Why is of course, that some speculate that the "uber" rich who are suspose to be the major holders of muni's won't be buying them if the politicians in washington decide to cut the 100 yr old tax-free status of munis. However, many of these bond holders are middle-class retirees who use them for income. Of course, how long has it been since the gov. really encouraged savers? So they're not even thinking about these guys. My question is: Who do they think would buy these bonds without the tax break? If the utilities and municipalities aren't able to get buyers for the bonds they'll have to get the money in the form of aide from the federal government. Sounds like they would just be building a bigger "cliff to go over" for a later date.
Maybe we could just have a garage sale of local muni's for the Chinese government and they could just buy them directly, instead of buying them in the packaged U.S.A. federal government debt as they've been doing in the last several years. 'Just a silly thought.