Feds: No Bailout for Puerto Rico
But White House may support allowing bankruptcy
By Rob Quinn,  Newser Staff
Posted Jun 30, 2015 2:34 AM CDT
A man in a local bar watches Puerto Rico's Gov. Alejandro Garcia Padilla on television delivering an address on the state of the island's finances in San Juan, Puerto Rico.   (AP Photo/Ricardo Arduengo)
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(Newser) – Puerto Rico can't pay its debts, and the federal government has made it clear that it's not going to shell out $72 billion to cover them. "There is no one in the administration or in DC federal government that's contemplating a federal bailout of Puerto Rico," White House spokesman Josh Earnest said yesterday, per the Hill. But the White House says it may support allowing the island's public corporations to file for bankruptcy, reports the New York Times, which notes that Congress would have to back such a move for the US commonwealth, and that many Republicans are opposed to giving a "free pass" to officials who let the island's finances slide into such a perilous state.

In a televised address yesterday, Gov. Alejandro Garcia Padilla called for debt restructuring and postponed payments, the AP reports. The same day, economists released a report offering a very bleak assessment of the island's economy. "Growth has not just been low, but output has actually been contracting for almost a decade now, which is remarkable for an economy suffering neither civil strife nor overt financial crisis," they wrote. Puerto Ricans can't vote in presidential elections, but the crisis could still become a major issue in 2016 because there are millions of emigrants and people of Puerto Rican descent living in the US, and their political power is rising in Florida, the Times notes.