No chance this legislation passes unless the Democrats control both the house and senate, and no chance that Trump signs it if they did pass it. So this is a non-factor and just about stirring up their base prior to the mid-term elections.
But if you just game theory this out, this bill would be disasterous for anyone issuing muni debt. No one would want it, knowing that the federal government can just decide one day that you don't deserve to get your capital back because they want to give some constituency a debt holiday. It would just kill the market, and municipalities wouldn't be able to fund themselves. The bill is just short term wishful thinking, they would regret the consequences if it passed.
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