When Joe Biden takes the oath of office Tuesday and Donald Trump departs D.C. for Florida, many hope the transfer will mark an end to the nasty divide in Washington. It won’t.
While there will undoubtedly be a honeymoon phase in Biden’s first 100 days, as is typical for new presidents, the political reality that Donald Trump’s tumultuous four years in office made so plain is more durable than The Donald’s actual hold on power.
But while House Republicans elected by Trump’s base will go on fighting tooth and nail to frustrate the progress of anything that even smells like progressive policy, and GOP senators will protect Trump’s signature Tax Cuts and Jobs Act as substantially as they can, that doesn’t mean the muni agenda has to sit in purgatory.
In my near decade of covering public finance in Washington, I’ve watched most of the same muni market efforts frustrated over and over again, lost in partisan squabbling or political miscalculations. Many in the market were hopeful that major infrastructure legislation hugely beneficial to public finance would emerge in 2017, as Trump had campaigned on an ambitious infrastructure plan and key Democrats had indicated they wanted to work with him on it.
Many of those same market figures then blamed Trump for wasting that political opportunity on an effort to erase his predecessor’s legacy and eradicate Obamacare. By the time that push ended with a famous thumbs down from the ailing Sen. John McCain of Arizona, any goodwill was gone. Congress would be left to piece together infrastructure spending bills that would do little to move the needle for the economy, and little for the muni market.
We would do well to remember that this impasse predates Trump, and prepare for the near certainty that it won’t go away just because he does. But there are some key differences between this landscape and that which has marked most of the last 10 years.
First, Democrats will hold a (albeit slim) majority in both chambers of Congress as well as the White House. This means that while Senate Republicans can still frustrate the advance of legislation unacceptable to them, House-passed tax, infrastructure, and regulatory bills are no longer dead on arrival in the upper chamber. They can reach the floor for debate and get an up or down vote, something that consistently did not happen under Republican Majority Leader Mitch McConnell.
Second, Biden is widely perceived as, and indeed campaigned as, a commonsense compromiser with a decades-long track record of working with Republicans to get bills passed in the Senate. Obama didn’t have that background of bipartisan accomplishment, and Trump certainly did not.
Lastly, the pressure to pass stimulus legislation is huge because of the coronavirus pandemic. Americans need to get back to work, and the kinds of measures the muni market wants would be conducive to that.
The return of tax-exempt advance refunding looks like a small ask compared with increasing income tax rates. The increase in the bank-qualified cap feels like a slam dunk if it just rides along with Biden’s expected stimulus package.
So while you should be prepared for a lot of the same partisan nastiness post-Trump as marked his administration, you should also take heart. There’s a real chance to make some headway here. The best chance in a long time.
