Goldman Sachs has shared its perspective on Vice President Kamala Harris’ economic plans, suggesting that they will not significantly differ from those of President Biden if she becomes the Democratic presidential nominee. This commentary follows Biden’s announcement on Sunday, in which he stepped back from the race amid mounting pressure for him to do so, largely due to a less-than-stellar debate performance against former President Donald Trump.
In his statement, Biden endorsed Harris, who expressed her intention to continue her campaign. She has since garnered several influential endorsements, including from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this shift in candidacy, analysts at Goldman Sachs believe there will be minimal changes to the Democratic fiscal and trade policy agenda.
According to Goldman analysts, led by chief economist Jan Hatzius, the likelihood of Democrats winning the presidency has increased slightly, reaching just under 40%. They previously highlighted the upcoming expiration of personal income tax cuts from the Tax Cut and Jobs Act at the end of 2025, indicating that the next president will have significant decisions to make regarding tax extensions or new tax policies.
Goldman Sachs provided specific forecasts regarding fiscal policy if Biden were to win re-election:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35% or 37%.
– A proposed corporate tax rate of 28%, up from the current 21%, although the firm expressed skepticism about Congressional approval, suggesting a 25% rate may be more realistic. In contrast, Trump has pledged to reduce the rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes exceeding $400,000, proposed to rise from 3.8% to 5%.
If Harris becomes the nominee, speculation around potential vice-presidential candidates includes Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.