The municipal market is prepared to withstand a congressional impasse over raising the debt ceiling this month as a U.S. credit downgrade that roiled the tax-free market during the 2011 debate is considered unlikely to recur this time around.

Worst-case scenarios should politicians fail to raise the debt ceiling range from reduced federal funding to states to credit cuts and changes to municipal tax exemptions. They are largely being shrugged off by analysts and investors, because they assume the government will again sidestep the dire consequences by lifting its cap on borrowing.

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