(Bloomberg) -- U.S. lawmakers pledged to back Puerto Rico’s recovery as Governor Ricardo Rossello prepares to ask Congress for a multibillion-dollar aid package to help rebuild from the devastation caused by Hurricane Maria.
Rossello said his government will ask Congress by January for long-term assistance for the U.S. territory, where the storm caused an estimated $80 billion to $100 billion in damages. He made his case to a bipartisan delegation of U.S. senators Saturday as they flew over some of the island’s hardest-hit areas. Democratic Senator Richard Blumenthal of Connecticut said Sunday that investors will "have to begin taking haircuts" on Puerto Rico debt.
“We need the resources so that Puerto Rico can get out of the emergency stage, stabilize, and then start rebuilding,” Rossello told reporters in San Juan on Saturday, flanked by lawmakers. “This is the most devastating event in the modern history of Puerto Rico.”
Puerto Rico has said it needs as much as $8 billion in emergency funding to keep the government running and respond to the disaster while it prepares a separate request for long-term assistance.
The territory’s government was struggling long before the storm, having entered into a bankruptcy-like process in May to restructure $74 billion in debt. The White House is requesting $29 billion in disaster and flood aid for a series of storms that hit parts of the U.S. this season, including Hurricane Maria. Lawmakers plan to take up the measure as early as this week.
“We have a moral obligation as Americans and my fear, quite simply, is that America will fail Puerto Rico,” Blumenthal said Saturday. “We are going to have a fight. And we are going to need bipartisan cooperation.”
In a call with reporters on Sunday, Blumenthal said Puerto Rico bondholders should expect to shoulder some loss on their holdings as the island contends with economic and humanitarian crises.
Investors will “have to begin taking haircuts. It’s that simple,” he said. "People are going to begin taking the consequences of investments they made when they knew there was a high risk that these debts might not be paid back."
White House budget director Mick Mulvaney said on NBC’s "Meet the Press" Sunday that while the government won’t do a bailout of Puerto Rico’s debt, "we are going to -- well, to mitigate the debt. We are going to work with them to rebuild the island. There is no question about that. "
Republicans Cory Gardner of Colorado and Ron Johnson of Wisconsin were among the lawmakers’ delegation along with Democrats Blumenthal, Tim Kaine of Virginia, and Kirsten Gillibrand of New York.
More than two weeks after Hurricane Maria, almost 90 percent of households and businesses on the island remain without power, the majority of phone lines and cell towers are still down, small towns are isolated by destroyed roads and bridges, and many communities are without running water.
Rossello said it was unclear what form the funding package would take, whether it be appropriations, loans or other federal programs. His government plans to submit a detailed request to Congress in the coming weeks.
“We are fully aware of your plight, your suffering. And we are fully committed to make sure that you are not ignored, you’re not forgotten,” said Johnson, who added that re-establishing the electrical grid is the top priority.
The congressional delegation visit followed trips to the island by President Donald Trump and Vice President Mike Pence last week. Food and Drug Administration Commissioner Scott Gottlieb also visited, in part to investigate damage to Puerto Rico’s large pharmaceutical manufacturing plants that threatens to cause shortages of drugs on the mainland.