Getting tax cuts, which will then result in stimulation of the economy, is unlikely to happen. The Republicans, over decades, have been eager to offer increased spending programs to compete with Democrats for votes. The total uncontrollable, mandatory spending on social welfare programs is so deeply entrenched and growing that there is no room to cut taxes. The source of huge future deficits will be from the government’s cost of health care programs and this can’t be changed due to demographic patterns. With the 60 vote Senate filibuster limit it takes a considerable consensus to make major changes, one that is unlikely to be achieved in an era where the president was elected by the Electoral College despite getting 3 million votes less than the other candidate. (The budget can be passed with only 50 Senators using the once a year “reconciliation” procedure, but there are a lot of technical and political reasons that may make that unlikely).
The result of this will be a gridlock scenario with minimal change. That means less economic stimulation will occur than what was forecasted the day after the election of November, 2016. Shortly before the election the ten year Treasury yield hit an all-time low of 1.33% on July 5, 2016; it is now 2.28%. As we get closer to confirmation of this gridlock then the bond market may start to retrace the movement in 2016 towards low rates.
Assuming Congress remains in gridlock until a new Congress is seated on January, 2019 and central banks can’t have a regime of negative interest rates (because negative rates would destroy the very banks and insurance companies that the government is trying to protect) then no stimulus will be forthcoming in the next recession, leading to a deep crash and thus a justification for low interest rates. Recessions usually happen every 8 to 9 years so we are due for one soon.
Of course a scary recession will provoke Congress to change their policies and take action but that always happens too late, thus it will take a long time before help arrives during the recession.
Despite the Congress and presidency controlled by Republicans, the dominant political forces are actually those of a typical tax and spend liberal regime! This is because voters are too addicted to government benefits and Republican politicians too afraid to take those benefits away, thus the huge federal deficit will keep growing and no tax cuts will be allowed. Economists like Lacy Hunt have warned that debts are so huge that consumers have to suppress spending just to pay their debt payments, leading to a low growth, low inflation environment. In an environment where growth is low and debt loads and taxation are increasing then consumers won’t be able to increase consumption, leading to a recession.
Investors need independent financial advice about the risks of the economy getting stuck in a debt/deflation trap (leading to a big stock crash) with no source of stimulus to fix it.