The nation's political balance shifted more forcefully this month than it has at any time since 1954, and we are about to enter a world where Republicans control the Senate, the House, and 30 state governorships. It will be different from the 1970s, the 1980s, and the early 1990s, and it could turn out to be beneficial for municipal bonds. Bond investors, though, may be buffeted more than they expect.

The Republicans are committed to lower taxes and smaller government, and they have pledged to do away with unfunded mandates. If they succeed in reducing spending as they trim taxes, overall fiscal strength will improve, and that will be good news for bondholders.

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