NEW YORK DAILY NEWS | Updat­ed: Wednes­day, Decem­ber 16, 2015, 9:18 AM

Repub­li­can lead­ers in Con­gress told Puer­to Rico’s near­ly bank­rupt gov­ern­ment to drop dead on Tuesday.

Despite fever­ish efforts by the White House and con­gres­sion­al Democ­rats to insert a pro­vi­sion into the fed­er­al spend­ing bill that would allow the Caribbean island ter­ri­to­ry to tack­le its mas­sive $72 bil­lion debt through bank­rupt­cy restruc­tur­ing, top Repub­li­cans in the Sen­ate scut­tled it at the last minute.


Their refusal now leaves Puer­to Rico just two weeks away from the biggest munic­i­pal bond default in Amer­i­can history.

“The hedge funds won, they got their way in Con­gress,” said Richard Rav­itch, New York’s for­mer lieu­tenant governor.

Rav­itch, who steered this city through its finan­cial trou­bles in the 1970s, and assist­ed Detroit in its bank­rupt­cy exit plan, has been an unpaid advis­er to Puer­to Rico’s gov­ern­ment and a major advo­cate of a spe­cial “ter­ri­to­r­i­al” bank­rupt­cy pro­vi­sion for the island.

San Juan, the capital of Puerto Rico, faces an uncertain future once bond payments come due Jan. 1.

Ricar­do Arduengo/AP

On Jan. 1, near­ly $1 bil­lion in debt ser­vice pay­ments come due. The only way Gov. Ale­jan­dro Gar­cia Padil­la can make that pay­ment — and hun­dreds of mil­lions more that are due in sub­se­quent months — is by fur­ther dec­i­mat­ing basic ser­vices to his island’s 3.5 mil­lion U.S. citizens.

Well, Gar­cia Padil­la should refuse to do that. He should fol­low, instead, the exam­ple of Alex­is Tsipras in Greece.

He should tell Con­gress, the bond­hold­ers and hedge funds: “Puer­to Rico can’t pay what it doesn’t have.”

Then, when the tremors sweep Wall Street fol­low­ing a Puer­to Rico default, watch the change in attitude.


Puerto Rico governor Alejandro Garcia Padilla should tell Congress, bondholders and hedge funds: "Puerto Rico can't pay what it doesn't have."

© Ana Mar­tinez / Reuters/REUTERS

Last week, it appeared that con­fronta­tion could be avoid­ed. New York Sen. Chuck Schumer expressed opti­mism that a bipar­ti­san com­pro­mise to aid Puer­to Rico could be reached.

On Mon­day, Schumer and Sen. Maria Cantwell (D‑Wash.) hud­dled late into the night with three top GOP lead­ers — Sens. Chuck Grass­ley, chair­man of the Judi­cia­ry Com­mit­tee; Orrin Hatch, chair­man of the Finance Com­mit­tee; and Lisa Murkows­ki, chair­woman of the Ener­gy Com­mit­tee — and their top aides to find com­mon ground.

But Grass­ley was adamant, accord­ing to two par­tic­i­pants in the meet­ing, that he didn’t want to extend munic­i­pal bank­rupt­cy laws to Puer­to Rico, a right the 50 states already have.

Cantwell then offered a last-minute com­pro­mise that did not specif­i­cal­ly autho­rize bankruptcy.


Rep. Nydia Velazquez calls Republican response to Puerto Rico’s woes “disgusting and insulting.”

Enid Alvarez/New York Dai­ly News

She pro­posed cre­at­ing instead a five-mem­ber board appoint­ed by the Pres­i­dent (with three mem­bers from the U.S. and two from Puer­to Rico). That board would mon­i­tor the island’s finances and rec­om­mend any pos­si­ble restruc­tur­ing. In the mean­time, all law­suits would be held in abeyance pend­ing vol­un­tary talks with creditors.

On Tues­day, Grass­ley reject­ed that compromise.

“The last-minute Cantwell pro­pos­al was lit­tle more than the Oba­ma administration’s plan that has been round­ly crit­i­cized and has lit­tle sup­port on Capi­tol Hill,” Grassley’s spokesman Tay­lor Foy said.

“The bot­tom line is that nei­ther Chap­ter 9 (nor­mal munic­i­pal bank­rupt­cy) nor Super Chap­ter 9 (the ter­ri­to­r­i­al alter­na­tive) do any­thing to help Puer­to Rico’s spend­ing prob­lems, which are the crux of the issue,” Foy said.

“This is dis­gust­ing and insult­ing,” said Rep. Nydia Velazquez (D‑N.Y.) in response. “The ones who have not been seri­ous on this issue have been the Republicans.”

Velazquez, along with Schumer, has been spear­head­ing the fight in Con­gress for assis­tance to Puer­to Rico.

“This is our last chance in this bud­get,” Schumer said. “We can’t aban­don the Puer­to Rican people.”