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As Puerto Rico filed the largest municipal bond bankruptcy in U.S. history last week, many believe that all Congress needs to do is take a step back and let the process work itself out. Others are also under the false impression that merely allowing the Financial Control Board set up under the Puerto Rico Oversight, Management, and Economic Stability Act will provide the necessary independence and structural reforms for the economy to magically bounce back after more than a decade of negative growth. Unfortunately, nothing could be further from the truth, according to a commentary in The Hill yesterday. The reality is that unlike other major debt-restructuring cases in the U.S. and worldwide, Puerto Rico’s 10-year-plus economic depression is directly correlated to congressional policies that harmed the Commonwealth’s economy. It was Congress and the ruling political party in Puerto Rico at the time that decided to phase out Section 936 of the Internal Revenue Code, a decision that provoked the loss of 75,000 manufacturing jobs over the following decade. The inability to foster alternative economic strategies to mitigate the loss of federal tax incentives, and ill-advised spending decisions by the island’s politicians, aggravated the situation. Therefore, according to the commentary, reasonable and responsible remedies need to be put in place to correct this damage. Helping Puerto Rico now would save money to states and the federal government. Puerto Ricans, as U.S. citizens by birth, are moving at an accelerated pace to live in the states. If economic conditions do not improve soon, this trend is projected to increase even further, continuing to erode the tax base of the Commonwealth and leaving behind an aging population without the workforce it needs to grow.

 

House Republicans took a major step toward their goal of unwinding the stricter financial rules created after the 2008 crisis, pushing forward sweeping legislation that would undo much of President Barack Obama's banking law, the Associated Press reported today. A House panel approved Republican-written legislation that would gut much of the Dodd-Frank law enacted in the wake of the financial crisis and the Great Recession. The party-line vote in the Republican-led House Financial Services Committee was 34-26. "I can't do a good James Brown, but I feel good," said Rep. Jeb Hensarling, referring to the singer often called the godfather of soul. Hensarling wrote much of the overhaul legislation. Republicans argued that the Dodd-Frank law is slowing economic growth because of the cost of compliance and by curbing lending. President Donald Trump has denounced Dodd-Frank and promised that his administration would "do a big number" on it. Still, getting the new bill to Trump's desk could be a hard road. It now goes to the GOP-dominated House for a vote, but supporters admit that the path will be much more difficult in the Senate, where Democratic support will be needed. The bill would repeal about 40 provisions of the Dodd-Frank Act.

After years of debate, the House voted to repeal key parts of the Affordable Care Act and replace them with new provisions, CNBC reported yesterday. The vote sends the Republican-sponsored bill to gut Obamacare to the Senate for consideration. But winning approval for the bill could be even more difficult in the Senate than it has been in the House, where Republican leaders struggled for nearly two months to wrangle enough votes in their caucus to secure its passage. The bill passed by a vote of 217-213. The bill — which would dramatically change the way the federal government funds purchases of individual health plans and Medicaid — is expected to dramatically increase the number of people without health insurance if enacted into law.