After recovering some recent losses, munis were crushed again today on news that the Build America Bond program would not be included in the tax deal.
According to Reuters’ DC-based James Pethokoukis — himself a Republican — the goal on the part of the GOP is to bankrupt the states, force restructuring, and squash the public sector unions that represent an ever-growing burden on fiscal manoeuvring.
Absent actual default, the GOP is pushing for legal changes that would shine a brighter line on how much pension burdens are costing the states:
Republicans in the House of Representatives already want to stop state and local governments from issuing tax-exempt bonds unless they are more forthright about these future obligations. Republican Representatives Devin Nunes and Darrell Issa of California and Paul Ryan of Wisconsin have introduced a bill that would require state and local governments to estimate the size of public pension liabilities if their assets earned a more conservative rate of return than many plans currently expect. Failure to do so would result in the suspension of their ability to issue tax-exempt bonds.
Here’s a look at MUB, the big Muni Bond fund ETF. Note that gigantic red bar is today.
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