Making Munis Taxable Will Hurt Cities: Rep. Frank
Rep. Barney Frank opposes the part of the Obama jobs plan changing the tax-exempt status of income from municipal bonds, saying it would hurt the states and cities.
"Most of my savings are in municipal bonds," the Massachusetts Democrat told CNBC Wednesday. "The rating agencies…have substantially overrated private securities, but they substantially underrate municipal bonds, which almost never default."
"I’m particularly against it because one of the parts of the president’s program I am most enthused about is funding for states and cities," he added. "We have about 700,000 fewer state and municipal employees on the payroll today than we had two years ago."
Frank predicted that there will be a lot of complaints this winter about inadequate snow-removal services "because people we pay to clean up the snow [are] not going to be there."
Instead, he reiterated his desire for the president to cut back U.S. military involvement in Iraq and Afghanistan, and tell NATO it has to defend itself. "Then I’ll look at what the need is for cuts elsewhere," Frank said.
He acknowledged the Dodd-Frank financial-services law he co-sponsored may have been a factor in the shrinking in the banking sector and loss of jobs. But he said many of these banks were in areas where they shouldn't have been, including "making loans to people who shouldn't have gotten the loans, then packaging those and selling them to people who shouldn’t be buying them."
Frank added: "If the effect of better regulation, of requiring people to post capital, is that there are then going to be fewer people doing some of the activities that I don’t think were especially useful, that is a reasonable price."