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tv   Key Capitol Hill Hearings  CSPAN  May 28, 2016 2:00am-4:01am EDT

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the united states. [ laughter ] to be able to get some of this done. so thank you all very much. [ applause ] next, the house national resources committee mark-up of legislation addressing puerto rico debt relief and then a housing hearing on how food suppliers can reduce waste. and after that, a discussion on the challenges facing women in military combat roles. on wednesday a bill addressing puerto rico's debt crisis was approved by the house national resources committee. it now heads to the full house floor for a vote. but will not be taken up until after that memorial day recess. the bill, which creates a federal over sight board to manage puerto rico's $70 billion in debt passed by a 29-10
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committee vote. this is about two and a half hours. well, this fun committee is going to come to order. as announce in the mark-up, i'm sorry, we have a quorum here and we're going to have an exciting and fun day. i haven't had this much fun since we went over red snapper. let's just do red snapper and puerto rico all of the time. i've never seen so much -- so much frivolity coming in here. as announced in the mark-up notice i'll give priority to those who filed bipartisan and amendments by the amendment deadline of yesterday at 4:00 p.m. thank you for doing that on time. please go back and tell your staff, get at mendments in by
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4:00. all right. you have received kind of an order i think that was sent out to you of which we'll take the amendments in here. there are only 32 of them that have been filed. it is going to be a piece of cake. there are going to be some of those -- i'm going to make some changes on the fly in the order in which we deal with these. some amendments will be bipartisan and some will be easy to accept. some are going to be subject to a point of order. we'll try and block them altogether in those categories. so we're now ready to start the amendment process on hr-5278. and i have to ask, are there amendments to the bill? mr. graves? >> mr. chairman, i have an amendment at the desk. >> this is the first of the bipartisan ones, this is the grave polis amendment it is 046
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and you all have it. mr. graves, you recognized to explain the amendment and without objection, the amendment is ordered read. >> mr. chairman, this is an amendment that we're doing with mr. polis and what it does is it directed the gao to conduct a study of the conditions that led to the financial crisis that we're currently experiencing in puerto rico. the idea here, mr. chairman, is that this is a crisis that has sort of evolved over a ten to 12-year process and to prevent future situations like this from happening, we need to make sure that we're extracting as many lessons learned from this as possible and it directs the gao to conduct a study that look at what led to this financial crisis and to make recommendations to congress and the administration on changes that could occur in the future to avert this type of situation. i know everyone enjoys working on puerto rico bills and everybody is really happy to be here today. but i would like to try and
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prevent us from being in this situation again. and i yield to mr. polis. >> i want to thank mr. graves for bringing forward this amendment as well. there is the old saying that says those who don't study history are doomed to repeat it and i hope in addition to working to sort out the situation in puerto rico, one of the legacies of the action that this body takes is having a quality study done by the gao to help prevent these kinds of financial crisis in the mainland or our territories by finding out what practices, what actions of the territories government and what led to make this situation as bad as it is today in puerto rico and it is my hope that other states and territories could learn from this and it will hopefully be a positive legacy of whatever action this body chooses to take. and yield back to my colleague
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mr. graves. >> mr. chairman, i'm going to reserve. >> thank you. let me take one second to give you a clarification. we have to stop this unholly graves polis alignment but they have two amendments. i said we are doing 046 and this is number one on your list. so it is still -- it is a different amendment, but this is amendment number one not the 046. and if i could give myself some time, i'm satisfied with this and willing to accept it. is there anyone else that has further discussion on this amendment? if it not, any amendments to the amendment? if not we'll vote on it. all of those in favor of this graves polis number one which is number three on the list say aye and opposed say nay and the motion carries. all right, now -- >> it is graves-fire, not graves
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polis. >> i'm sorry. >> it's my fault. [ pause in proceedings ] >> yes, i know exactly what i'm doing. we're not going to go back to the -- knock it off. we're not going to go back to the next bipartisan amendment, mr. graves you are still up. and i said it was graves polison and this is graves beyer and i'm sorry, 046. you are recognized for that one. >> so did we just passed graves polis, though, correct. >> yes. >> so now mr. chairman, we have another amendment at the desk. this is a bipartisan amount also. with mr. beyer. and what this does is this provides the discretionary authority, it doesn't require but it provides discretionary authority to the oversight board which is established in the act to -- for the oversight board to conduct an investigation into
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understand the selling practices and some of the representations that may or may not have been made with investments in puerto rico securities that may have led to or contributed to misinformation that may have exacerbated the financial situation that we're facing right now. and again, this is all about lessons learned from this disaster. so it gives the discretion of the oversight board to conduct an investigation, to look at some of the representations associated with this investments. and here is the deal. as weal -- we all know. we have pensioners and all of the districts across the united states that are invested in these securities. and we want to make sure that we understand what type of representations were made to those investors, under what auspices did they invest in these securities and make that information public to ensure that folks have been up front and honest about -- about the
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dealings with these securities and i yield to mr. beyer. >> thank you, mr. graves. mr. chairman, i proudly support the amendment offered by my good friend from louisiana. while i'm sure most of the bonds in question were marketed in good faith by brothers and -- brokers and dealers and buyers acting in the best ethical acts of their profession and there is question about possible proprieties in the sale connected with these bonds and i share the concern about the possible conflict of interest and failures of disclosure regarding the marketing and sale of these bonds. so it is in the interest of investors and a puerto rico government that seeks to regain access to the financial markets that any improper practice involved in the sale of the bonds be brought to light, to turn future improprietities and restoring future investor and i urge support for the graves amendment. >> thank you. any further discussion? >> mr. chairman -- >> let me take the time to say
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personally, we have three bipartisan amendments we just passed the one. i feel comfortable with all three of these bipartisan amendments. miss lem is. >> mr. chairman, i'll support this, but i have in front of me the bond issuing documents and if you read through them, there was full disclosure, especially if you look at the 2014 -- i have a general obligation bond of 2014, series a., it was a refunding, which is a refinancing, if you go through all of the documents, it fully discloses these were noninvestment-grade bonds. they were rated non-investment grade by moody's, standard and poors and fitch. and in all of the disclosure documents, it makes clear how risky these bonds are. and prudent investors buy these bonds because they want a wide
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variety of maturity dates, of risk profiles, and they buy lower-yielding bonds and balance it off with some higher yielding bonds and balance the risks. these are professional investors who know what they are doing. and so i haven't heard the kind of allegations that there may have been nonadequate disclosure. but if you read the bond documents themselves, it is very clear how risky these bonds were. and any prudent investor that buys these kinds of bonds would have known that: thank you, i yield back. >> is there any further discussion on this amendment? is there any amendments to the amendment. all of those in favor to the
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amount say aye. opposed? the amendment passes. we're now going to the third of the bipartisan amounts. this is mr. polis and mr. benishek. you are recognized. >> thank you, mr. chairman, as you are aware in the process of drafting this legislation, there has been a lot of discussion and i've certainly tried to drill down on the issue of economic growth mechanisms for the island of puerto rico. i have concerns that while we're addressing the issue of the outstanding debt, i think it is very important that we look at pro-growth policies for the island. a lot of those will not be -- which we'll be talking about in amendment form won't necessarily be in in order in this committee which is why i'm offering my colleague from michigan mr. bennish acan aamendment to improve the task force to come up with policy regulation that may be codified through the appropriate committees of jurisdiction to create
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pro-growth economic policies for the island. and what we're looking at with this amount is the composition of this committee expanding the committee leadership to include the committee on ways and means and the committee on fbs and not just this -- finance and not just this committee in the senate. we love this committee, of course, but it is important to buy in from committees of jurisdiction over progrowth economic policies. it has been frustrated to me that we have not been able to do the tax incentives and growth policies that are needed. so the other thing that it does, instead of allowing 30 days to appoint the task force members we shorten it to 15 days. that should be enough. this is an urgent issue. we need to get to work on in. and finally it requires a status update in mid-september which is while congress is still in session. congress is here for a couple more weeks. and it gives congress a chance to act if congress wants to. and the situation in puerto rico is dire. we want to make sure that in
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addition to whatever action this body takes now, there is at least the opportunity to look at pro-growth economic policies for puerto rico. and i hope that the committee supports this bipartisan and simple amendment, i'm happy to yield to mr. benishek. >> thank you. finally we have a bill to put puerto rico back on a path to fiscal sanity. while it is incredibly important to work out the immediate crisis that puerto rico finds itself in, we need to look to the feature and help create an economic environment that fosters growth and investment. adding members from house ways and means and senate finance will improve the work that the congressional task force of economic growth in puerto rico will be doing once this bill is signed into law. i'm glad mr. polis and i have been able to work across the aisle on a common sense amendment. i want to thank mr. duffy and the staff on getting the best possible bill out of our committee and one step closer into law.
