Goldman Sachs predicts that Kamala Harris’ economic policies are unlikely to change significantly if she becomes the Democratic presidential nominee. Following President Biden’s announcement that he will not seek re-election, which came after increasing pressure due to his recent debate performance against former President Donald Trump, he has endorsed Vice President Harris, who is eager to continue her campaign. She has already received support from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy.
According to Goldman analysts, the shift from Biden to Harris will not lead to major changes in the Democrats’ fiscal and trade policy. They noted that the likelihood of Democratic victory in the upcoming election has increased slightly but is still under 40%.
Additionally, Goldman has indicated that taxes will be a primary fiscal issue in the coming year, particularly with the impending expiration of certain provisions of the Tax Cuts and Jobs Act at the end of 2025. The winner of the election will have to make crucial decisions regarding the extension of these tax cuts and the potential introduction of new taxes.
Goldman also provided key forecasts regarding fiscal policy should Biden win, including a proposed tax rate of 39.6% for earners over $400,000, up from the current rates of 35% and 37%. They also mentioned Biden’s suggested increase in the corporate tax rate to 28% from 21%, though they expressed doubt that Congress would agree, considering a more realistic rate might be 25%. Furthermore, they highlighted a proposed increase in the Social Security and Medicare tax rate for higher incomes from 3.8% to 5%.
If Harris secures the nomination, markets suggest that potential vice presidential candidates may include Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.