The election is fast approaching and many economic and tax policies are at stake under the guidance of a new president and changes in Congress.
Vice President Harris and former President Trump's only debate, on Sept. 10, largely ignored discussions on economic and
During the debate, Harris promoted her policies for an expanded child tax credit — an issue that some Republicans support as well — and her proposal to increase housing stock by three million and offer a $25,000 subsidy for first-time homebuyers. Those issues are of interest to cities and states, Emily Brock, federal liaison at the Government Finance Officers Association, told The Bond Buyer's
Trump's tariff proposal on foreign goods, which he promised would be "substantial," also impacts issuers with the potential to disrupt the supply chain and thus infrastructure projects, Brock said. "But I think with [the Tax Cuts and Jobs Act of 2017] tax plan revival that's going to take place next year, we're all trying to get a sense of how each promise fits into the larger debate," she added.
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Harris' housing policies may be positive for municipals, either through the issuance of new bonds or more housing, but the plan has yet to be fleshed out yet, according to Matt Fabian, partner at Municipal Market Analytics, Inc.
Harris' affordable housing plan involves
"There is a lot of enthusiasm about trying to leverage the
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Former President Trump announced plans to remove the
"Many Republicans on Long Island have long since attempted to work across party lines to eliminate the cap," Emily Brock, director, federal liaison center, Government Finance Officers Association told The Bond Buyer's
Several iterations of eliminating or adjusting the cap have been proposed and abandoned in Congress including the SALT Marriage Penalty Elimination Act proposed by Rep. Mike Lawler, R- N.Y., in February.
According to numbers from the Tax Foundation, increasing the deduction to $20,000 from $10,000 for joint tax filers who earn under $500,000 in adjusted gross income in 2023, "would cost about $11.7 billion. If the proposed change was extended to 2024 and 2025, it would cost another $25.5 billion over those two years."
Tinkering with the cap is likely to be a high-priced bargaining chip during the overall negotiations that will determine the fate of the TCJA provisions that are scheduled to expire at the end of 2025.
Read more about how this election could impact policies important to the municipal bond market.
How an election sweep or a potential divided government will impact policy
Next year
Even with a divided government, most experts expect to see tax changes as provisions of the 2017
"Ultimately the composition of Congress is going to dictate how attractive munis are going to be," said Jeff Schulze, head of economic and market strategy at ClearBridge Investments.
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Tax treatment of nonprofit higher ed at stake in election
The new administration and Congress
The political uncertainty adds strain to a sector already facing internal pressures and increasingly splitting into haves and have nots. Defaults are rising on a monthly basis, Municipal Market Analytics, Inc. noted in a September default report. "In fact, at $1.06 billion, private higher ed is the third-largest contributor to gross par impairments this year," behind retirement homes and hospitals, MMA said. "For a sector with only a minimal history of actual, current (as opposed to theoretical, future) credit impairments, this is highly concerning for the near-term trend," the firm said.
Higher-education supply has spiked this year along with the rest of the bond market. As of the end of August, it was up almost 40% this year, to $27 billion, S&P Global Ratings analyst Jessica Wood said in a recent National Federation of Municipal Analysts' webinar.
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T&I Committee could see new leadership
While the House Committee on Transportation and Infrastructure historically has not delved into political drama, it could face a post-election power struggle for leadership.
"Depending on which party is in the majority, [the American Public Transportation Association's] strategy and tactics, particularly our messaging, may change," Paul P. Skoutelas, APTA president and CEO, told The Bond Buyer's
T&I is currently chaired by Rep. Sam Graves, R- Mo., who has expressed an interest in staying in power even though he's poised to exceed his six-year term on the Committee. Rep. Rick Crawford, R-Ark., announced in
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Harris' affordable housing plan focuses on transit development
As affordable housing has stepped into the spotlight in the presidential election, Vice President Kamala Harris is touting transit-oriented development as a way to increase housing in urban areas.
"Some of the work is going to be through what we do in terms of giving benefits and assistance to state and local governments around transit dollars," Harris said in a recent MSNBC interview, referring to her policies to increase the housing supply.
The government needs to be "looking holistically at the connection between [transit] and housing, and looking holistically at the incentives we in the federal government can create for local and state governments to actually engage in planning in a holistic manner that includes prioritizing affordable housing for working people," Harris said.
Transit-oriented developments, or TODs, aim to encourage growth along transit corridors with public buildings or housing near modes of public transportation like light rail, subways and busy bus routes. TODs have started to gain momentum among cities that are increasingly focused on building more houses. The Build America Bureau, the U.S. Department of Transportation's P3-focused office, boasts a $12 billion pipeline worth of TOD projects in the works, bureau director
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Trump announces plan to remove SALT cap
Former President Trump in September threw his support behind lifting the cap on the State and Local Tax deduction, a provision included in his own tax law changes, and one that issuers would greatly like to be restored.
Trump made the announcement via his Truth Social network as part of a personal post saying, "I will turn it around, get SALT back, lower your taxes, and so much more. I'll work with the Democrat Governor and Mayor, and make sure the funding is there to bring New York back to levels it hasn't seen for 50 years."
Limiting the SALT deduction was part of the Tax Cuts and Jobs Act of 2017, which is considered Trump's biggest legislative accomplishment during his term. The cap is touted as a money maker for the federal government but opposed by bond issuers who maintain that the cap infringes on their sovereign ability to levy future taxes.
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Harris and Trump debate ignores muni bond market economic and tax policies
Vice President Kamala Harris and former President Donald Trump shined no new light on the economic and tax policies important to the municipal bond market during their high-stakes debate in September, though brief mentions of housing, energy policy and tariffs carry modest interest to participants.
"The debate was pretty light in general," Matt Fabian, partner at Municipal Market Analytics, Inc. told Bond Buyer's
The outcome of November's election will not only decide the presidency but also shape Congress as it gears up to
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