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i urge my colleagues to support the amendment and look forward to continue to work with you to help puerto rico be successful in the long-term. i yield back. >> i reserve the balance of my time. >> or yield back. whichever comes first. >> okay, well again, i encourage the adoption of the amendment. it is very simple. it includes the committees of jurisdiction so that committees that have jurisdiction over tax policy and financial services policy could look at this and expedite the process of recommendations coming back to us and i'm happy to yield back the balance ever my time. >> thank you. any other discussion on this amendment? any amendments to the amendment? if not, we vote. all of those in favor say aye. opposed say nay. motion carries. i want to go through four amendments that i will tell you in advance i once again have no problems with and willing to accept it. two by mr. gallego and one -- no, i lied again.
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an even better amendment. it is the technical one under my name which is number one. this one -- i'm sorry, it consists -- i recognize myself. it is number one. it consists of technical amendments and typos and punctuation errors and terms used in the bill and we found two prep positions to ended a sentence. so any other discussion on the technical amendments. ? if not. any amendments? all of those in favor of the technical amounts say aye. oppose? that one passes. now to the four that i will tell you in advance i'm willing to accept. two by mr. gallego and one by mr. [ inaudible ] and we'll go to mr. gallego. let's go 046. >> excellent. thank you mr. chairman. >> you're recognized. >> thank you mr. chairman.
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i rise today to offer a common sense amendment to the bill before us that affirms the critical role of the puerto rico people in this process. section 409 establishes the congressional task force on economic growth in puerto rico to analysis the impediments to stronger economy and help identify opportunities to for revitalization under federal law. while i applaud my fellow colleagues who have travelled to puerto rico to witness the urgent humanitarian crisis for themselves, the members who serve on this task force ought to bring questions and ideas to the faups and businesses -- families and businesses on the island. my amendment stipulates that if the task force holds any hearing it must hold one hearing in puerto rico. to truly grasp the realities that communities across puerto rico are facing, members of the task force must have the chance to see for themselves the barriers and opportunities on the island for long-term growth and prosperity. mr. chairman, let's adopt my amendment and send a strong message to the puerto rico people that their voices are valued. again, i strongly believe that a
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task force should conduct hearings and one should be held on the island. i surge the colleagues to support my amendment and i yield back. >> is there any other discussion to this amendment? all say aye and opposed. it passed. you are on a role. let's do the next one. 045. >> let's do them, mr. chairman. thar thank you, mr. chairman. as we look to face the urgent humanitarian crisis in puerto rico, we must face the health care system that millions depend on. the hospital system has laid off 10% of the workforce and has been reducing services including closing beds and floors and entire wings of hospitals just to cut costs. an average of 1 physician a day it leaving the island. the government is struggling to make the medicaid payments. jeopardizing the entire medicaid
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program that thousands of families rely upon for care on the island. mr. chairman, ultimately, as we all know, it is the patients that will suffer. i believe section 409 and a congressional task force provides a meaningful opportunity for congress to reexamine the root causes of the current crisis and offer bipartisan solutions. that is why i'm offering an amendment that ensures a task force consider access to federal health care programs as part of the mission to identify impediments to economic growth in its report. health care makes up 18% of the puerto rico economy and employed 84,000 people so it must be a central part of the mission to fiscally stabilize the island. issues like the underfunding of medicare and prescription drugs and looming medicaid cliff have been identified by members of congresses irishs that must -- as issues that must be addressed to have a sustainable system. by ensuring that the task rors includes these issues i hope we could act swiftly to solve the
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long-term problems that continue for economic vitalization on the island of puerto rico. on behalf of those on the island, i urge my colleagues to support my amendment and i yield back. >> is there any other discussion on this amendment? miss dingle. >> thank you. i want to thank my friend and colleague from arizona for offering this common sense amendment. if we want to make sure this committee is not back here in a few months to deal with puerto rico once again, we must ensure that the root causes of this crisis are addressed. this means supporting provisions that will grow the economy and stop the mass exodus of people from the island. democrats wanted this legislation to ensure that puerto rico is treated just like any other state in terms of access to federal health care programs. we push for language to deal with puerto rico inadequate treatment under medicaid by removing the cap on medicaid funds for the island and increasing the federal medicaid match. unfortunately, none of these
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provisions are in the final bill. this amount would require the -- amendment would require the economic growth in puerto rico to study the inequitiable access to federal health programs as part of a report that looks at all of the impediments to economic growth on the island. if this report is going to be fair and accurate, the issue of health care on puerto rico must be examined. we have nothing to fear from studying the issue further and i hope my colleagues on the other side of the aisle agree. i urge my colleagues to support this amendment and yield back the balance of my time. >> is there other discussion? mr. labrador. >> i oppose this amendment. the root cause of the problems in puerto rico is not they are not getting enough federal money from us. their root causes are poor decisions that have been made over years and years. and i think that what this amendment does, it actually puts a -- a stamp on the bill that
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we're asking for additional monies. we have been attacked by people -- people have been saying that this bill is a pathway to a bail-out and i think if we actually encourage this task force to look at sending more money to puerto rico, it will become that and i think that this amendment should be opposed. >> mr. chairman. >> is there any other discussion. >> i move to strike the last word. >> why don't you be recognized for five minutes. >> thank you. >> i rise in support of this amendment. when you look at this bill, what we're trying to do is to improve puerto rico -- the government of puerto rico fiscal condition. and it is undisputable that the lack of fair, equitable access to federal health programs is having a huge impact on the fiscal stability of puerto rico.
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if you just simply take a look at the medicaid program and you basically provide puerto rico with equal access up to 100% of poverty level, not medicaid expansion, simply treating the american citizens of puerto rico falling below the poverty level equally, the same as their fellow american citizens in the states. puerto rico -- the government of puerto rico would be receiving in excess of $2 billion extra additional each year. right now the government of puerto rico is struggling to deal with the medically indigent. and if you are going to be creating a task force to look at ways in which puerto rico can do better, the government of puerto rico can do better, the economy of puerto rico can get back to a growth path, definitely you should be looking at the way
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that puerto rico is treated under the federal health programs. this is not preordaining a result. it is simply adding this subject matter to the scope of work of this task force. the task force will make its recommendations, but the members of congress will be the ones with the last say. excluding federal health programs from this review, from the work of the task force, doesn't make sense if the objective of this bill is the one that i just portrayed. getting puerto rico back in shape. fiscally in the first place and then economically as a result. so i urge my colleagues to support the amendment offered by mr. gallego. i yield back. >> let me yield to myself for one second here. this is the easy stuff. this is a study. actually on the base bill of the study, it allows them to go into
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other areas. it specifies an area. that is why i'm willing to accept this. because it still once again doesn't mandate anything, it is a study. if you want to still keep talking on this, we can keep talking on it. anyone else? any amendments to this? all those in favor say aye. opposed say no. >> no. >> let's do a roll call. >> mr. bishop. >> aye. >> yes. mr. grijalva. yes. miss napolitano. mr. board alleya. mr. lamborn. mr. whitman. mr. sublan. mr. fleming. mr. fleming votes no. miss tsongas. voting yes. mr. mcclinton. voting no. mr. pierluisi.
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yes. mr. thomas. voting yes. mr. huff mab votes yes. and mr. llamas. and mr. ruiz. and mr. benishek votes yes. and mr. lowen thal. yes. mr. duncan. no. mr. cartwright. >> yes. >> he votes yet. mr. gosar. mr. beyer votes yes. mr. labrador. voting no. miss torres. mr. la mafla. no. miss dingell votes yes. and mr. gallego. he votes yes. mr. cooke votes no. miss caps. she votes yes. mr. westerman. mr. polis votes yes. mr. graves. he votes no. mr. clay. mr. knew house. mr. knew house votes no. mr. zinke. mr. zinke votes yes.
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mr. hice. mr. hice votes no. miss rad wagon. voting yes. mr. mcarthur. voting yet. mr. moony. mr. hardy. mr. hardy votes no. mr. la hood. voting no. >> the clerk will report. >> the ye a's are 19 and the nays are 18. >> you all won. do you really want to? motion accepted. amendment passes. turn to mr. hice. number 22. you're recognized for five minutes. >> thank you mr. chairman. i'm offering an amendment this morning that i believe will address an issue within this whole debate about puerto rico that has long been overlooked
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and that is the influence of private market competition. unfortunately for far too long there has been way too much reliance on the public sector within puerto rico. in fact, in the energy and mineral resources sub-committee hearing this past january that was held on preppa, we saw an incredible example of why the puerto rico government has failed, the 3.5 million american citizens on the island. mr. chairman, instead one of the key objectives that i believe should be part of this legislation is to ensure that we promote and encourage free market competition in order to improve the over all economy of puerto rico across all industries. and so my amendment will achieve just that. i believe that it is critically important that we give the
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oversight board the ability to promote the very private sector competition that has been so long lacking on the island. and so with this amendment, i believe that the oversight board can provide the needed support and spur the economic growth that is needed. and so i just simply want to ensure that in the future that the puerto rico government can serve as a facilitator of the private sector and not an in hinter of it. so mr. chairman, i encourage all of my colleagues to support this amendment and i yield back. >> thank you. any discussion to the miami. seeing none. all of those in favor of the amendment say aye. opponents say no. it is adopted. now to the mcarthur amendment, 050. that has to be passed out. there was a technical change. it has been revised so there was a technical changes that had to be made to it. so i'll take a second and if the staff will pass those out.
