With a new Democratic majority in the House of Representatives and Republicans maintaining the majority in the Senate, what can investors expect to see from the new Congress and how might new legislation affect them? This is the first time in nearly a decade that Democrats have held power in Congress, and it’s an unusual split that sees the House (and therefore the power of the purse) in the hands of the President’s opponents.
One thing is almost guaranteed, and that is that you can forget about more tax cuts. President Trump premised the 2.0 version of his tax cuts on keeping the House, and now with that loss there’s no way that we’re going to see any more tax relief. Hopefully investors have already invested what tax savings they’ve already made very wisely.
One other certainty is that the government will continue to run huge deficits. Don’t expect Republicans in the Senate to exercise any sort of fiscal restraint, as the Senate has always been big on pork-barrel spending. Don’t be surprised to see deficits of $800 billion to $1 trillion or more. And the government has to come up with that money from somewhere.
With more debt and a need for revenue, it’s only a matter of time before the government starts coming after your retirement account. The popularity of 401(k) accounts and the ability of investors to defer taxation for years or decades means that trillions of dollars is just sitting there going to work for investors. But that large chunk of cash is a tempting target for the government. The urge to tap into that money to pay for more government spending is there and it’s growing all the time.
The last time Democrats were in power they openly discussed the outright seizure of 401(k) accounts, converting hard-earned retirement assets into government debt. And while they only control the House, it’s not outside the realm of possibility that they could convince enough Republicans to go along with a first small foray into taxing 401(k) accounts.
If that concerns you, you should look into investing in gold. Holding gold in a gold IRA account will keep your assets away from the prying hands of government bureaucrats looking to siphon off money from 401(k) accounts. And gold’s performance as a hedge against inflation and financial crisis makes it an ideal asset to protect against upcoming stock market weakness. So if you’re concerned about the safety of your retirement assets, think about investing in gold today.
This article was originally posted on Goldco.
