SAN JUAN, Puerto Rico (AP) — As Congress debates how to help Puerto Rico with its $70 billion debt, Treasury Secretary Jacob Lew is trying to prod lawmakers into action with stories of crumbling infrastructure on the island and a lack of basic services.
On a one-day trip to the U.S. territory Monday, Lew toured a San Juan elementary school struggling with insects and limited electricity and a hospital unable to provide some basic services to infants. He walked through a once-vibrant shopping district now covered in graffiti and drove past shuttered stores and restaurants.
"It can only get worse," Lew told reporters as he toured Eleanor Roosevelt Elementary School in San Juan with Gov. Alejandro Garcia Padilla.
With the strong support of Speaker Paul Ryan, House Republicans are expected to announce new legislation this week to create a control board to help manage the island's financial obligations and oversee some debt restructuring. It would be the third draft of the House bill, which has come under fire from some conservatives who worry it would set a precedent for financially ailing states.
At a brief news conference after a private tour of San Juan's Centro Medico hospital, Lew said Puerto Rico's problems were a human crisis as well as financial. He said infants who needed dialysis were unable to get it while children could only get cancer medicine if it were paid for in advance with cash.
Lew said he didn't think there was a member of Congress who would find those conditions acceptable for the 3.5 million U.S. citizens on the island.
"What I have gotten to see first-hand is, there is a growing crisis in Puerto Rico," Lew said.
In a kindergarten classroom, a teacher showed Lew and Garcia evidence of termites in the walls. The school has problems with electricity, and teachers said they were unable to use laptops, televisions and fans at the same time because they cause the power to go out.
In a fourth-grade classroom open to the outside, a fan was broken on a hot day. A science teacher told Lew that she doesn't have a lab for the children to do experiments.
"You all keep doing your work and we'll keep doing our work to help you," Lew told the children.
Garcia said that Puerto Rico is not asking for a bailout and has not been offered one.
"If Congress does not act then we will need a bailout, and it will be very expensive to U.S. taxpayers," he said.
The territory missed a nearly $370 million bond payment May 1. The default was the largest in a series of missed payments since last year, and Garcia has warned there will be more.
Puerto Rico has payments totaling nearly $2 billion due on July 1, including more than $700 million in general obligation bonds that are supposed to be guaranteed under the island's constitution. In an ominous warning to Congress and creditors that include U.S. hedge funds, Garcia said the outlook for the next payment is bleak.
"We don't anticipate having the money," he said last week.
Garcia said he had no choice but to suspend the debt payment to avoid cutting essential public services, such as schools and medical care.
House Natural Resources Committee Chairman Rob Bishop, R-Utah, has led negotiations on the bill. In addition to disagreement among conservatives, Bishop has also faced objections from Democrats and Puerto Rican officials who say they are concerned the oversight board would be too powerful and the restructuring plan would be too difficult.
Bishop has worked closely on the latest version of the bill with Lew and Treasury officials over the terms of the debt restructuring. He's said the negotiations with administration officials are one of the things holding the bill up. Lew has said the bill should provide "an orderly restructuring regime and independent oversight while respecting the Commonwealth's self-governance."
He said he has not seen the final version of the bill but that administration officials had a series of meetings with House Republicans last week.
The effort has been particularly complicated by disagreement among creditors. While some support the bill, others are fighting it in hopes of preserving larger payouts. Some creditors' groups lobbying against the legislation have said that it amounts to a financial bailout, even though the bill has no direct financial aid. Ads saying that the bill is a bailout are targeted at wavering Republicans.
Ryan has said he is opposed to a bailout but that one may become necessary if Congress doesn't pass the legislation soon and Puerto Rico's economy collapses.
The Senate has yet to weigh in on Puerto Rico while waiting for the House to act.