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[ pause in proceedings ] >> they'll come out to you quickly. mr. mcarthur, while those are being passed out to members, let me recognize you for five minutes for the amendment. >> well, thank you mr. chairman. this bill, i think, in its current form, does a suburb job i think of creating structures that resolve the debt and fiscal crisis in puerto rico. and it sets the stage in the form of this growth commission for addressing the future growth of the island. i think we could do a little bit more on that. and that is what this sense of congress is for.
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if you look at a chart, which i have in front of me, of puerto rico's growth from 1969 until present, you'll see the island enjoyed pretty healthy growth until about 2000. there was some changes in tax policy that year and in the subsequent five or six years you saw puerto rico's growth go down and down and down. and then by 2006, puerto rico's growth has been under water every year. so what this amendment does is try to address the need for growth policies. i want to read a quote from forbes magazine, an article last night and want to read it because they quoted me. and what they quoted me saying was it is vital that we help resolve puerto rico's debt crisis, but the island will not enjoy enduring prosperity until with you include growth
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initiatives. we have a unique opportunity to have energy zones and other tax policies which will allow this island paradise to become an economic miracle. what this amendment does is simply offer a sense of congress that the growth commission must -- and congress must look at pro-growth policies, including the ones that i just referenced. i want to add that it is supported by the puerto rico manufacturing association. i was visited by their president last week and represents 1200 puerto rico companies that account for about half of puerto rico's economy. coca-cola came out this morning and endorsed it. forbes magazine i just read. i introduced it with representative gosar. it has been sut pored by -- supported by americans for tax reform, the national taxpayer union and citizens against government waste. so it has a broad support.
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and i'll leave you just with this. when the president of the puerto rico manufacturing association visited me last week, he applauded all of the things that we're doing to resolve the debt crisis in puerto rico. he said this kind of amendment will do more to give hope to the puerto rico people than anything else because it gives them a sense we're paying attention to their future and that this isn't just about resolving debt issues. so i urge passage of the amendment. >> mr. mcarthur, i'm glad you got coca-cola endorsement of this but if you wanted gom ert and my support, you had to have it endorsed by dr pepper as well. >> i'm working on that as well. >> is there sni discussion of the revisement. >> mr. chairman. on behalf of the people of puerto rico, i commend mr. mcarthur for presenting this amendment and i support it. i yield back. >> thank you. any discussion? any amendments to the amendment.
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all of those in favor say aye. opposed. it passes as adopts. all right. we'll go through four amendments for which i will actually ask a -- have a point of order against all four of these. so let's just do them all at once. i give the people the ability to speak on it if they wish to. we'll start with miss torres number 23. i reserve obviously the point of order against the amendment. you are recognized for five minutes. >> thank you, mr. chairman. >> or less. >> the legislation that -- as it is currently written allows the minimum wage for workers 25 and under to be lowers to a business mal $4.25 for as long as the oversight board is in place. my amendment will strip this provision from the bill. mr. chairman, when i first entered the workforce in the early 1980, i was paid the minimum wage at $3.35.
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and now we're asking the young men and women of puerto rico to make just 90 cents above that. in fact, the last time the minimum wage was this low in the united states was 25 years ago. but in today's dollars, workers haven't had a minimum wage this low since 1940s. the young men and women of puerto rico are american citizens and they don't deserve to be treated like second-class citizens. this -- the workers being affected are not high school students with a summer job. they are young people setting off their careers, many of them struggling to pay student loans, payments to become self-sufficient. i am also concerned that there is nothing in this bill that would prevent an employer from laying off older workers the first chance they get just so
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they could bring cheaper labor. the people of puerto rico are already dealing with an increasing, challenging economic environment. lowering the wage would only add an in sult to this injury and sends the wrong statement about whether we value puerto ricans as equal american citizens. during our april 13th hearing on this issue, one of the witnesses, antoina wise from the treasury department testified that one of the puerto rico's biggest problems was the declining population. this provision only magnifies this problem. the island is already experiencing a mass exodus of young people. lowering wages will only compel more young people to leave, having a detrimental impact on puerto rico's current and future workforce and its tax base. if you are a young person in puerto rico, college educated
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and anyone english speaker, what would compel you to stay on the island and build a life there. the minimum wage provision in this bill is bad for these young workers and it is bad for the people of puerto rico. this provision does not fix puerto rico's problem. and in the long run it may worsen them. there is no question that puerto rico will need to make sacrifices. but it can't do so on the backs of 25-year-olds. i urge my colleagues to support my amendment so that puerto rico's recovery doesn't come at the expense of young, hard-working americans. >> thank you. i'm going to have to insist now on my point of order, this amendment violates rules ten -- i'm sorry. is there discussion to the amendment? >> yeah. >> you really have to? all right. >> well i wanted to thank the gentle lady from california.
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i think it is important. for the discussion on this legislation, the major point of convention for our side of the aisle has been this particular point, the gentle lady brought up. and some will say that, you know, low wages is a pro-growth strategy that will help in the growth. well, all it will do is grow poverty and continue to grow the rate of departure of people from the island and grow discontent and it will grow family situations and domestic issues and grow premature debts and illness and grow the wallets of the certain corporations, but it will not -- it will not grow the economy in puerto rico, in this gesture. i want to thank my friend from california, it is an important one. regardless what occurs on this, it is an issue that we'll have to deal with again. thank you. i yield back.
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>> is there anyone else before i do the point of order because that isn't going to change? mr. beyer. or mr. cartwright. >> thank you, mr. chairman. mr. chairman, i spoke on this issue as well at the april 13 hearing. look, we're all good capitalists here. we understand how the mashlrket works and we understand if you pay people much less in one place to work than in other places of the united states, they are going to move to the other places in the united states. i commend representative torres for this amendment. i associate myself with the remarks of the ranking member and i yield back. >> any other discussion? mr. denim. >> thank you, mr. chairman. i realize this is going to be ruled out of order. but for the sake of discussion, the hard-working 25-year-olds in puerto rico are no less americans than the hardorking californians in california that are going to make $15 an hour, just a question to the author of
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the amendment, shouldn't the puerto ricans receive $15 or more and if we are going to have that discussion we should take a look at how that will affect the puerto rico economy the same way we look at california's economy. >> was that a question to mrs. torres? >> if that is your amendment, sir, i would absolutely second your amendment request. given the fact that these 25-year-olds parents are being asked to relinquish their pension, therefore $15 an hour i believe is a good, liveable wage for the citizens of puerto rico. >> thank you. >> did you yield back, i'm sorry? >> is that the denim amount. >> there is no amendment. [ laughter ] >> yes, i will yield back and look forward to a longer discussion and certainly the economic analysis behind this.
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maybe $15 is not enough. maybe it should be $20 or $25 since we are talking about living wage versus a minimum wage. >> yield back? thank you. and i'm sure there is going to be a further discussion on this just not in this venue because it violates rule ten. it is out of the scope of the jurisdiction of this committee. i rule it out of order. the amendment falls because of that. let's go to the next one, then. which is mr. polis, 168. once again i reserve a point of order against this amendment. nothing personal and you have three of them coming up and it is the same dialect. you are recognized for the amendment even though i have the point of order against it. >> i want to confirm, this is the one with regard to the fair standard labor acts waiver. >> i have tax treatment. >> oh, tax treatment. okay, excellent. yes, this amendment is one of the many ideas that would actually promote economic growth on the island. and i'm glad that a number of members have talked about
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including mr. mcarthur, the need for pro-growth economic policies. one tool for development is in 1996 congress decided to phase out what are called revenue code section 936 tax credits over a ten-year period which is when the recession began. my amendment is a tax policy that seeks to bring back some of thes and -- the jobs and would provide economic growth and opportunity for -- for development on the island. it provides an in sentive for companies that invest in puerto rico to repatriate and come back to the u.s. mainland by granting 85% exemption against the second layer of u.s. tax and eliminates the lock-out effect that many companies believe that their income could be trapped in puerto rico and they can't reinvest it back on the main land and incentivized u.s. companies to manufacture in puerto rico knowing that their income could stay anywhere in the united states. and this amendment is consistent
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with bipartisan recommendations by department schumer and the white paper and the bowl's simpson report and matches the structure that many other developed countries have implemented. in order to reduce any impact to the u.s. treasury, and ensure proet posal -- the proposal doesn't allow companies to gain the tax system, the proposal is only about active income and contains limits on the use of foreign tax credits. effectively, that would prevent u.s. companies from using credits against taxes paid in puerto rico to reduce taxes owed on income from other countries. this kind of bipartisan economic growth tax proposal is what the island needs to help get their economy growing again as we indicated, of course, through a sense of congress, which i strongly agree with and i hope we could put some meat behind it through this amendment and i yield back. >> thank you. any other discussion of this? then i will insist on the point of order this one again violates rule ten and deals with issues
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not in the jurisdiction of this committee, but in the jurisdiction of ways and means. the amendment falls. mr. polis, i'm not picking on you, but you have 69. i once again reserve a point of order but you are recognized for five minutes. >> this is the hub zone amendment? >> yep. hub zone. >> mr. chairman another great idea. and i think, again, i think what -- one thing that has frustrated all of us and certainly frustrated me during our hearings and also during our mark-up is what the limited jurisdiction of this committee. i think ideally we could have seen something through both ways and means and financial services but i do want to highlight one other type of economic incentive that i hope the commission recommends and i'm sure they will look at and this is essentially a concept of hub zones which we could go beyond the study. adjust the definition of hub zones for the entire island of puerto rico qualifies as a historically underutilized business zone.
