Trump $44 Billion Aid Request Puts Off Puerto Rico Demands
Trump Disaster Request Said to Fall Short of Puerto Rico Request
(Bloomberg) -- The White House asked Congress for $44 billion in hurricane aid, including funds designated for Texas and Florida, while most of Puerto Rico’s needs would be addressed in a future request.
By delaying its full request for Puerto Rico aid, the White House move Friday may diminish the chances that Congress will supply that aid in a December funding bill. The White House said damage assessments haven’t been completed for Puerto Rico and the U.S. Virgin Islands, and a further request is planned.
Texas would get less funding than it says it needs. Texas Governor Greg Abbott, a Republican, asked for $61 billion to repair damage from Hurricane Harvey. Florida officials asked for billions in aid for the state’s citrus industry.
Puerto Rico this week requested $94 billion in immediate aid to recover from hurricanes Irma and Maria, which left most of the 3.4 million residents without power. The biggest share of the funds, $31 billion, were to be used to rebuild homes, with another $18 billion requested for the electric utility, Governor Ricardo Rossello said in a letter to President Donald Trump released Monday.
Democrats earlier this month asked the White House not to request spending cuts to pay for the disaster aid and requested liquidity loans to help cash-strapped Puerto Rico pay its bills. The island is struggling to emerge from a record-setting bankruptcy.
Congress has already approved two bills totaling $52 billion in aid for the hurricanes. Those bills did not contain cuts to offset the spending.
Congress is likely to address the disaster request as part of a year-end spending bill needed to avoid a government shutdown. Current government funding runs out after Dec. 8, though a two-week stopgap measure is widely expected to extend that to Dec. 22.
The White House aid request, sent to House Speaker Paul Ryan of Wisconsin, suggests that Congress offset the spending through $6 billion in cuts elsewhere in the budget.
"This request does not come close to what local officials say is needed," said top House spending panel Democrat Nita Lowey of New York. "Just one day after pushing the House to pass a massive tax cut for corporations and the wealthy that would add $1.5 trillion to the debt, it is galling that the administration is requesting offsets in exchange for helping Americans rebuild their lives."
House Appropriations Committee Chairman Rodney Frelinghuysen, a New Jersey Republican, said in a statement that he hopes to provide the next round of disaster assistance soon.
The request includes $25.2 billion for the Federal Emergency Management Agency disaster fund and the Small Business Administration, $1 billion in agricultural assistance, $1.2 billion for education, and $4.6 billion for damaged federal property. Flood prevention programs of the Community Development Block Grant Disaster Recovery program would receive $12 billion.
The White House letter urges Congress to reauthorize the troubled National Flood Insurance Program along the lines of legislation passed by the House earlier this week. The administration says it will work with Congress on cash-flow issues as well as Puerto Rico’s Medicaid cost-sharing payments.
Emails and phone calls to representatives of Puerto Rico’s governor and non-voting member of Congress weren’t immediately returned. A representative for the oversight board wasn’t immediately available to comment.
Almost two months after Hurricane Maria slammed into the U.S. commonwealth, most of the island’s households remain without power as the government prioritizes health-care facilities and other core infrastructure. San Juan has been better off than many rural areas, where the destruction was far greater. Meanwhile, the rebuilding of the power grid remains the island’s greatest financial challenge and a major political flashpoint in San Juan and Washington.
The island declared bankruptcy earlier this year after it said it couldn’t pay all of the $74 billion it owed to creditors. With many there still lacking basic services and its economy slowed to a halt, prices of Puerto Rico’s benchmark debt have tumbled to fresh lows as investors speculate that any payouts will be less than previously anticipated.
Puerto Rico is considering suspending debt-service payments for five years, a lead lawyer for the territory’s federal oversight board said this week, in the first indication of how the devastation caused by Hurricane Maria will affect the restructuring of the island’s debt.
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A moratorium may be included as part of Puerto Rico’s plan to reduce what it owes through bankruptcy, Martin Bienenstock, a partner at Proskauer Rose LLP who represents the panel, said at a court hearing Wednesday in Manhattan. It wasn’t immediately clear whether such a step would apply to all of government’s $74 billion of debt.
"Bondholders need the island to turn the corner and start seeing some green shoots," said Matt Dalton, chief executive officer of Rye Brook, New York-based Belle Haven Investments, which manages $6.5 billion of municipal bonds, including insured Puerto Rico debt. "I would think that any money pouring into the island would be a good thing without focusing on what the total number is."
He said lawmakers may want to see the impact of the initial aid in Puerto Rico and could give the island more money later. "If you give them everything they want up front, they’re still likely to ask for more, because it’ll never be enough," Dalton said.
No matter how much the island gets, it won’t be enough, said Matt Fabian, a partner with Municipal Market Analytics. “Puerto Rico will likely be requesting aid this time next year," he said. Officials in the White House "probably think that that’s an incredibly generous offer."
--With assistance from Rebecca Spalding Amanda Albright and Justina Vasquez
To contact the reporter on this story: Erik Wasson in Washington at ewasson@bloomberg.net.
To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Justin Blum, Laurie Asséo
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