There are two proposals in President Obama's "tax reforms" to finance his jobs intiative that could have a major negative impact on Cal and any future plans to expand I/A facilities. The first is the elimination of a the charitable deduction for those making over $220K annually {edit: the threshold number where the deduction elimination kicks in is changing, and only a portion of the deduction now is proposed to go away]. , and more importantly, the elimination of the exemption for muni-bond income, again for those making over $220K {edit note: the proposal is moving and now stand that there is a reduction in the muni-exclusion so that this income is taxed at 28%, as opposed to top rate of 36% assuming the Bush tax cuts are allowed to lapse].

The conventional wisdom is that fundraising will be adversly impacted, at least lifetime donations, since a significant potion (in terms of dollars) of Cal's endowment and support comes from alums and others who make well over the $220K threshold. There is a counter argument that the wealthy will continue contribute, though perphas not at the same level. I know several fundrasing types who are deeply concerned about the proposed change. Be curious if anyone on this board will adjust their donations to Cal if they lose their tax deduction.

The elimination of the muni-bond exclusion would appear to have more impact. While most finance experts believe the demand for muni-bonds will continue unabated, the market will require the same or near same after tax yields to fund future bonds issuances. Increases in yields to near taxable bond levels obviously will increase the cost for financing future UC and I/A projects (the new basketball practice facility, baseball/softball facility or a second expansion of CMS) by the tradional method of bond issuances, as well as the cost of any future UC re-financings. The increased cost of financing also will have a detrimental impact on financing the State deficit, which in turn, could impact other CA government entities, such as UC, based on how the State attempts to address the higher cost of borrowing. The UC budget was hammered in the last round of budget negotiations. {edit note: read the article attached to 86 Oski's post]

Its uncertain how much of the President's proposed tax changes will get through the Republican House. I am not attempting to espouse a speciifc political perspective, but to point out an issue that could adversly impact Cal and Cal sports. Thoughts?

WIAF, my understanding is that the proposal on muni bonds is somewhat less drastic than your description suggests. It would limit the tax value of tax-exempt interest to 28%, rather than the current 35% (i.e., the highest marginal tax rate) for taxpayers earning more than $200k ($250k for married couples). LINK

If my understanding is correct, that definitely would increase borrowing costs for entities issuing tax-exempt bonds. How much that would affect UC is hard to say.

This particular proposal seems unlikely to pass, especially since it would apply to already issued bonds.

wiaf, your description of Obama's proposal is way, way off the mark. It wouldn't eliminate deductions it would limit the deduction to 28% of income rather than the current 35% of income. In other words, a $100 charitable donation from somebody in the 35% tax bracket would create a deduction of $28instead of $35. Same deal with the munis.

I always wonder how very intelligent people can get such basic things very wrong when they are talking about democrats. Happens all the time.

wifeisafurd;569091 said:

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There are two proposals in President Obama's "tax reforms" to finance his jobs intiative that could have a major negative impact on Cal and any future plans to expand I/A facilities. The first is the elimination of a the charitable deduction for those making over $220K annually, and more importantly, the elimination of the exemption for muni-bond income, again for those making over $220K.

The conventional wisdom is that fundraising will be adversly impacted, at least lifetime donations, since a significant potion (in terms of dollars) of Cal's endowment and support comes from alums and others who make well over the $220K threshold. There is a counter argument that the wealthy will continue contribute, though perphas not at the same level. I know several fundrasing types who are deeply concerned about the proposed change. Be curious if anyone on this board will adjust their donations to Cal if they lose their tax deduction.

The elimination of the muni-bond exclusion would appear to have more impact. While most finance experts believe the demand for muni-bonds will continue unabated, the market will require the same or near same after tax yields to fund future bonds issuances. Increases in yields to near taxable bond levels obviously will increase the cost for financing future UC and I/A projects (the new basketball practice facility, baseball/softball facility or a second expansion of CMS) by the tradional method of bond issuances, as well as the cost of any future UC re-financings. The increased cost of financing also will have a detrimental impact on financing the State deficit, which in turn, could impact other CA government entities, such as UC, based on how the State attempts to address the higher cost of borrowing. The UC budget was hammered in the last round of budget negotiations.

Its uncertain how much of the President's proposed tax changes will get through the Republican House. I am not attempting to espouse a speciifc political perspective, but to point out an issue that could adversly impact Cal and Cal sports. Thoughts?

