Manhattan Institute for Policy Research.
search  
 
Subscribe   Subscribe   MI on Facebook Find us on Twitter Find us on Instagram      
 
 
   
 
     
 

National Review Online

 

Are Muni Bonds Really Underreported By $800 Billion? I Doubt It.

June 08, 2011

By Josh Barro

Yesterday, Citigroup released a report claiming that Federal Reserve is far underestimating the amount of municipal debt outstanding. The Fed reported (page 91) that there was $2.925 trillion in outstanding muni debt at the end of 2010. Citi believes that figure to be closer to $3.7 trillion. Not a small difference!

How does Citi explain the error? The full report isn’t public, but according to the Bond Buyer, they say it’s a problem with the Fed’s data on household holdings of municipal debt. Citi also says this is not a new error, and that the last several years’ reported changes in debt have been more or less correct, with the base figure far too low—which is to say, if there’s a hidden pile of muni debt, it’s not a hidden recent explosion in muni debt.

Color me skeptical about the claim that the Fed data are so far off. While (as I understand it) the Fed gets its data by surveying bondholders, the Census Bureau also reports a total state and local debt figure that it calculates by collecting information directly from municipal bond issuers. The Census data are only available far in arrears—the most recent estimates are as of July 2008 (last page)—but as of that time the Census estimate of state and municipal debt outstanding was actually about three percentage points lower than the Fed’s contemporaneous estimates.

So, if the Fed is way off on muni debt, so is Census. And it’s hard to see why the Census figures, calculated with the benefit of a couple of years’ hindsight and actual reporting from issuing governments, would be so inaccurate.

Original Source: http://www.nationalreview.com/agenda/269087/are-muni-bonds-really-underreported-800-billion-i-doubt-it-josh-barro

 

 
PRINTER FRIENDLY
 
LATEST FROM OUR SCHOLARS

The Real Challenge When Police Use Lethal Force
Stephen Eide, 12-15-14

Why Cops Need To Sweat The Small Stuff
Nicole Gelinas, 12-08-14

A Bill To Loosen Police Discipline
E. J. McMahon, 12-08-14

More Subsidies For Big Wind
Robert Bryce, 12-08-14

Bill Slanders His Cops
Heather Mac Donald, 12-07-14

What The Numbers Say On Police Use Of Force
Steven Malanga, 12-04-14

Detroit's Bankruptcy and Its Painful Reforms
Stephen Eide, 12-04-14

The EPA Pours On The Pain With New Ozone Regulations
Diana Furchtgott-Roth, 12-03-14

 
 
 

The Manhattan Institute, a 501(c)(3), is a think tank whose mission is to develop and disseminate new ideas
that foster greater economic choice and individual responsibility.

Copyright © 2014 Manhattan Institute for Policy Research, Inc. All rights reserved.

52 Vanderbilt Avenue, New York, N.Y. 10017
phone (212) 599-7000 / fax (212) 599-3494