restructuring mechanism that has deeply troubling implications for both the island and the broader United States.

Such a mechanism would circumvent nearly a century of established bankruptcy law by giving the island far broader restructuring capabilities than are available to states, and by taking the restructuring process out of the experienced hands of the federal courts and handing it to unelected Washington bureaucrats.

Just as disturbingly, such a broad restructuring would likely entail a redistribution by the federal government, as taxpayers would assume the obligation of compensating bondholders. Whether in the form of a super control board with restructuring powers or through a special bankruptcy regime crafted under the territories clause, that is a bailout by any other name.

In granting the island this bailout, lawmakers would be sending a clear and decisive message to profligate states that refuse to balance their budgets: Fiscal reform is unimportant, because when push comes to shove, Congress will rewrite the rules to give you a free pass.

That course of action would be unwise and destructive, and not at all in accord with the conservative principles upon which this body was so resoundingly elected by the American people.  Thank you very much for your attention to this important matter. 

Respectfully,
/s/
Jeffrey Mazzella
President