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I'll bite. First off, I heard on the radio that it kicks in at $250K annual income. Maybe my figure is married filing joint and yours is single earner?

Second, my understanding is that for those higher income earners, there will be a limit on many types of deductions, including home mortgage interest and muni bond interest. I hadn't heard it applied to charitable contributions but I will take your word for it. In any event, the limitation is basically to disallow a PORTION of the deduction such that the tax benefit that would be realized is the same as that of a 28% marginal tax rate taxpayer. So, if for instance you are a 35% marginal rate taxpayer, and you make a $100 donation to Cal, instead of getting a $35 tax benefit, you only get $28 off your tax liability (rather than $0 off). Given the above, one might argue that donations will be hurt but not devastated. Personally, I believe that most donors will continue to give to Cal at the same levels on the thinking that Well, it's not like I get a better deduction donating elsewhere.

As for muni bond interest, it might hurt AD projects a little on the bottom line but not enough to make any stall or implode. For starters, again, it is not a complete elimination of the deduction, but rather a disallowance of a portion of the deduction to make the tax benefit equal to that of a 28% marginal rate taxpayer. So, UC might have to pay a 35% marginal rate taxpayer a 7% (i.e. 35% minus 28%) higher interest rate on its muni bonds to make them "whole", e.g. 4.28% instead of 4.00%. What's more, financing for new projects (as opposed to refinancings) is not terribly interest rate sensitive (people will generally borrow to pay for a new project whether the rate is 4.00 or 4.28). For refinancings, it just means that fewer refis will be economically advantageous and therefore fewer refis will happen. But that is like money that we never had in the first place so I doubt it will be missed or will be the difference in a new project happening or not. Moreover, I don't believe new athletic facilities are funded as much by muni bonds as they are from donations. The higher muni bond borrowing cost will have a smaller impact on AD projects than one might expect.

Lastly, I heard the Obama job legislation has basically no chance of passing the House in its current form. Look for bits and pieces of it to be taken up and passed by the House in separate bills. Which bits and pieces, who knows.

MisterNoodle;569121 said:

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As for muni bond interest, it might hurt AD projects a little on the bottom line but not enough to make any stall or implode. For starters, again, it is not a complete elimination of the deduction, but rather a disallowance of a portion of the deduction to make the tax benefit equal to that of a 28% marginal rate taxpayer. So, UC might have to pay a 35% marginal rate taxpayer a 7% (i.e. 35% minus 28%) higher interest rate on its muni bonds to make them "whole", e.g. 4.28% instead of 4.00%.

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That's not my current understanding of the muni bond provision. Note that your interpretation runs directly counter to what was printed in the linked article. But this provision and all the others as well probably will go through a dozen revisions as it attempts to wind its way through Congress. I think it has a low probability of success, so I'm going to mostly ignore it.

Cal84;569129 said:

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That's not my current understanding of the muni bond provision. Note that your interpretation runs directly counter to what was printed in the linked article. But this provision and all the others as well probably will go through a dozen revisions as it attempts to wind its way through Congress. I think it has a low probability of success, so I'm going to mostly ignore it.

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Beg pardon for missing that link. What part runs counter?

MisterNoodle;569136 said:

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Beg pardon for missing that link. What part runs counter?

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Noodle's explanation seems consistent with the Bond Buyer article to me. What's your understanding of the proposal, 84?

I think 84 may be referring to this passage from the article, suggesting a bigger impact than the 28 basis points Noodle posited:

Quote:

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The estimate is based on two assumptions: that an investor who wants to buy a 5% coupon bond and is paying a 28% tax rate would need to receive an extra 50 basis points to replicate the after-tax current yield produced with a 35% marginal rate; and that the market returns to a more normal rate of issuance of about $300 billion per year.

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dajo9;569107 said:

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wiaf, your description of Obama's proposal is way, way off the mark. It wouldn't eliminate deductions it would limit the deduction to 28% of income rather than the current 35% of income. In other words, a $100 charitable donation from somebody in the 35% tax bracket would create a deduction of $28instead of $35. Same deal with the munis.

I always wonder how very intelligent people can get such basic things very wrong when they are talking about democrats. Happens all the time.