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that would affectively give small businesses in puerto rico easier access to contracting opportunities, unfortunately only 24 businesses on the island currently enjoy the benefits of the program. given the very complicated way the current hub zone formula applies to puerto rico, it is very limited. many severely distressed areas on the island are excluded from the benefits of the program because of the way they are calculated and our point here is saying the entire island should be subject to these kinds of in sentives. my amendment would allow many more businesses across the island to get the benefit of hub zones. with the proper adjustment such as my amendment for a hub zone i believe hr 5278 could help puerto rico lift itself up by bootstraps and complementing tax policy and regulatory forbearance and this is the type of policy that could help prevent a future need for a bail-out or a costly solution. i hope that the chair and the committee will support myments
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and i yield back the balance of my time. >> thank you. any other discussion to this amendment. >> mr. chairman. >> yes, mr. labrador. >> i understand there is a point of order raises on this but i would like to join mr. polis in supporting this amendment. i hope we could find a way to doo this and -- to do this and instead of talking about sending more money to puerto rico, maybe there is more ways to incurage -- encourage economic development on the island. thank you very much. >> further discussion? if not, i will insist on the point of order, this is, you are correct, not a bad idea, but for here it is. because it violates rule ten. it is out of the scope of the jurisdiction of this committee so i will insist on the point of order. the amount fails. mr. pole is, nothing personal but 170. striking the over time rule once again, i reserve the point of order. >> and this is the fair labor standards act amendment. >> the overtime rule. >> so this is my final amendment. and again, i think what i try to put out in the other two amendments are a little bit
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about what a proactive growth agenda might look like for puerto rico. there are many other ideas but those were the low-hanging fruit. but i think many democrats, myself included, have a problem with miss torres highlights, the reduction in minimum wage and this, which is exempting puerto rico from an overtime ruefle. and as you know, the rule is long overdue for fair labor standards and sets a new salary for overtime at $47,000 a year and a worker that makes less than the new threshold is eligible for paid overtime above 40 hours a week. we've debated this rule expensively with regard to the continental states in hawaii. i know members have varying opinions on it. i believe that it does not lead to any additional economic growth in puerto rico if somehow workers are not compensated for working 50 or 60 hours as week.
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a manage at a fast food restaurant may earn $25,000 or $30,000 but they might work 50, 60, 70 hours a week. that is fine. but they deserve their overtime pay. and that doesn't change just because of fiscal mismanagement on the government of puerto rico. the overtime provision coupled with separate language that miss torres talks about that undermines minimum wage and drives productive people from the island, the exact opposite of what we want to do because for comparable jobs, remember, they are american citizens, they could move to florida or texas or california at the exact same fast food restaurant managing in puerto rico, they will not get the overtime. but if they simply move to california or florida, they would get the overtime. so it create this is incentive to leave. which i don't think is what we want to do. i don't think that is in the
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long-term interest of puerto rico. so i would encourage my colleagues to consider this amendment. whatever they believe about the virtues of the executive action with the fair labor standards, it is very important that puerto rico have the same policies as the rest of the country. obviously the next president can take a stab at whether they want to change it again or not. but to create this -- this delta between puerto rico and america with regard to items like overtime can create some perverse incentives that lead the most productive puerto ricans to leave the island which i believe is the opposite of what we want for the economic growth of the island and i yield back the balance of my time. >> so further discussion on this amendment? i will insist on the point of order one more time, good conversation but out of the jurisdiction of this particular committee. and amendment falls. all right. go on to the next section, the
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amendments which present more problem and may take more time. starting with the first one, mr. fleming, number 76. >> thank you. >> mr. fleming, you recognized for five minutes on your amendment. >> mr. chairman, i would like to submit to the record an article from politico on may 9th, 2016 and the article states and i'm quoting, law enforcements say they absolutely positively will not bail out puerto rico. but here is the thing. the federal government already is bailing out puerto rico. it goes on to say this. the obama administration effectively has been providing the beleaguered island with billions of dollars in aid through a little noticed and convoluted tax arrangement with the help of a washington law firm puerto rico in 2010 created a special corporate levy aimed at getting money out of the u.s. treasury and the u.s. has refused to rule on whether it is legitimate. end quote. those are not my words.
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those are from politico. my amendment requires a ruling before the rest of the bill's provisions could go into effect. first a bit of history. the government of enacted a new tax through act 154 that took effect in january of 2011. this was an excise tax, not an income tax. an excise tax on american companies without operations on puerto rico. the tox was structured to qualify for the foreign tax credit so that companies would pay the same amount. here's how it works. u.s. tax law allows foreign tax credits to be claimed to prevent american companies from being double taxed on the same income. because we tax american companies no matter where they operate, most companies operating abroad would be subject to both u.s. taxes as well as a tax of the foreign country. u.s. tax law allows american companies to claim a credit of
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the foreign taxes they pay so they won't overpay. this can create a perverse incentive for foreign countries and we see this here to raise their taxes only on u.s. companies so the tax law has a number of limitations that prevent a foreign country from creating a, quote, soakup tax, end quote, which is a tax that woo not be imposed if there were not -- if not for foreign tax credits. with the assistance of a k street law firm, puerto rico was able to concoct an excise tax that skirted all of these restrictions but otherwise would not exist but for the u.s. tax credits. the result is a pass-through of u.s. tax dollars to the puerto rican government where american companies pay this novel excise tax to puerto rico and the companies are in turn made whole by the u.s. tax dollars. so, again, in summary of that,
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the companies pay the tax, the excise tax, they get fully reimbursed by the u.s. government, but the taxes are being paid to puerto rico. puerto rico gets to keep those taxes. in march of 2011, the irs released a preliminary ruling saying they were stud yying the new tax scheme and that they would not challenge claims that companies could claim the tax. recently a treasury spokesman said, quote, as treasury and irs have previously stated, we are evaluating the excise tax. the provisions of which are novel. it remains under review and reare not yet in a position to provide permanent guide aps on the credibility of act 154. all my amendment does is say that we need a tax ruling from the irs before we go forward. i'll be happy to yield back. >> is there any other discussion on this amendment? >> mr. chairman, people of puerto rico are suffering in
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businesses, schools and hospitals are closing. and young people and professi professionals are leaving the island by the hundreds every day. they need our help to reverse this trend. while the bill before us is not perfect, it is a carefully crafted compromise which seeks time prove the quality of life for families on the island. this amendment should be defeated because it will significantly lengthen the time it takes for the bill's provision to take effect by requiring the secretary of treasure to issue guidance regarding the eligibility of companies to take a foreign tax credit in connection to taxes that are imposed on the island. people of puerto rico waited long enough for some action by congress. this amendment is not necessary and all it will do is create harm and lengthen the process of doing some actual relief. i oppose the adoption and urge my colleagues to do so as well. and i yield back. >> further discussion?
