Drowning in red ink, the Puerto Rican government missed another big debt payment Monday. And while the island has defaulted on such bills multiple times over the past year, the process can't go on much longer — the government has been cashing out whatever it can get its hands on just to keep operating. Meanwhile, it faces a growing number of lawsuits that could make it harder, if not impossible, to chart an orderly path out of its fiscal misery.
That's why it's encouraging to see leaders of the U.S. House of Representatives and the Obama administration converging on a sensible proposal to help the territory climb out from under the crushing weight of its $70 billion debt. The measure would set up an oversight panel to help steer the island's finances and create a way to restructure its debt. Having dug itself into a ditch, the Puerto Rican government clearly needs independent supervision of its revenues and spending. And because U.S. territories are not permitted to go through bankruptcy the way companies and cities can, Congress has to provide a way to resolve the many competing claims from investors while protecting the interests of its 3.5 million residents — who are, after all, American citizens.
Some important details remain to be negotiated, though, and an even bigger and more consequential default looms on July 1. That means lawmakers and the administration have to settle their differences soon on provisions governing how debts will be restructured, pensions protected and some badly needed growth injected into the island's economy.
Just as important, recalcitrant Republicans need to get over the idea that the bill would somehow bail out profligate Puerto Rican leaders. There's no taxpayer-funded rescue here, just the overdue creation of a process to stop the fiscal bleeding and restructure debt. Until those steps are taken, the island's government will continue shuffling money desperately from one creditor's account to another while its citizens, many of whom are impoverished, are neglected. (One example of that neglect is the island's limited response to the Zika epidemic.) And the longer Congress waits, the greater the chance that the island will sink too deep into the red to restructure its debts, and really will need a bailout.