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talking about Democrats. I can't link the freaking thing, but the original proposal was a complete elimination of deductions and was suppose to raise $400 billion, and apparantly there is now a healthy debate as to what level the tax changes are supposed to kick-in. Bottom line is we told our clients based on the original release it was the whole thing. The latest that was submitted to Congress clealry is for people (as opposed to entities) for the exclusion to go down to 28%, which doesn't really raise much money as the percentage of itemized deductions are phased out in any event as income increases. Moreover, the tax rate for people (as opposed to entities) is going to 36% because the Bush tax cuts expire, so I am at a loss to understand the 35% number being kicked around. But moving around what exactly the freaking number for the tax may be at a current momment, the concept was that there would be (in this case an extimated 50 basis point jump) in financing costs has on Cal. BTW, I voted for Obama.

MisterNoodle;569121 said:

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I'll bite. First off, I heard on the radio that it kicks in at $250K annual income. Maybe my figure is married filing joint and yours is single earner?

Second, my understanding is that for those higher income earners, there will be a limit on many types of deductions, including home mortgage interest and muni bond interest. I hadn't heard it applied to charitable contributions but I will take your word for it. In any event, the limitation is basically to disallow a PORTION of the deduction such that the tax benefit that would be realized is the same as that of a 28% marginal tax rate taxpayer. So, if for instance you are a 35% marginal rate taxpayer, and you make a $100 donation to Cal, instead of getting a $35 tax benefit, you only get $28 off your tax liability (rather than $0 off). Given the above, one might argue that donations will be hurt but not devastated. Personally, I believe that most donors will continue to give to Cal at the same levels on the thinking that Well, it's not like I get a better deduction donating elsewhere.

As for muni bond interest, it might hurt AD projects a little on the bottom line but not enough to make any stall or implode. For starters, again, it is not a complete elimination of the deduction, but rather a disallowance of a portion of the deduction to make the tax benefit equal to that of a 28% marginal rate taxpayer. So, UC might have to pay a 35% marginal rate taxpayer a 7% (i.e. 35% minus 28%) higher interest rate on its muni bonds to make them "whole", e.g. 4.28% instead of 4.00%. What's more, financing for new projects (as opposed to refinancings) is not terribly interest rate sensitive (people will generally borrow to pay for a new project whether the rate is 4.00 or 4.28). For refinancings, it just means that fewer refis will be economically advantageous and therefore fewer refis will happen. But that is like money that we never had in the first place so I doubt it will be missed or will be the difference in a new project happening or not. Moreover, I don't believe new athletic facilities are funded as much by muni bonds as they are from donations. The higher muni bond borrowing cost will have a smaller impact on AD projects than one might expect.

Lastly, I heard the Obama job legislation has basically no chance of passing the House in its current form. Look for bits and pieces of it to be taken up and passed by the House in separate bills. Which bits and pieces, who knows.

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UC issues multi-billions (yes, with a B) of capital project bonds each year. UC then goes out and finds way to fund the repayment of the bonds through fundrasing, grants, etc. This really is quite standard way government entities pay fund long term capital projects The donor thinks they are paying for a building, but they are really repaying the bonds, the proceeeds of which pay for the building. A prime example of this is the bonds issued for the CMS remodel and repayment of bonds through the sale of ESP seats. The exceptional case is the SAHPC, where the money was raised first, and bonds were never issues. That is why Prof Barksy whining about the bond issuance that included the CMS project was so bizarre.

The predicted 50 basis point increase is huge to debtor governmental entities like the State, especially when there is no corresponding increase in earnings from investments to be achieved by these entities (usually when interest rates go up, so do investment yields).

I suspect your last paragraph is dead on, hence my qualfiication regarding any of the tax law changes getting through the House. However, if the President gets his way, expect some impact on Cal (and I don't know how much).

86Oski;569095 said:

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WIAF, my understanding is that the proposal on muni bonds is somewhat less drastic than your description suggests. It would limit the tax value of tax-exempt interest to 28%, rather than the current 35% (i.e., the highest marginal tax rate) for taxpayers earning more than $200k ($250k for married couples). LINK

If my understanding is correct, that definitely would increase borrowing costs for entities issuing tax-exempt bonds. How much that would affect UC is hard to say.

This particular proposal seems unlikely to pass, especially since it would apply to already issued bonds.

