A lesser-known aspect of the $787 billion American Recovery and Reinvestment Act (ARRA) is the provisions it sets forth concerning the municipal bond market. By targeting investors through enhanced returns and novel financing options, and by creating new categories of bonds, these provisions provided a boost to public credit that has helped offset the shrinkage in private credit markets. This has brought fiscal relief for states and localities, and helped sustain investments in the nation's infrastructure and promote economic development. Many of the new ARRA bond programs are having a beneficial effect, facilitating financing for schools, infrastructure, and sustainable energy projects.


The impacts of Recovery Act bonds are potentially enormous, and yet there is little public discussion about how these bonds work, how they shape public policy, and whether they lead to development that creates good jobs. This report seeks to address that.