Obama Stimulus Plan May Aid the Municipal Bond Market

The stimulus plan making its way through Congress contains some provisions that may aid the municipal bond market.

The stimulus plan making its way through Congress contains some provisions that may aid the municipal bond market.  A version of the stimulus bill supports infrastructure state and local infrastructure programs and also make it more attractive for banks to own municipal bonds.  Some of the TARP may also be headed into municipals.  Legislation introduced by Barney Frank would provide government guarantees on municipal debt. 

All of this will result in a more robust municipal market that will lead to more debt issuance.  This will help states but it will also suppress the yields that municipals provide.  At the moment, I believe municipals offer a relativel low-risk way of getting above average returns.  Some states are paying between 6-8% Federal and state tax-free.

It remains to be seen how the stimulus will impact the municipal bond market.

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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Comments

  • Ted

    February 08, 2009

    No to "stimulus" bill. Here's why:
    Since Obama's earnest drive to convince the nation to weaken its economic strength through redistribution as well as weaken its national defense, has confirmed the very threats to our Republic's survival that the Constitution was designed to avert, it no longer is sustainable for the United States Supreme Court and Military Joint Chiefs to refrain from exercising WHAT IS THEIR ABSOLUTE CONSTITUTIONAL DUTY TO DEFEND THE NATION FROM UNLAWFUL USURPATION. The questions of Obama's Kenyan birth and his father's Kenyan/British citizenship (admitted on his own website) have been conflated by his sustained unwillingnes to supply his long form birth certificate now under seal, and compounded by his internet posting of a discredited 'after-the-fact' short form 'certificate'. In the absence of these issues being acknowledged and addessed, IT IS MANIFEST THAT OBAMA REMAINS INELIGIBLE TO BE PRESIDENT UNDER ARTICLE 2 OF THE UNITED STATES CONSTITUTION. Being a 14th Amendment 'citizen' is not sufficient. A 'President' MUST BE an Article 2 'natural born citizen' AS DEFINED BY THE FRAMERS' INTENT.

  • No to Ted

    February 08, 2009

    Ted,
    That's old news. It doesn't really address the issue of the stimulus bill. You'd be better served telling us why the stimulus bill won't work than claiming Obama isn't a US citizen.

  • No to Ted is a Scumbag!!

    February 08, 2009

    The "Stimulus" bill is a wolf in sheeps clothing.It is a "Spending" bill.By labeling it a "Stimulus" alot of "sheep" will think it is going to turn around the country.Spending alone will not!The projects outlined in the bill will have no "Immediate Impact" on the economy and creating an "Influx" of new jobs.These said jobs and recovery programs will take a minimum 3yrs for working money to reappear into the economy.Yes ladies and gentlemen the plans have been drawn up! They have not went thru the approval process.Which takes time.So the "stimulus=spending" plan might sound good to the Mentally ill ie: Barney Frank and many Kool aid drinkers.Which there are more than 64 million.Remember "more paper" has to be printed by the "fed" which means "What" you guessed it Devaluing of the dollar further!!! Oh but the "Messiah" he can fix it all.Sure he will!!

  • M. Savage

    February 08, 2009

    Impeach Obama Now!!!

  • M. Senour

    February 09, 2009

    I second the impeachment of Obama!! He is not my President!!

  • A. Franken

    February 09, 2009

    I am for impeaching "Congress".They are the Approval Commitee.

  • Ken

    February 09, 2009

    I'm betting all of the Obama haters are the same person.

  • StupidOne

    February 09, 2009

    This is not the time for partisan politics. As Americans, we need to come to together to save our great nation. Obama has not even been in office for 1 month yet. Let's give him a chance before we declare failure! When Bush was putting out a stimulus plan, no one had anything to say.

  • King

    February 10, 2009

    "Some states are paying between 6-8% Federal and state tax-free."

    List a few examples that are paying that rate!

  • Stupid One Can't Read!!

    February 10, 2009

    Nobody made any implications for Bush.In fact he has promoted socialism with "Tarp".Kool aid drinkers and MoonBats should love him!! The last time I checked we have the 1st amendment still in effect.How much longer who knows,only Marxist's know.

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