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Going on 3 day old info. Edited original post.

drunkoski;569181 said:

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I'd be shocked if it was only 50 basis points unless there is language in the law ensuring new issues wont be taxed higher. And I would expect a legal challenge as well. I don't understand how you can tax something by eliminating a deduction that never existed in the first place. Also expect states to start taxing treasuries which would be great for the deficit.

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The State has a big hole in its budget, unless it raises taxes or hacks at expenditures. And if the State taxes its own bonds, it just increases its borrowing costs. Even California wouldn't be that stupid would it?

LafayetteBear;569201 said:

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......DO: I realize that, as a conservative, you don't like Obama. That's fine. Rasonable people can disagree. .

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Are you just being diplomatic or do you truly believe that reasonable people can disagree about whether the Republican candidates on display at the podiums at the debates are the biggest bunch of dipsticks since the nerds in the waiting room at the frat in Animal House? The Right Wing sentiment on this board has me asking one question: Exactly what year was it that Cal starting turning out graduates that have lost their souls?

drunkoski;569212 said:

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What an asshole post. God forbid this university is about having one point of view. You should be ashamed of yourself.

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Take a guess how ashamed I am of myself.




We can't all be as open minded and accepting of differences of opinion as Michele Bachmann and Rick Perry are.

WIAF, the proposal was NEVER to eliminate the charitable deduction for high earners. Just to reduce the deduction. You passed on incorrect information to your clients. If you have a link that corrects me please use it.

This is not my area of expertise but I believe the states are legally forbidden from taxing Treasuries. I think the supreme court at some point ruled that since the Fed was superior to the states they couldn't tax Treasuries. I'm sure I have some nuance of this wrong and DO will pounce in 3. . 2. . 1. .

Furthermore, I don't understand DO's semantic issues with the proposal. The Fed chooses not to tax munis. It can write legislation that taxes only muni income at your highest marginal rate minus 28%. Whether you use the word deduction or exemption or whatever doesn't matter.

drunkoski;569212 said:

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What an asshole post. God forbid this university is about having one point of view. You should be ashamed of yourself.

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It's Bearister. Did you expect anything else? He doesn't realize that the times, they've been a changin'. You now actually have significant diversity of opinion among Cal students.

drunkoski;569209 said:

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That's my point. There is no deduction. So what the hell is he eliminating? He has no authority to eliminate anything. Up until a couple of years ago you didn't even have to disclose or report muni income.

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He has no authority? Um...he's the President of the United States, and he's proposing legislation.

And to answer your question...you're correct that he's not eliminating a deduction, he's proposing to make income that previously had been excluded from income tax subject to income tax.

The reason muni bond interest has been excluded from income is the Internal Revenue Code says so. The old doctrine of "reciprocal immunity" (that the feds can't tax states and vice-versa) went the way of the dodo bird courtesy of the Supreme Court in the late 80s. So I really don't get your comment earlier about him trying to "violate" the law. He's not trying to violate the law, he's just trying to change it.

Getting back to the substance....in the absence of a constitutional doctrine forbidding the feds from taxing muni bond interest, it is clear that the tax exemption is in effect a federal subsidy for state and municipal spending. Since we're looking at ways to decrease the deficit, I suppose that subsidy should be fair game.

Having said that, I think having the proposal affect already-issued bonds is extremely bad policy, and I also think there are much better ways to decrease the deficit.

wallyball2003;569220 said:

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It's Bearister. Did you expect anything else? He doesn't realize that the times, they've been a changin'. You now actually have significant diversity of opinion among Cal students.

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I think the point in time when things went south was when a large percentage of students became business majors instead of opting for a Renaissance education.

bearister;569226 said:

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I think the point in time when things went south was when a large percentage of students became business majors instead of opting for a Renaissance education.

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I am a liberal and have studied economics and finance. The problem with liberals as I see it is that too many think it is a badge of honor to be ignorant on matters of money / finance. It allows conservatives to run circles around them.

Let's assume the following - married filing jointly. $400,000 AGI. That puts them barely into the 35% marginal tax bracket. They report $120,000 in tax exempt interest income.

According to Bond Buyer, the couple would only be allowed to report 400,000*.28 = $112,000 of tax exempt interest income. The remaining $8,000 would be subject to taxes. They would pay an additional 8,000*.35 = $2,800 in taxes. As a practical matter their additional tax bill would be higher than that due to their higher income eroding their deduction allowance, but I am not accounting for that here.

