The BAB program was created to act as a lower-cost borrowing tool for state and local governments. The bonds are conventional taxable bonds, and the federal government subsidizes portions of the state and local government borrowing by making direct payments. The bonds can go to any 501(c)(3) organization, such as non-profit hospitals.
The provision would operate the BAB program with a subsidy of 30 percent through 2013, and then it would be permanently extended at a rate of 28 percent.
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