Tax-exempt bonds have always been something of a two-edged sword. On one hand, they reduce borrowing costs for state and local governments. On the other, they suffer from both built-in inefficiencies and the potential for serious abuse. The newly enacted stimulus bill didn’t do much to prevent the abuses—indeed it includes eight separate provisions that would expand the use of bonds for a wide-range of purposes from housing to alternative energy. But it did add one provision that promises to make municipal bonds a far more efficient way for states and localities to raise money.    more »