Kamala Harris’ economic strategies are unlikely to change significantly if she becomes the Democratic presidential nominee, according to Goldman Sachs.
President Joe Biden announced on Sunday that he is withdrawing from the race for the Democratic nomination amid increasing pressure for him to step aside following a lackluster debate performance against Republican contender Donald Trump.
In a statement, Biden endorsed Vice President Kamala Harris, who expressed her intention to pursue the nomination. She has since garnered endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the leadership change, analysts at Goldman Sachs predict minimal shifts in policy.
Goldman analysts, led by chief economist Jan Hatzius, indicated in a note released Sunday that they do not expect significant alterations to the Democrats’ fiscal and trade policies if Harris becomes the nominee. They revised the odds of Democrats securing the White House slightly higher, but still estimated them at just under 40%.
According to prior analysis, Goldman researchers projected that taxes will be a major focus next year, especially as the personal income tax provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. This means the next administration will have to determine the future of these cuts and whether new taxes will be introduced.
Here are some key fiscal policy predictions if Biden were to win:
– A proposed tax rate of 39.6% on individuals earning over $400,000, compared to the current rates of 35% and 37%.
– A proposed increase in the corporate tax rate to 28%, up from the current 21%, although Goldman expressed doubts that Congress would agree on this, suggesting a more likely outcome of a 25% rate. In contrast, Trump has committed to reducing the rate to 20%.
– An increase in the Social Security and Medicare tax rate to 5% on incomes above $400,000, up from the current 3.8%.
If Harris secures the nomination, prediction markets suggest that the vice presidential position may go to candidates such as Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.