Bankers Flood DC to Protect Tax-Free Debt for States and Cities

Public finance bankers are descending on Capitol Hill Thursday to defend an existential part of the municipal bond market — keeping state and local debt tax free.

A group of underwriters are warning of the real-world consequences if the federal subsidy underpinning the $500 billion-a-year-debt market is eliminated. Last month, a lengthy menu of spending cuts circulated among House Republicans listed ending munis’ tax-exempt status as a way to help pay for extending President Donald Trump’s 2017 tax cuts.

It’s hard to ascertain just how likely this is to get through Congress — all the chatter in Washington right ...