According to 86Oski's original post, a different set of calculations is triggered. The tax saved by the couple from the tax exempt status of the couple is nominally 400,000*.35 = $140K. But the maximum allowed savings under this new rule (using 86Oski's interpretation) would be 400,000*.28 - $112K, so the couple must pay an additional tax of $28,000.

The first interpretation effectively limits the total amount of tax exempt interest income that can be claimed. The second interpretation imposes a 7% marginal tax rate on ALL tax exempt interest income if the tax payer is in the 35% marginal bracket.

Left unclarified under both interpretations is whether tax exempt interest income subject to taxes would be counted in AGI causing a waterfall of additional tax repercussions, mostly on the erosion of the deduction allowance, but also the (re)calculation of the tax exempt interest tax (!), causing this to be iterative in nature and thus uncalculable for most taxpayers.

Like I said, I give this provision a low chance of passage. Fortunately....

84, my read of the proposal is very different from yours. I understood it to mean that if a taxpayer in the 35% bracket had $10,000 of muni bond income, he/she would only be able to exclude it in the 28% bracket, meaning the taxpayer would pay 7% on the $10,000, or $700. This Wall St. Journal piece appears to support that reading.

In any event, I agree this provision has a low likelihood of passage, and I also agree with DO's earlier point that this provision could increase borrowing costs far beyond what the Bond Buyer's simplistic analysis. Markets don't like legislative uncertainty.

Yeah, I used your interpretation in the second example. It's worth noting that while in my example the first interpretation generated a lower additional tax bill, that would ot be the case for all tax payers. Crossover occurs at $140K of tax exempt income, i.e. 35% marginal tax payers with under $140K of tax exempt income get hurt more by your interpretation than by the Bond Buyers.

dajo9;569227 said:

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I am a liberal and have studied economics and finance. The problem with liberals as I see it is that too many think it is a badge of honor to be ignorant on matters of money / finance. It allows conservatives to run circles around them.

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I seem to be able to follow the economics and finance issues in this article:

http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105

...If I make a million dollars a year, even if the rate goes down the attractiveness of tax free municipals is still there, even at 28%, considering that a good 30 year CA GO is currently around 5% and certain funds pay out over 7%, why would you not buy them? Better to get .01% at the bank, 2-3% on medium term money funds, treasuries at what 2% and falling? Backed by the taxing authority of the State of CA municipals are second only to education in the State's responsibility to pay. And why if demand is still there would rates tick up?

Nope, another trap by the rich and elite to lower their taxes again and again, rather than paying their fair share which is now the lowest since, guess when...the Roaring 20's and the Great Depression. Read Professor Reich on income disparity lowering all boats and hope the R's don't get in to play more giveaway games or a Cal education will be $40,000 a year!

:rant

I say we go back to the tax rates when Ronny RayGun was Governor...shall we? Then Larry Ellison will only have one yacht and maybe our children can attend Cal for a reasonable sum that a middle class family can afford.

Bearister - for me it was the day after the head of a community development action group with whom I was volunteering ordered me to intern for a rival group and to steal their files.

I refused and the next day looked in the mirror and asked myself, "Who the hell are you to tell other people how to live."

The "compelling" circumstance is interpreted to be that there is money out there, the vast majority of which is assumed to be in the hands of people who it is assumed can do without it, that high deficits and debt represent reelection threats, and that therefore could be confiscated. Is there a way to do that which can be said not to be illegal or if illegal can not be enforced in time?

bearister;569252 said:

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I seem to be able to follow the economics and finance issues in this article:

http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105

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I hope you're being sarcastic or something. I'm not really sure how many people view the ability to understand a Vanity Fair article to be all that impressive, especially since that article was an Op-Ed. I wouldn't be surprised if there are multiple inaccuracies in that thing, since just skimming through it I see less citations and more posturing. Of course, I'm not an economist and he is, so who knows, maybe he's 100% right, but my BS sense is tingling.

Point is, forming an unbiased opinion based on an Op-Ed is only marginally better than forming one based on a Matthews or O'Rielly screamathon rant.

bearister;569208 said:

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Are you just being diplomatic or do you truly believe that reasonable people can disagree about whether the Republican candidates on display at the podiums at the debates are the biggest bunch of dipsticks since the nerds in the waiting room at the frat in Animal House? The Right Wing sentiment on this board has me asking one question: Exactly what year was it that Cal starting turning out graduates that have lost their souls?

