Mick Mulvaney: No Federal bailout for Puerto Rico

Office of Management and Budget Director Mick Mulvaney on Wednesday said President Trump's comments on Puerto Rico's debt does not indicate that the federal government is involved in its bond situation.

“It doesn’t mean that the federal government is going to be bailing Puerto Rico’s long-term debt situation – bailing out the bond holders. What I think you saw there was the president focusing on the reality that in order to get sort of its long-term fiscal operation back in order, Puerto Rico is going to have to figure out a way to restructure its debt, which is happening through the PROMESA process already," Mulvaney told FOX Business’ Stuart Varney on Varney & Co.

In May, the U.S. commonwealth filed a debt restructuring petition under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA). Puerto Rico owes creditors and pension funds upwards of $120 billion.

President Trump said Puerto Rico may need to have its debt wiped out as it recovers from Hurricane Maria.

“They owe a lot of money to your friends on Wall Street and we’re going to have to wipe that out. You’re going to say goodbye to that – I don’t know if it’s Goldman Sachs, but whoever it is you can wave goodbye to that,” Trump told Fox News’ Geraldo Rivera on Tuesday.

Mulvaney said he doesn’t think Trump’s comments signal any action by the federal government related to Puerto Rico’s steep debt.

“I don’t think we are breaking any news there when we say that Puerto Rico’s debt is in a very tenuous situation,” he said.

The White House budget chief also weighed in on reports that some GOP members are considering keeping state and local tax deductions.

“If you are from a jurisdiction in a high-tax state, you are certainly going to be concerned about it,” Mulvaney said.

Mulvaney said it is too early to have a discussion about the specific impact Trump’s tax plan will have on businesses and families because the tax brackets haven’t been set.

“We came together with the House leadership, the Senate leadership and said ‘look, these are the principles: We want lower taxes for the middle class, we want a simpler tax form for the middle class and we want a lower corporate tax rate,’” he said.