In a Senate hearing this week, Senator Merkley and Senator Kennedy engaged in a discussion with Mr. Thomas G. Doe, President And Founder of Municipal Market Analytics regarding the potential impact of climate change on municipal bonds.
Senator Kennedy sought clarification on Mr. Doe’s assertion that climate change could lead to municipal bond defaults. Mr. Doe clarified that while he did not anticipate defaults, municipal bonds could face increased pressure due to heightened budgetary concerns. When asked if these bonds could withstand such pressure, he responded positively, stating, “I think so.”
Anticipated Challenges
The discussion then pivoted to the potential rise in interest rates. Mr. Doe expressed concern that interest rates might increase, particularly if state and local governments fail to address climate-related issues adequately. He emphasized the importance of addressing vulnerabilities in infrastructure to mitigate these challenges.
Senator Kennedy tapped into Mr. Doe’s self-proclaimed visionary expertise, questioning when climate change might lead to prohibitive interest rates. Mr. Doe, acknowledging the uncertainty, speculated a timeframe of “10 to 20 years” before significant impacts on municipal bonds could occur.
Proactive Measures
When asked about solutions, Mr. Doe suggested identifying vulnerable infrastructure and allocating appropriate funds for modernization. He advocated for wise and proactive spending by state and local governments to update infrastructure, preventing potential defaults on municipal bonds.
The conversation then shifted to broader climate goals. Mr. Doe, while cautious about the feasibility of becoming carbon neutral by 2050, acknowledged the importance of finding the right mix of power and energy for essential needs. He emphasized the need for a pragmatic approach, understanding the costs associated with such ambitious targets.
Cost Considerations
Senator Kennedy probed further into the costs associated with carbon neutrality. Mr. Doe, recognizing his limitations, stated that providing a figure was outside his area of expertise. However, he stressed the importance of understanding costs before embarking on significant spending initiatives.
In response to questions about funding, Mr. Doe suggested that state and local governments should leverage their borrowing capacity while interest rates remain low. He proposed borrowing as a proactive measure to address climate-related challenges and ensure the resilience of municipal bonds.
A Personal Touch
The hearing concluded with some personal questions for Mr. Doe, shedding light on his lifestyle choices. While he drives a gas-powered Jeep, he does not use a gas stove or a heat pump, offering a glimpse into his commitment to sustainable practices.
People are loving Kennedy’s savage takedown of Doe. One writes: “Senator John Kennedy is a National Treasure.” Another adds: “This man will expose you by letting you expose yourself. People know it, see it, and prepare for it but can never stop it. You can’t teach or learn it. It’s either you have it or you don’t. Legendary.” While a third questions: “I thought Congress already appropriated 1.2 trillion dollars in their infrastructure bill. I thought that money was supposed to deal with the infrastructure issues he’s describing. Is he saying that’s not enough?”
