Get the latest installment with best practices, examples, and SEO tips straight to your inbox each week.
Biden Administration and Municipal Bonds
As we noted in our prior version of the 2020 Electoral Outlook, the BDA is was bullish on legislative progress for municipal priorities regardless of Presidential outcome. President-Elect Biden has made it clear that infrastructure will be on his agenda in his Administrations's first 100 days. Throughout his campaign, he touted the need for additional stimulus and public works investments, including a robust infrastructure package, to help offset the negative impacts the COVID-19 pandemic has had on the American economy.
While his plan has lacked specifics as noted in the BDA BondingTime Blog, the Build Back Better Plan has been expanded includes a plethora of spending initiatives such as infrastructure, which includes the creation of 10 million clean-energy jobs, and on housing, education, economic fairness, and health care.
House Speaker Nancy Pelosi recently commented that her “top-10 list of legislation” for 2021 fits comfortably within what Biden is proposing in his Build Back Better platform.
This includes Biden’s clear support of the House Moving Forward Act which includes a plethora of BDA municipal priorities.
This includes:
  • Restore tax-exempt advance refundings;
  • Expand the usage of PAB's;
  • Raise BQ debt limit; and
  • Create a new direct pay bond exempt from sequestration.
As a note of concern for the Biden Presidency and support for fixed income, in 2011, 2012, and 2014 the Obama Administration included capping the value of the tax exemption for interest paid by municipal bonds. According to a summary released by the White House, in his budget proposal for fiscal 2014 Obama would limit the value of tax benefits for the top 2 percent of earners to 28 percent from the current 35 percent.
In their recently releases tax plan, Biden revives the 28% cap on itemized decoctions, however, with a split government, the plan faces an uphill battle for consideration
The BDA will continue to advocate strongly against a cap.
Also of note have been recent progressive calls to create a national bond bank or national investment authority. According to an analysis by our partners at Davis-Polk, this appears to be off the table with the likely outcome being an increased usage of public/private partnerships as an additional investment vehicle.
The BDA strongly believes that individual municipal bond provisions have a greater than even chance of passage in the 117th Congress and will have strong support in the Biden Administration. These provisions are further detailed below along with a review of Committee leadership and priorities in both the House and Senate: