We’ve seen this movie before: reckless government policies and irresponsible investments by big business bankers leading to bailout schemes before Congress.
We went through this less than a decade ago with the collapse of Lehman Brothers, and we experienced it again when billions of taxpayers’ dollars were used to bailout Goldman Sachs, Citigroup, and scores of other investment banks – many of which didn’t even want or need the bailout money!
Some members of Congress believe this was, and still is, a good idea. I disagree. Now, the next generation of government bailouts is about to come before Congress. I am determined to stop it in its tracks.
Puerto Rico is on the verge of defaulting on its bonds because of mismanagement and corruption. Puerto Rico is in such bad shape that, as Reuters reported, its government has commandeered funds intended to pay bond-holders and instead used them to continue funding pensions. It’s a mess and now Puerto Rico is trying to hold us hostage for their mistakes. Two weeks ago, Puerto Rican lawmakers authorized its governor to stop payments on $72 billion in debt. Until they got word that Congress might bail them out, they had been working with their creditors on a voluntary deal. Now that they think Congress will save them, they are giving the stiff arm, refusing to pay anyone back. Make no mistake about it, this is government-sponsored extortion intended to force our hand.
We must draw a line in the sand against this now. The federal government is to let markets work, not be the ‘get out of jail free’ card for irresponsibility and corruption. And, just as important, we must lay a marker down for future requests that we all know will be coming – not from a commonwealth but from states likes California and Illinois that are on the path to bankruptcy themselves.
Like Puerto Rico, many states have legally guaranteed the payment of “full faith-and-credit” debt. So what happens when states simply cannot make a payment? Puerto Rico is the first test-case of this looming disaster. And, this test is coming faster than you think.
Just last week, at a meeting for members, a committee chair asked rank-and-file members to remain silent, refrain from asking for a recorded vote, or leave the room when the time came for a vote regarding the upcoming Puerto Rico debt restructuring bill. In all my time in Congress, no one has ever asked me to do something quite like this. I was angry. To be asked to walk away—to be told to miss a vote—is a request that flies in the face of every member’s conscience. I, along with some other members, strongly objected to this.
The establishment folks wanted us to be silent on this vote; however, I did not stay silent. Because I stood up against this government cronyism, the bailout is obtaining much needed scrutiny from many different groups and is being delayed.
Republicans, and specifically the Republican Congressional Leadership, should join me in opposing this bailout. We cannot set the precedent of allowing contracts and debt obligations to become meaningless. The way we handle this situation will have lasting implications for how we deal with the looming debt crisis facing individual states.
Today, Louisianans are suffering because of a very fragile economy. Families are having to cut their household budgets, businesses are laying off employees, and taxes are rising. It just isn’t right to put you at risk to paper over the mismanagement of States or Territories. Puerto Rico faces some tough medicine, but they have to be willing to change.
You can be assured that I will continue to be a strong voice for Louisiana and an effective leader against irresponsible bailout schemes.
Dr. John Fleming is Chairman of the Natural Resources Subcommittee on Water, Power and Oceans and is a member of the House Armed Services Committee. He is a physician, small business owner, and co-founder of the House Freedom Caucus. He represents the 4th Congressional District of Louisiana.