Assuming the Republicans keep control of the House of Representatives after the election then they may be able to participate in the joint creation of gridlock  because of an inability to get along with Clinton and thus they will avoid tax increases next year. This could prevent a tax increase that would trigger a recession. It may be tempting for investors to conclude that there won’t be any changes and thus stocks won’t crash. But since stocks are overpriced (and need to drop 45% from their top to reach fair value) and the economy is at a 1.9% GDP this quarter (estimated) and has been logged in at 1.3% annual GDP growth for the first half of the year then a recession is still likely even with no tax increase.
Debt levels are very high and many corporate bonds have covenant light clauses which make them riskier. When the GDP is below 2% that’s below the stall speed of the economy which implies a lack of growth makes it too hard for over-indebted borrowers to grow out of their problems. Then minor fluctuations of bad luck could trigger default in some of them, leading to a wave of panicky downgrades by ratings agencies and a cutting off of new sources of funds to marginal borrowers.
Once a preponderance of negative economic news occurs then investors may finally realize they were wrong to overpay for stocks just to get a 2% dividend and they will sell stocks, making prices go down. A decline in stocks will encourage more workers who are near retirement to postpone retirement, thus lowering wages as supply of workers exceeds demand.  Since many consumers have too much debt then a decline in wages will trigger a downward spiral in the economy.
Congress may then reverse course and agree to implement fiscal stimulus through the creation of make-work projects. However there is the possibility that those don’t work. This could happen if taxes or debt service used for the projects are too much to bear or if the business community anticipates that the corresponding future taxes will offset benefits from stimulus and thus refuses to expand their business.
Hopefully Supply Side tax cuts could act to stimulate the economy and probably will be tried two years after the recession after people have become frustrated with fiscal make-work projects and central bank monetary stimulation.
Investors need independent financial advice about the risks of a stock market crash in 2017 caused by a failure to comprehensively fix things in the economy during the 2009 crash. During the 2009 crisis banks were encouraged to ignore a decline in home values and not mark down to market and instead were allowed to pretend that all was well. Some giant banks were allowed to stay in business even though they were insolvent and they were allowed to have unlimited FDIC insurance per account instead of the $250,000 limit. Many problems in that period, including the excessive amount of debt, were never fixed and thus the economy is susceptible to another downturn.