Journalists and activists warn that Puerto Rico faces a "colonial-style takeover" by the U.S. government amid the country's crippling debt crisis.
Bernie Sanders has condemned the proposed takeover, characterizing it as a form of colonialism. Hillary Clinton supports it.
A House committee approved the Puerto Rico Oversight, Management and Economic Stability Act on Wednesday. The pending legislation would give control of the country's financial institutions to a board appointed by the U.S. federal government.
"The bill has provoked a furor among many island residents because it imposes a seven-member oversight board with dictatorial powers that harken back to colonial days," award-winning journalist Juan González explained in a column in the New York Daily News.
Puerto Rican activists have also condemned the legislation "because it is geared to protecting bondholders and paving the way for massive cuts in the island’s public services," González added.
He later called it "a poison pill," that requires "the government of Puerto Rico to submit to a virtual total takeover of its economy."
The board would have control over a five-year fiscal plan for Puerto Rico, and would likely impose harsh cuts in social service spending and government pension funds.
The bill already forces the Puerto Rican government to reduce the minimum wage to $4.25 an hour for people under 25.
The board would also have to approve new laws that are passed in Puerto Rico, and could control the country's capital investments.
"So you’re in essence creating ... a control board that will be of nonresidents of the island running the financial affairs of Puerto Rico for the next five, possibly 10 years," González explained.
The proposed plan is similar to the imposition of unelected city managers on U.S. cities like Flint, Michigan. But those are appointed by the state's governor. In the case of Puerto Rico, which is supposedly a self-governing territory, it would have little control.
The Democratic presidential candidates are divided on the bill. Hillary Clinton backs it, whereas Bernie Sanders has blasted it as a gift for Wall Street.
“It is unacceptable to me for the United States government to treat Puerto Rico like a colony during a time when its people are facing the worst fiscal and economic crisis in its history. In my view, the people of Puerto Rico must be empowered to determine their own destiny,” Sanders told a crowd in capital San Juan earlier this month.
"When you establish a federal control board that says these unelected officials have the power to make major, major decisions impacting millions of people and they are accountable to nobody ... that's wrong," Sanders insisted, "to deafening applause," AP noted.
Puerto Rico faces a decade-long economic crisis, with a $72 billion debt that the governor says is unpayable and must be restructured. Hedge funds own much of the country's debt.
Sanders slammed the “vulture capitalists” that are trying to impose crippling austerity measures on Puerto Rico that will hurt poor and working-class families in an attempt to suck up the money. He says the hedge funds can take a "massive haircut."
“In the midst of this massive human crisis, it is morally unacceptable that billionaire hedge-fund managers have been calling for even more austerity in Puerto Rico. Austerity will not solve this crisis,” Sanders declared.
“As we all know from throughout the world, austerity will cause more suffering for working people and make the rich richer. We must vigorously oppose all efforts at austerity," he added.
"It is unacceptable to me that vulture funds on Wall Street are demanding that Puerto Rico fire teachers, close schools, cut pensions and abolish the minimum wage so that they can reap huge profits off the suffering and the misery of the children and the people of Puerto Rico. We cannot allow that to happen. We will not allow that to happen."
The longtime independent Vermont senator and self-declared democratic socialist called on the U.S. Federal Reserve to authorize emergency loans for Puerto Rico and to allow the country to restructure its debt.
“Do we stand with the working people of Puerto Rico or do we stand with Wall Street and the Tea Party?” Sanders asked.
Puerto Rico Gov. Alejandro Garcia Padilla also opposes the proposed colonial-style board.
Gov. Padilla has criticized U.S. hypocrisy on the issue, pointing out that the government refuses to help Puerto Rico when it itself has trillions of dollars in debt.
Clinton, who supports the plan, and has only tepidly criticized it, will visit Puerto Rico next week, on the eve of the June 5 Democratic presidential caucus.
Labor and civil groups plan to protest Clinton's visit due to her support.
Puerto Ricans can vote in U.S. primaries, but not in U.S. presidential elections, leading critics to characterize the relationship as a form of colonialism.
Yet local residents interviewed by AP still expressed great enthusiasm for Sanders, calling him "the only candidate to have a solid plan for Puerto Rico" and the only candidate to "speak with such humanity, dignity and respect."
The Puerto Rico Oversight, Management and Economic Stability Act has bipartisan support, and is strongly backed by the Obama administration.
The House will vote on the bill in June.
In his article, journalist Juan González cited The Committee for a New Economy, a prominent Puerto Rican think tank, which condemned the plan "a wholesale takeover of Puerto Rico’s fiscal institutions," and stressed that this "is not the solution."