WASHINGTON — A federal cap on tax-exempt bonds could gradually wean investors and issuers off the muni market and toward a permanent, expanded Build America Bond market that has a flexible subsidy rate, a new report from the Center for American Progress argues.

The 30-page report, released Friday and authored by Jordan Eizenga and Seth Hanlon, asserts that BABs are a better product than tax-exempt bonds, based on the inefficient nature of tax-exempt debt for the federal government.

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