Congress promises to cover 35% of the interest cost for taxable municipal bonds issue by states and localities. California market yield on these bonds was 7.48%, Congress paying 2.62% of that rate. Where does Congress get 30 yr money? They borrow it at the Treasury rate of about 4.5%.
This is a puzzle because Congress will be on the hook anyway for a California default, states have only federal receivership as a bankruptcy option.
For the wealthy who pay about 35% in Federal taxes, this is an even trade. However a lot of the super wealthy pay 30% in taxes, so Build America Bond are a direct subsidy for loan sharking by the wealthy.
What is worse, in a rising interest rate environment, the transfer of wealth from the middle class to the wealthy rises disproportionately.
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