Treasury Secretary Jacob J. Lew strived to light a fire under congressional leaders Tuesday by calling the fiscal crisis confronting Puerto Rico “immediate and real,” with dire consequences for the island commonwealth’s 3.5 million citizens as well as investment markets nationwide.
Puerto Rico defaulted Monday on most of a debt payment of roughly $400 million; another $1.3 billion in bond payments are due July 1, and the island’s administration has made clear that it can’t meet the obligation. The island has been shut out of the debt markets, while creditors await action on legislation that would restructure its debt under the supervision of an independent oversight board.
Without congressional action, Lew told an audience at the Milken Institute Global Conference in Beverly Hills, Puerto Rico could face the unraveling of “what we know of as normal life in an American community.” He was interviewed by Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and former chief economist to Vice President Joseph Biden.
Among other topics touched on in their talk were tax reform and the Treasury’s recent decision to place an image of Harriet Tubman on the $20 bill.