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Probably the same year they realized that both parties are just two sides of the same piece of turd, and that blindly casting a vote based on a political party rather than making an educated decision based on a platform or position is foolhardy (and yet so many people still do it, on both sides ).

In any case, there's a growing sentiment among educated young Republicans that the "Top Tier" or whatever the media is now calling Romney/Perry is really just a bunch of RINOs. Their past history suggests that they're more like centrist Democrats (Romneycare, Big Spender Perry, etc), except they just happen to be more religious than the candidates on the left.

pingpong2;569374 said:

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Probably the same year they realized that both parties are just two sides of the same piece of turd, and that blindly casting a vote based on a political party rather than making an educated decision based on a platform or position is foolhardy (and yet so many people still do it, on both sides ).

In any case, there's a growing sentiment among educated young Republicans that the "Top Tier" or whatever the media is now calling Romney/Perry is really just a bunch of RINOs. Their past history suggests that they're more like centrist Democrats (Romneycare, Big Spender Perry, etc), except they just happen to be more religious than the candidates on the left.

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Wow. Romneycare was supported by the Heritage Foundation and Rick Perry believes social security is a failure. Your post shows how far right the current republican party has moved in that they are considered RINOs.

dajo9;569400 said:

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Wow. Romneycare was supported by the Heritage Foundation and Rick Perry believes social security is a failure. Your post shows how far right the current republican party has moved in that they are considered RINOs.

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My personal sense is that it's not a matter of left or right lateral movement that defines them as RINOs. The current breed is just too far on the authoritarian side.

Like I said, look at past history, not what they say now. Rick Perry is just saying what he wants to get votes. Take a look at his track record, and you'll see he spent as much as the candidates he's deriding for spending too much. Candidates these days flip flop more than Riley on his QBs...

bearister;569217 said:

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Take a guess how ashamed I am of myself.




We can't all be as open minded and accepting of differences of opinion as Michele Bachmann and Rick Perry are.

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I have yet to find a liberal who touts the "Republicans are closed minded" who is open-minded about much of anything. Still haven't.

I'll let you get back now to your regularly-scheduled echo chamber.

These are patently stupid ideas that are DOA in Congress, thank God.

86Oski;569139 said:

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I think 84 may be referring to this passage from the article, suggesting a bigger impact than the 28 basis points Noodle posited:

"The estimate is based on two assumptions: that an investor who wants to buy a 5% coupon bond and is paying a 28% tax rate would need to receive an extra 50 basis points to replicate the after-tax current yield produced with a 35% marginal rate; and that the market returns to a more normal rate of issuance of about $300 billion per year."

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This is just bad math by the Bond Buyer, IMO. These articles are written by a 23-year old NYU grad with a degree in economics who calls up some industry expert and asks the expert to explain something pretty complex. Then the reporter tries to regurgitate in the article what she heard. Guess what: half the time she gets it wrong. Articles on complex subjects written on short time frames by journalists who have no direct expertise on said subjects should be taken with a grain of salt.

drunkoski;569173 said:

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We have no idea what this would do to muni demand. "Making up" the yield gap is a simplistic analysis. It completely ignores investor confidence (for instance who believes this tax will be the end? Real estate becomes a much more attractive investment). What premium will have to be paid for uncertainty? Why would i buy something if i have no idea what te tax equivalent yield will be 4 years from now? I expect the increase in yield will bankrupt many already stuggling municipalities. Obama isn't talking about only taxing future muni issues. He's going to tax issues that have been around for 20 years.

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Good points. The actual premium paid by governments in the muni bond market would be higher than the 28 basis points or 50 basis points in the examples given above. How much more no one knows, which is why it is convenient to ignore that factor for pedagogical purposes!

drunkoski;569141 said:

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he's going to bring down dozens of municipalities with him.

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This is an exaggeration.

If the borrowing costs to municipalities go up a click or two, they just won't do as many new projects as they might otherwise do. And even that will be a small impact because as I argued before, people just borrow when they want the money and not so much if the rate is 50 basis points higher or lower at any given time. Think about a home buyer. Does he typically say "I'm not buying a house now because I think the rate will 50 basis points lower in six months"?

As for existing bond issues, most of it is fixed rate so they have locked in their interest costs. yeah they won't be able to refinance as many and will lose out on some future interest savings but that's money they never had in the first place and aren't relying on as an existential matter.