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>> first of all, this excise tax mr. flemming is referring to in his amendment is in lieu of income taxes. it's not a typical excise tax. and treasury has taken the position that the tax, the excise tax, may be credited against income repted by american controlled foreign corporations doing business in puerto rico. it is true that treasury hasn't given a formal ruling on it, but this bill is all about puerto rico -- the government of puerto rico's fiscal condition. and the fact of the matter is that this excise tax is generating close to $2 billion in revenues for the government of puerto rico. so to hold this bill haas taj
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until treasury issues a formal ruling does not make any sense. to even question this tax in this hearing is also not reasonable. congress has the last say in terms of the way puerto rico is treated for tax purposes. right now because it is congress' will, american corporations doing business in puerto rico as controlled foreign corporations do not pay taxes, federal taxes, unless they repatriate their earnings in puerto rico. they repatriate them to the states. that's congress' will. and puerto rico has every right to have its own tax system. this american corporations, by the way, are paying anywhere between 2% to 4% in income taxes to the government of puerto rico, and those are creditable and the government of puerto rico imposed this excise tax in lieu of additional income taxes
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from them and there being the taxes is creditable. so this is something that is critical for the fiscal health of puerto rico, and we shouldn't be questioning it here. in fact, i myself believe it could be out of order, but that's the chairman's ruling, not mine. and we have to be very careful. as with we all know, we're talking about a fiscal crisis. and how does a fiscal crisis happen? it is a function of revenues and expenses and when i'm telling you that $2 billion are coming through this excise tax to puerto rico, it is a -- it makes a huge difference. the total revenues of the central government of puerto rico roughly amount to $9 billion. $2 billion are coming from this american corporations doing business in puerto rico and by the way they're paying little because of the tax decrease they have in puerto rico and because
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of the way congress has decided to treat income generated in puerto rico. so i urge the gentleman to either withdraw the amendment and in the alternative i oppose it for the sake of the fiscal health of puerto rico, which is what we are all trying to deal with. i yield back. >> thank you. let me also yield myself some time on this particular one. seeing several thing that's are already done. originally i thought this could have tax credits which could be be in the ways and means but i think as i read this carefully we can argue with the parliamentary this could be made in order of this committee. if it was argued on the floor it would be much cleerp with that. however, i'm going to be voting against the amendment because of the line that -- verbiage that starts in line 5 which was already mentioned here, that it wouldn't take effect until the secretary of the treasury does
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something. in essence, this would allow administration to sw walk the implementation of the entire bill waiting for them to do something. it empowers the secretary of treasury, and i'm not willing to go that war. so i'm actually goinging to be voting no on this particular amendment. further discussionor mr. whitman? >> thank you, mr. chairman. i'd like to yield to the gentleman from louisiana, mr. flemming. >> i thank the gentleman. my colleague on the other side of the aisle willingly admits out of $9 billion or so revenue of puerto rico $2 billion of that is coming from taxpayers on the mainland. so this is clearly a tax scheme and congress had nothing to do with it. nothing. this came completely out of an agreement between some k street lobbyist and the administration to turn a blind eye to this beginning in 2010. this is very recent. so the bailout the cash taxpayer
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bailout has already begun. to say that this is not a bailout and hasn't been a bailout simply is not true. this has nothing to do with the income tax. we know about the foreign income tax credit. that's prevalent everywhere. this is novel. this is an excise tax and the way it works is it's to the territory's benefit to gradually increase that tax over time and that sucks more and more dollars out of the u.s. treasury at a time that we have a national debt of $19 trillion. and i'll be happy to reserve. >> mr. whitman? you yield back? >> i yield back. >> any other discussion on this amendment? any amendments to the amendmen if not, we'll vote. all those in favor of the amendment, say aye. opposed say nay. according to the chair, the nays have it. >> yes. i'm sorry. i do request a roll call. >> call the roll. >> mr. bishop. >> no.
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>> mr. bishop votes no. mr. grijalva. >> no mr. young mr. ball thanh know. mr. gohmert. mr. gohmert votes no. ms. vidalia. mr. lamborn. lamborn votes yes. mr. costa votes no. mr. whitman votes yes. mr. salam. mr. flemming. >> yes. >> mr. flemming votes yes. >> mr. thompson votes no. mr. huffman. >> mr. huffman votes no. mr. reese. >> no. >> mr. reese votes no. mr. van i shack votes no. mr. lowen thaul. no. mr. duncan. >> yes. >> mr. cartwright. >> no. >> mr. gose art? >> mr. goe sar votes yes.
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ms. torres votes no. mr. la mauve fa votes yes. ms. tingle. mr. denim mr. denim votes no. mr. gallego. no. mr. cook. yes. >> mr. cook votes yes. ms. caps? ms. caps votes no. mr. wasserman. no. >> mr. pol is votes no. mr. graves votes no. mr. clay. >> no. >> mr. clay votes no. mr. new house. >> no. >> zincy. >> mr. mcaur their. mr. mooney? mr. hardy. >> no. >> mr. hardy votes no. mr. lahood. >> mr. loo hood votes yes. >> anyone not voted? mr. gohmert has not vote. >> mr. gohmert -- >> i change my vote to yes.
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>> mr. gohmert votes yes. >> anyone else? the clerk will report. >> mr. chairman, on this vote, the ayes are 12 and the nays are 26. >> motion is not -- the amendment fails. mr. flemming, we got seven amendments. we're going to go through several of them right now. start next one is 079. >> thank you, mr. chairman. mr. chairman, we have to be very with the precedence we are setting in this bill. promesa represents a brand-new approach that's never been tried before. and we are in many ways in unchartered waters. one of the most glaring examples is the stay on lawsuits. never mind that this concept was first introduced as legislation from the minority leader nancy pelosi. just looking at the policy without consideration of the politics, the stay deprives
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american citizens of access to the judicial system with respect to defending their private property rights. that should give my republican colleagues quite a chill. unlike those who advocate for sociali socialism, we believe in private property and the american zint should have a means to defend their property in court. to my knowledge, the automatic stay in this bill has never been before attempted. let's be clear. this stay would be the first ever federally imposed stay on creditor actions outside the couldn't text of an actual bankruptcy case. if you vote for this stay, you are telling the bond market that you as a member of congress are fine with changing the rules in midstream. that is dangerous. let's also be clear this stay is bond holders only. in other words, the senior citizen in louisiana who financed his or her retirement with puerto rico bonds is under the stay. but the union worker on a puerto
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rico government pension is not. that's why i'm offering an amendment to strike section 405, the stay on lawsuits from bond holders. in my mind, congress is not exercising due diligence when it passes legislation that is very likely to be ruled unconstitutional. we should carefully consider the constitutionality of a bill before we pass it and exercise restraint when the bill runs afoul of constitutional principles. frankly, i'm surprised section 405 which provides for an automatic stay upon enactment survived this long. even before the first draft of promesa was released there seemed to be a recognition by this committee that this section had serious constitutional questions and needed to be dropped. in fact, it seems that only -- that the only reason the provision survived is the democrats insisted that it remain. and the administration insisted as well. those are not good reasons to pass legislation that runs
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counter to the constitution. the solution is to support the flemming amendment to strike this language from the bill. i urge an aye. i yield back. >> thank you. any other discussion? >> mr. chairman, one of the main drivers behind doing this bill at all is to provide an orderly debt restructuring process that can go hopefully relatively smoothly and quickly. the opposite is a situation which all the creditors rush to the courthouse to fight to determine who will get the most of a very limited pot of money. and it's very messy. it's expensive. it's rarely equitable and it can drag on for years. that's exactly what we would have without a stay in this bill. it's also exactly what we can't have this puerto rico. the department of treasury has said it would take ten years to untangle the lawsuits if the creditors were able to start fighting in court. a stay on litigation in the case of puerto rico gives time for
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voluntary restructuring -- orderly restructuring. without a stay, quite frankly, there is little point to this bill which may be why it was introduced. if this amendment passed, it would kill the entire bill. for that reason alone, i strongly oppose it and urge a no vote. >> is there further discussion on this? mr. labrador. >> mr. chairman, i move to strike the last word. >> you're recognized. >> i am not -- i have some troubles with this stay as well as a lot of people do, but for -- but i want to -- i decided to ask my staff to do some research on the constitutionality of the stay. so for purposes of education, i want to just talk about that without taking a position on the amendment. first of all, this alleged taking is not a taking. you can argue about the stay
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based on whether it's good policy or not, but it's not unconstitutional. it is only a stay on creditor litigation, not a deprivation of substa tiff rights. based on longstanding u.s. supreme court precedent, a moratorium or stay on creditor rights limited in duration and scope, which is what this stay does, would not give rise to a claim to a takings claim. there's a series of cases in the 1920s and 30s where the supreme court has recognized that in response to i financial emergency a government's enactment of legislation temporarily staying creditor rights does not constitute a takings under the fifth amendment. there's a 1921 supreme court case which is block versus hersh. i'm not good to bore you with all the information about the case. there's a second in 1934 case homebuilding and loan association versus blazedell. in both cases, the court found that as long as you had a short
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stay for a specific purpose that there would be no stay -- no takings in place. lastly, in 1937, the court rejected constitutional challenges to an act of 1935 which among other things stayed foreclosure actions against a property of a family farmer. the court found that the imposition of a three year stay -- so we're talking about a three year stay as opposed to a six month stay -- of the right to foreclose on the mortgage did not deprive the creditor of property without due process of law. that's a case of wright versus vinta and branch and mountain trust bank of row noe noeanoroa. there were other cases apdz we did some extensive research on this and we asked some experts to do research on this. you can have i think a pretty valid claim against the stay on policy grounds, whether we want to have that policy in the bill or not, but i don't think we should reject the stay as a matter of constitutional law
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because the supreme court has made it pretty clear that we have the authority to do this. and i yield back. >> is there further discussion on this amendment? >> mr. chairman? the amendment proposed by mr. flemming would dismantle a core provision of the bill. section 405 shouldn't be viewed in isolation. the reason why this bill provides for this automatic stay is precisely to encourage, incentivize creditor negotiations, negotiations between debt issuers in puerto rico, public debt issuers, and the creditors. this is something that is done in every chapter 9 case in america, wherever you have to -- whenever you have to reorganize a public entity, a public instrumentality in the u.s., you file a petition before the bankruptcy court and there's an
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automatic stay. so that there's no chaos, there's no litigation all over the place disrupting the process. here, this bill actually provides for collective negotiations with creditors. it even provides that if two-thirds. creditors of any pool of bonds in any public entity of puerto rico agree on a potential restructuring, you can go to court and then enforce it on all the creditors. this bill shouldn't be viewed as an anti-creditor bill. the opposite. this is a good bill for all concerned. bond holders, government of puerto rico, citizens at large, ibs constitutional bond holders, individual bond holders because the bill, what the bill tries to do is restructure a lot of the
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debt that the government of puerto rico owes and its instrumentalities in an orderly, legal way. the stay is of limited duration, and it basically allows to have a conducive environment for the negotiations to work. not having the stay is going to be chaotic. it's not going to work. and what we want is to have puerto rico back in fiscal order with access to the financial markets, the sooner the better. in fact, i think the stay is too short. i'm concerned about the length but this is the result of a negotiation between leadership from both sides of the aisle, the white house, and treasury. i irnlg urge my colleagues to l this provision as is for the benefit of all. and i oppose the amendment. i yield back.
