WASHINGTON -- At first glance, some in the municipal market may be disappointed because none of the top members of President-elect Bill Clinton's economic team can be called an absolute champion of municipal bonds.
But market participants, when they think about the selections, should be pleased. Clinton's choices for the top two Treasury posts, his budget director, and the head of the new National Economic Council are a mixture of congressional and Wall Street heavyweights who both know and have respect for public finance and who know how to get things done.
That should be a vast improvement over the Bush regime, in which municipal finance generally has been an afterthought and economic policy has consisted of doing little or nothing.
Sen. Lloyd Bentsen, D-Tex., Clinton's choice for Treasury secretary, and Rep. Leon Panetta, D-Calif., his nominee to head the Office of Management and Budget, often have priorities that clash, but both support public finance and state and local governments.
Bentsen, the chairman of the Senate Finance Committee for the last six years, rarely says much about tax-exempt bonds. nevertheless, he generally has supported bonds as part of his overall policy of favoring the increased use of tax incentives.
He has supported the extension of mortgage bonds and small-issue industrial development bonds and a simplification and easing of the 1986 bond curbs. And in his draft of the vetoed urban aid tax bill, he included an increase in the limit on bank deductibility and elimination of the $150 million limit on the amount of bonds that can be issued for nonprofit organizations, primarily colleges.
Panetta, a staunch advocate of reducing the deficit, has said very little about public finance, but has been a consistent supporter of increased spending for infrastructure and aid to state and local governments.
On the Wall street side of the team, both Robert Rubin, named to head the Economic Security Council, and Roger Altman, selected as deputy Treasury secretary, are no strangers to municipal securities.
Rubin, co-chairman of Goldman, Sachs & Co., never worked in the municipal department, but he was the co-manager of Goldman's fixed-income division in the mid-1980s and took a strong interest in the firm's municipal department, according to an insider at the firm.
"He knows the issuers, is endlessly curious about public finance, and worked closely with the muni department on deals involving New York City and the Municipal Assistance Corp.," a source said.
Altman, vice chairman of the Blackstone Group, was responsible for overseeing the Carter administration's rescue plan for New York City in the late 1970s while serving as assistant Treasury secretary for domestic finance.
He also served as the chairman of New York City's economic development agency from 1985 through 1989 and has served as co-manager of Mayor David N. Dinkins' management advisory task force since 1990.
With Clinton scheduled to unveil his ambitious economic agenda in early February, it should be reassuring to the market to know that the team leading the charge appreciates the value of public finance.