Puerto Rico has $ 70 billion worth of debt that they cannot pay now or ever. They should declare bankruptcy and sit down and work out some kind of deal with their creditors. Trying to get Puerto Rico to pay their debts in full is stupid. They can't do it.
Some Republicans are insisting that bond holders be repaid in full. Why? They knew the risks when they bought Puerto Rico bonds, whose yields were substantially higher than other, better quality, bonds. Why should a group of hedge funds and sharpies be saved from their own stupid speculation?
Those owning these bonds should suffer. Period. That is the right answer. Keep the American taxpayer out of this. They didn't spend the money that the bonds raised.
The Puerto Rico situation is the first shoe to fall. Next up to the plate is the city of Chicago, followed shortly by the state of Illinois. They, also, should go bankrupt and bondholders should be the losers, not taxpayers. Eventually almost every state and large city in America will be forced to do a "debt workout" of some kind. No way, these folks can pay off their debts. It is just not possible.
The market can't work if lenders don't pay the price when they make bad loans. Bankruptcy is the right answer and the lenders should get, deservedly, hosed.
Welcome to the American version of the Greek crisis. This is the first act of a long running play.