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>> is there further discussion in mr. mcclintock. >> thank you. i would remind my colleagues that a bankruptcy stay freezes both sides. true, creditors cannot enforce claims but also the debtor is forbidden from spending down assets. this is a one-sided freeze that forbids the creditors from enforcing their claims but leaves puerto rico perfectly free to continue to spend and in fact that's exactly what is currently going on. the budget announced by the governor for 2017 provides that spending for nondebt service is actually going up about $250 million. they're spending everything except for servicing their debts. the problem with this bill is this provision perversely encourages the puerto rican government to spend down its resources knowing that bond holders are legally powerless to stop them. and i yield the remaining time
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to -- >> would the gentleman yield? >> no. i am yeeling my remaining time to mr. flemming. >> thank you. my colleague across the aisle interesting loy enough referred to this as a chapter 9 bankruptcy. you know, we were told in the beginning that this was anything but a bankruptcy. but we know that bankruptcy law chapter 9 bankruptcy law is lifted right out of the code and set down right in this. and interestingly enough, the word "bankruptcy" as far as i know is seen nowhere in this document. but the plain truth is and mr. mcclintock has this correct, this is picking winners and losers. this is not a stay on all involved. what it does is allows people to move assets, spend assets, spend resources while the people who have the highest priority, the bond holders, are held at bay. and with regard to encouraging
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negotiatio negotiations, negotiations were ongoing until this promesa bill came up and it shut everything down. so things were actually on a correct pathway to begin with. and then as to my good friend mr. labrador arguing the constitutionality, obviously this is not the supreme court. we're not going to decide today whether this is constitutional. but at best, it's a controversy, and that decision cannot be made today. >> would the gentleman yield? >> yes, for a question i'll be happy to. >> all i want to clarify is any payment not made by a government entity in puerto rico during the stay is a payment owed. this is not relieving the government of puerto rico or its instrumentalities from any debt. and in fact the board is encouraged to require at least interest payments from the government issuers in puerto
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rico. so i clarify the record because this is not an easy way out for the creditors. >> reclaiming my time, look, notes payable, what does that mean? right now the territory is not able to even perform on its notes payable today. so saying that they will continue to owe, look, we know that there's going to be a reduction in principal here, and we know that there are going to be some group that's are going to be treated more equal than other groups. again, government picking winners and losers. that is a bad precedent. for what's going to happen downrange for states and other territories. and i yield back. >> i thank the gentleman. he yields back. >> did you yield back? further discussion? >> mr. chairman, while this provision causes me some heartburn, too, i want again to read from bond documents that were -- gave full disclosure to purchasers of bonds that were
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issued in 2014, this is a particular paragraph out of the bond disclosure documents. in the future, new legislation could be enacted by the united states congress or by the legislative assembly that would entitle the commonwealth to seek the protection of a statute providing for restructuring, moratorium, and similar laws affecting creditors' rights. this could affect the rights and remedies of the holders of general obligation bondss and notes of the commonwealth, including the bonds and these bondss. and the enforceability of the commonwealth's obligation to make payments on such general obligation bonds and notes. these bonds were sold with full disclosure that that could happen even almost anticipating that this could happen. so mr. chairman -- >> will the gentle lady yield
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for a question? >> i will. >> were there not bond holders before 2014? >> yes, there were. >> did they have the same disclosures? >> i do not have all the bond documents here. >> okay. so i think we can agree that perhaps some bought their bonds understanding this possibility, but there were plenty of others who did lend money understanding that this would not be a likelihood or even a possibility. >> mr. chairman, that is entirely possible. >> yield back? >> i yield back. >> is there further discussion? let me yield myself some time here. and i appreciate the comments that have been made so far, especially the tutorial by mr. labrador. i appreciate that. look, this is the practical purpose of this particular bill, the stay language in this bill has a reason for being there so that the oversight board can get up to speed and be running before the lawsuit starts. there is another provision in the bill that allows the oversight board to intervene in lawsuits, but without the stay the time for that intervention
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would be expired before they could be up and running in this act. the stay is a very short duration. there are other provisions in this bill that allow aggrieved parties to seek relief from the stay. if there is no stay, it would simply be a race to the courthouse and a frenzy that would add chaos back rather than trying to bring some kind of order which is the purpose of having the oversight board in the first place. whatever the intentions of it, this simply gives some of the litigation funds the ability to do nothing more than go into court very quickly and without the ability of organizing before that simply happens. i have to poet vote no on this particular amendment. and i yield back. to me, myself. for what i had. is in there any other discussion on this? if not, we'll vote on amendment. all those in favor of this amendment say aye. opposed say no. opinion of the chair the nos have it. roll call again. [ roll call ]
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[ roll call ] [ roll call ]
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[ roll call ] [ roll call ] # . >> anyone else not voted? mr. duncan? >> mr. duncan has not been
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recorded. mr. duncan votes no. >> anyone wants to change or set? clerk will report. >> mr. chairman, on this vote the ayes are 6 and the nays are 33. >> amendment is not approved. we're going to go to mr. zincy's amendment number one now if we could. this is one -- is that with you? this is one that was allegedly late. does it need to be circulated? no. we've got it. but i want to know, it's not really late because you printed it on time. we just ask you to redo it. so let me have you introduce -- you're recognized to introduce zincy number one. >> thank you, prosecute mr. chairman. i offer my amendment to address an issue facing the natural
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products industry nutritional supplements, et cetera, in puerto rico. what occurred on february 9, 2016, is puerto rico's department of health issued an order in the form of a tax specifically aimed at the supplement industry without going through the legislature or even with public notice. and so obviously it hurts that industry. the industry is growing. with that, it requires a number of burdensome regulation that wrir mirrors what's already required by the fda. and also it's duplicative. it goes on what the amendment does is it just will allow the congressional task force on economic growth in puerto rico to submit recommendations. it's not binding, but recommendations to congress on how best to make the reforms to this order. it should not be controversial. i think it's a good step from
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talking to a number of manufacturers, they would like to grow in puerto rico. they think this is an opportunity to manufacture. they think it's an opportunity to -- the industry itself is growing. and it was somewhat arbitrary in how it was placed. again, it doesn't require anything other than a recommendation and i yield back. >> any further discussion on this amendment? i'd like to simply say i speak in favor of this particular amendment. all right. any amendments to the amendment? if not, all of those in favor of the amendment say aye. opposed say nay. amendment passes. let's go back to mr. fleming, number 79. i'm sorry. we just did 79. 091. >> i'll be happy to do 79 again.
