Goldman Sachs believes that Kamala Harris’ economic agenda would not significantly deviate from President Biden’s if she becomes the Democratic presidential nominee.
Amid increasing pressure for him to step back, President Biden announced his withdrawal from the race for the Democratic nomination on Sunday following a lackluster debate against former President Donald Trump. Shortly after his announcement, Biden endorsed Vice President Harris, who expressed her commitment to pursuing her candidacy. She has since garnered notable endorsements from figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts caution that this transition is unlikely to result in substantial policy changes.
Goldman analysts, led by chief economist Jan Hatzius, indicated that the Democratic fiscal and trade policies would remain largely consistent with Biden’s stance, regardless of Harris’ nomination. They estimate that the likelihood of a Democratic win in the White House has only increased marginally, hovering just below 40%.
Furthermore, Goldman Sachs has pointed out that taxes will become a central issue in fiscal discussions next year, particularly with the impending expiration of personal income tax provisions from the Tax Cuts and Jobs Act by the end of 2025. The winner of the upcoming election will influence decisions regarding the continuation of tax cuts and the potential introduction of new taxes.
The firm provided several projections regarding fiscal policy under a Biden win:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates of 35%/37%.
– A suggested corporate tax rate of 28%, up from the existing 21%. Goldman expresses skepticism about Congress approving this rate, suggesting that a 25% rate is more feasible. In contrast, Donald Trump has promised to reduce the rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes over $400,000 from 3.8% to 5%.
Should Harris secure the nomination, speculation points to several candidates for the vice presidential slot, including Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.