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>> 79's up to you. i mean be, 91. you know, whatever i say, you're didding 91, okay? just listen to what i think, not what i'm saying. you're recognized for 91. >> mr. chairman, i have two amendments that complement each other, and i'll bring members' attention that we've passed this out. it says section 201 and it has red lining and also some green lines. and the shorter bill refers to the green lining, the changes in green. then i'll have a second amendment that is in red. so just to sort of help you in a visual way. anyway, i have two amendments that complement each other. the first is very short and simply amends promesa to require the oversight board to give priority to bond that's have been issued with the full faith and credit of the puerto rican government through their
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constitution. this priority is already the stated goal of the bill, and my amendment merely strengthens the bill to eliminate my wiggle room by the oversight board to interpret or reinterpret the phrase, quote, respect the relative lawful priorities, end quote. instead, my amendment requires the oversight board to comply, quote, with the lawful priorities end quote. so that's the difference between respect and comply. my fear along with many on this side of the aisle is that we will see a repeat of the general motors bailout in which unions were placed ahead of bond holders. it is vitally important that doesn't happen here because we are dealing with full faith and credit constitutional debt. a message to owners of that debt, that your contract is not valid, is a message to bond markets that constitutional bonds are not sacrosanct and can be renegotiated at the
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government's convenience. that will increase costs for everyone including my home state of louisiana at a time when we can least afford it. so again we've got to watch the markets. if we change rules in midstream, future bonds, future debt and the interest that goes with that will have to be factored in, will have to be built in. and what that means is those that are doing the rite thight those being good citizens and paying their debts and they have good, solid fiscal and economic policies, they will be punished for the acts of others because they will have to pay higher rates and that will over the long term increase the risk for many others. i urge my colleagues to adopt my amendment. >> is this any other discussion on this amendment? >> mr. chairman? as a former attorney general of puerto rico, i have always advocated for strict compliance
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with our constitution. in fact, when this crisis began and when the government of puerto rico approved a local bankruptcy law, this was back in june 2014, the first thing i did was to introduce legislation giving puerto rico access to chapter 9 of the bankruptcy code. i was simply asking congress to treat puerto rico as a state for purposes of bankruptcy. that bill was a signed to the judiciary committee. it didn't get traction, it got a hearing. there were some reservations giving puerto rico access to chapter 9. the long story short is that matters continued deteriorating in puerto rico to the point where the u.s. treasury department comes and submits a proposal to congress saying
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puerto rico's not a state. puerto rico's a territory. and under
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this would give priority to groups who may not deserve that priority. that's the biggest problem with this amendment, which is why i'm voting no and yielding back. is there any further discussion in mr. labrador >> mr. chairman, thank you. i appreciate the spirit of the amendment. this is my language in this
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section and i was trying to do exactly what the gentleman from louisiana is trying to do to make sure that the board and the court respected the priorities. i am open to -- fu want -- this is just me speaking. if you wanted to amend your amendment, if the committee feels that the word "comply with" is better than "respect," i am open to that. i do think that the rest of your amendment kind of gets into the we're making the judgment, then we're deciding who gets the priority instead of letting the courts decide according to what the puerto rican constitution. but if this committee felt that the word "comply with" is much -- that phrase is better than "respect," i am open to that amendment to the language that i put in there because if there are better words i'm always willing to use them. but i'm not open to the rest of
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the language because i actually think the rest of the language confuses what we're trying to accomplish, which is we just want the court to look at the constitution of the territory and determine what the priorities are. i don't want to prejudge what those priorities should be. >> is there further discussion is? mr. gohmert. >> i don't want to be changing the priorities of the bond holders from what they currently should be and so i will not be voting for this. but i don't think for a moment that the judge, the board is -- can be considered as doing for sure the right thing because we saw what happened when the obama administration got involved in the auto bailout, they rammed
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through in violation of a myriad of bankruptcy laws a bankruptcy plan for car manufacturers. it violated bankruptcy law. it violated the constitution. that's why ginsberg put a 24-hour hold on it. and when i was speaking with the late justice scalia, i said, you know, i'm not a big fan of ginsberg, but i was so proud of her. she put a 24-hour hold on that outrageous, unconstitutional, illegal bankruptcy plan regarding our automakers. and he said, well, you know, actually, the white house was feeding information to the court back channel, which would be unethical, that if we allowed the stay to go more than 24
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hours everybody in any way related to the auto industry would lose their job, and that scared five judges and so the illegal, unconstitutional bankruptcy plan went through. so even though i'm voting no, i don't have the kind of faith that this administration will necessarily be pushing for the right thing and for -- i know all of this confidence is being placed in this board, but having witnessed what this administration did to the auto industry, even forcing the sale of chrysler to a foreign car manufacturer, i mean, so much damage done to the law, to the constitution, to american interest, that forcing secured creditors in violation of the bankruptcy code and the constitution to become unsecured, taking unsecured creditors and making them
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secured creditors, it was outrageous what happened. but when we look at the constitution of the board and we have all of this faith the board's going to do the right thing, the board has the power to force the cuts from the 30% or so working for the government, bring that size down like -- did and then got fired at the next election, yeah, they're going to do these things. we have a board of nine people unless it's changed since i read it last. four of those will be selections of reid and pelosi as recommended to the president . r they'll pick eight. he'll pick four of the eight choices. then the tie-breaker will be totally selectedly the president. so this administration basically will have five of the nine and if anybody open this side of the
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aisle thinks that that board will actually cut the government workers, cut potential government union workers, then i would encourage them to relook at the issue. but on the particular amendment itself, i'm not prepared to sit in the place of judgment. >> would the gentleman yield for a second before you yield back? just a small correction. the board's only seven, i believe, and four are picked by republicans, three are picked by the president, which is important. i think that's a very important point. i yield back. >> louie, are you done? yield back. >> okay. >> there anyone else? mr. duncan. >> thank you, mr. chairman. now, i agree that we probably
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need to tweak this amendment. i like "comply with" versus "respect." following up with the gentleman from texas' comments about the chrysler bailout, from what i remember, the pensioners, the pensions themselves were held harmless while the shareholders took a haircut. i think the big we hafear we ha with the puerto rico issue is that the pensions will be held harmless and the bondholders will have to take the haircut. and that is in my understanding in direct conflict with the puerto rican constitution which we don't have the power to change. the puerto rican constitution which gives general obligation bonds preference over pensions. i think it's a slippery slope if we try to change that and so i've got -- i've had concerns about that portion ever the bill all along. i like parts of this amendment. i wish we could change the word.
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with that, i'll yield back. >> further discussion? if not, any amendments? >> i just want to make a comment that i don't think there's anybody here that lived through the auto bailout more than i did and there's a lot of misinformation out there. i can tell you i lost all my stock, my pension was impacted and things did happen. and sometimes you come together to save the country or to save a place. so let's just be careful with misinformation with one of the biggest nightmare times i remember in my life, and we saved this country from total economic collapse. and we have another territory with people living in fear, people not being able to get medicine, people fearful of what's going to happen to their future, and that's what today is about. and all of us are having to make compromise on things we're concerned about because we care
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about people and their humanitarian issues at stake here. so i just had to say that, mr. chairman. and i thank you for your leadership in trying to bring us together on a very tough, difficult issue. >> it's okay. i brought my cruiser before the bailout so i was fine. any other discussion? the vote is on the amendment. all those in favor say aye. opposed say no. amendment fails. now, we have -- look, we're about two-thifrds of the way through this sucker. we've still got about ten more to go. i think we can move very quickly through here. let me go to mr. graves. you have an amendment which is graves number two. that will be passed out. why don't you go ahead and explain it while it's being passed out. >> mr. chairman, this amendment very simply just states no federal funds should be authorized to the pavement my
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liability of the territory or territorial instrumentality. so here's the deal. mr. careman as you know this bill even before it was introduced was alleged to have been categorized as a bailout. look let's be clear in the future there could be an effort to directly bail out the territory. that's not what this legislation does. it's designed to avert a bailout. so this provision is designed to make it clear that this legislation does not put federal funds on the table to address the liabilities of the territory. it does not preempt in any way future actions of this congress or the administration and attempts to put directly federal funds on the table which i would oppose. but all it does is directly clarify that this bill cannot be labeled as a bailout. and i reserve. >> would the gentleman yield? for a question? >> just for a question. >> no federal funds shall be authorized by this act.
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what about future funds in say a srr omni bus? does this prevent any federal funding to go to bail out puerto rico? >> it does not. but let's be clear this pertains to this bill, the allegation before the bill was even filed before any of us even read the text was that this bill was a pailout. i'm trying to make that crystal clear and prevent that from happening. we're not preventing and in the future we could be given an opportunity perhaps to vote up or down on efforts that could be made in the future to directly appropriate funds to bail out -- >> would the gentleman yield for further clarification? we've heard from republican leaders that there would be no taxpayer dollars used to bail out puerto rico and that's what you're trying to do with this right? >> i'm trying to prevent this bill -- i'm trying to make it clear that this bill does not -- is not a bailout. that this bill does not provide does not authorize any federal funds. i can't control what people in this room may do in the future, what other members of congress
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may offer amendments on in the future. but i want to make it clear this bill is not a bailout. >> would the gentleman yield for another question? >> sure. >> unless this has changed there was going to be thousands and thousands of acres that were owned by the department of interior that were being sold and the money which would be federal money from that massive sale was going to be going to puerto rico. would your amendment -- >> i believe that was -- >> would -- i believe that was removed. can i get an amen, mr. chairman? i believe it was not included this in of n this legislation. >> i guys know how to go to my heart, don't you? stab it directly. yeah, that's no longer part of this bill. >> thank you. >> will the gentleman yield for morrow question? >> yes, sir. >> i agree with the intent of it and i think you're stating a fact that this is not a bailout. but the oversight board itself
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is a responsibilis i recall the responsibility of the territory and yet it has to be funded up front. and this could have the unintended consequence of not allowing the supervisory board to do its work. >> thank you. that's a good question. as i recall from reading this i believe that the text was changed to actually require that puerto rican funds effectively be used to fund the oversight board. i'm getting a head shake from my good friend. an amen. >> i think so. >> now, in previous versions of the bill it was different where federal funds did seed the oversight board. this version does not have that. the board is to be paid with territorial funds effective ly. >> is there further discussion? if not -- do you? >> i'll be brief.
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>> please. >> my concern, mr. graves, is that this could affect the board's ability to perform its work. the truth of the matter is when you look at this bill it doesn't provide any authorization for federal spending in puerto rico. it doesn't. there's no provision here assigning funds. but the way the board works, it can be staffed internally using puerto rico funds but also federal agencies may assist the board open a reimbursable or nonreimbursable basis. >> will the gentleman yield? >> i'll be quick. i wouldn't want to discourage that from happening. so my intent here is simply to make this work and i see where you're coming from. obviously this is not a bailout and you want to send that message loud and clear. i join you there. but i'm concerned that i don't want through this language to
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make the board's work more difficult than necessary. i yield. >> and i am certainly very sensitive and respectful of the efforts to ensure that we get puerto rico on a sustainable trajectory and perhaps for different reasons. i don't want louisiana taxpayer funds to bail out puerto rico i'll be very honest with you. if you read the provision what it says is that no funds authorized for the payment of any liability of the territory or territorial instrumentality. it doesn't talk about funds that could be used by federal agency to look at something that puerto rico's doing or not doing while if someone did offer that amendment i probably would vote for it that's not what this one does. this is designed to make it crystal clear that this is not a bailout. it doesn't preempt in the future if someone does want to offer up an amendment to attempt to bail out, which again i would oppose. but this is designed to make it crystal clear that this is not a
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bailout within the four corners of. >>. >> i reclaim my time. actually, would you agree to changing or tinkering with your language so that it says for payment on so that it says for payment on any existent bonded indebtedness so it is more precise? >> if the gentleman would yield, no. because there could be future debt that is incurred and that would effectively be a bailout and would raise concerns. >> what if we strike the word existing and then for payment on any bonded indebtedness. >> can i -- will the gentleman yield? >> no. >> i will. >> look, everything you've been saying so far is correct. this does not -- the board is not paid by federal funds. and yes, this does not impact the board. this impacts liabilities. and if this amendment were to be adopted and we try to refine it i'd be more than happy to pledge to work with the aisle to try to refine it if it goes to the floor if it's adopted. >> i certainly would as well.
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i think the intention has been -- i've tried to convey it very clearly. i just in response to your last statement, bonded indebtedness is certainly the majority of the debt that we're dealing with here. but as i think the gentleman would acknowledge, there is other debt as well. and i just want to ensure that i can go home and tell the folks that i represent that their dollars are not being he diverted. but i certainly would -- if you can agree to adopt this, i'd love to work with you. >> i yield. >> yield. further discussion. all those in favor of the amendment say aye. opposed say nay. amendment passes. it's adopted. let's go back to mr. fleming. number 90. that's been passed out to you. we've had it before. mr. fleming, you're recognized. >> mr. chairman, i'd like to submit for the record a letter i recently received from the former governor of puerto rico, mr. colon. in this letter he expresses his concern that the oversight board will overrule the democratic
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will of the people of puerto rico. now as mr. pelosi -- excuse me, pierluisi, excuse me, has helpfully reminded this committee many times, this crisis has come about through decades of fiscal mismanagement. in some ways this debt crisis does reflect the will of the people of puerto rico because they have repeatedly voted for representatives and governors to give them liberal social policies and generous benefits, which is why we're here today talking about an oversight board. at the same time i am sympathetic to the governor's argument about self-governance. fortunately the promesa bill already contains the answer. it was written broadly so its provisions could one day apply to any of the five u.s. territories, but it creates special circumstances that apply only to puerto rico in this bill. to paraphrase section 101, "except for puerto rico an
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oversight board is established only if the territory adopts a resolution signed by the governor requesting the glishts. in the case of puerto rico the oversight board is deemed established by this bill, end quote. i think that's a mistake. the oversight board would have much more legitimacy if the people through their elected representatives asked for the tough medicine in this bill. it's also a test for the people of puerto rico. if they're not willing to accept a balanced budget and necessary reductions in the size of government, then they should not gain access to the debt restructuring ability in title 3 of promesa, which is intrinsically tied to the functions of the oversight board. i'm pleased to be joined on this amendment by mr. mcclintock as a co-sponsor. and i yield back. >> oversight boards, control boards have a long and nasty
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history of impoegz extreme austerity on people. for that reason i've been clear my opposition to an oversight board from the beginning. this amendment would make the establishment of an oversight board in puerto rico much less likely. getting rid of an oversight board, while appealing to me, is probably also appealing to my colleagues on this side of the aisle, but we are concerned about the effects that i mentioned about extreme austerity of the families in puerto rico. but i strongly oppose this amendment. because it is a poison pill. if this amendment were adopted, it would remove most of and all support from the majority, and it would therefore kill the bill, which is the sole purpose by friends of this amendment. i urge my colleagues to join me in opposing it and yield back. >> is there other discussion on the amendment? >> mr. chairman. >> mr. pierluisi.
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>> i personal ly am under extree political pressure in dealing with this issue. and i don't want my fellow elected officials in puerto rico to have to bear it as well. it is very difficult to accept oversight over the government of puerto rico. the only reason i'm doing it is because i am convinced, as are so many others, that puerto rico needs a broad debt restructuring mechanism. and the will of my colleagues here in congress seems to be that the only way that we will be afforded this debt restructuring mechanism is through a federal oversight board. now, puerto rico's in crisis. and we do have a responsibility
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here under the territory clause of the constitution to watch over the well-being of the american citizens living in puerto rico. it is our responsibility, whether i like it or not. i'd rather have puerto rico as a state. and we wouldn't be considering this legislation. but we are because puerto rico's not a state, it is not treated like a state, and frankly part of the problem is caused by the current status. as a result of the current status. but again, this is our business. as provided in the u.s. constitution. when congress enacted or created a board for the district of columbia, the district of columbia did not have to opt in. so if we look at a precedent, and that's a precedent we have been looking at in creating this board and providing this debt restructuring mechanism, then we shouldn't be asking the
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political class in puerto rico to consent. i agree with mr. grijalva. i think this is simply another way for you to try to dismantle or -- this bill to poison the well for this bill. and i tell you, mr. fleming. let's not play with fire. we're talking about the well-being of 3.5 million american citizens. >> will the gentleman yield for a question? >> i will yield in a minute. >> sure. >> i represent the people of puerto rico. i am very confident that the vast majority of the people of puerto rico get it. they want congress to intervene in a fair way. the political class, that's a different story. because by the way, in puerto rico they're saying hey, why are you running for election if there's going to be a federal oversight board? i am running for governor. and i'm saying, you know what? we have to accept this reality. we have to take this board the way it is. because we need debt relief in
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this orderly legal way. i will yield to you now. >> so if i understand what you're saying, is you can't find even a small group of good men and women who want to do the right thing and take the tough medicine and have the sort of austerity and the reforms necessary to get away from the liberal progressive policies that have so damaged the economy of puerto rico. you're saying you can't find just enough to do that? >> i'll reclaim now my time. i'm saying that it's not worth the risk. that we need to act. we need to act. we have the power to act. it is our responsibility. as provided in the u.s. constitution. and we should do all we can so that the government of puerto rico stabilizes itself, doesn't collapse. and so puerto rico is put back on a growth path. >> if i could just ask one more question, what happens after the
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emergency is over? will the leadership in puerto rico, will they return to the same policies that caused this problem to begin with? >> there will be elections in puerto rico in november the same way there will be elections in the u.s. mainland in november. democracy works its way. we'll see who gets elected for the governorship, for my position as resident commissioner as well as in the legislature of puerto rico. it's total speculation to try to anticipate what future office holders in puerto rico would do. but this crisis is unprecedented. and we shouldn't be assuming that the government of puerto rico will do the twloing. no. on the contrary, what i would do myself, and i promise to you that i will, if i'm elected governor of puerto rico, is work with this board. so we get the house back in order, fiscally in order, and we get puerto rico to grow again. i yield back.
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>> is there further discussion? mr. gohmert. >> thank you, mr. chair. i greatly respect my friend from puerto rico, and i really appreciate his sincerity and his effort on behalf of his constituents. the point continues to be made that puerto rico is not a state, puerto rico, it's happened, and i've missed it, has not voted to ask to become a state. but that's also the reason that puerto rico, guam, samoa, virgin islands, actually every american entity except for the district of columbia that does not elect a full voting member of congress does not pay federal income tax. which is why i filed a bill to allow the districtf

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