Goldman Sachs believes that Vice President Kamala Harris’ economic policies will not differ significantly from President Biden’s if she secures the Democratic presidential nomination. This perspective comes in light of President Biden’s announcement on Sunday that he is withdrawing from the race, following increased pressure to step aside after a less-than-stellar debate performance against former President Donald Trump.
In a short statement, Biden endorsed Harris, who expressed her commitment to pursue her candidacy, attracting endorsements from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the leadership change, Goldman analysts, led by chief economist Jan Hatzius, predict minimal alterations in the Democrats’ fiscal and trade policies should Harris become the nominee.
Goldman indicated that the likelihood of the Democrats winning the White House increased marginally, now standing just below 40%. They previously noted that with the expiration of certain tax provisions in the Tax Cuts and Jobs Act at the end of 2025, tax policies will become a primary focus in the upcoming election. The victor will determine the fate of the tax cuts and whether new taxes or reductions will be introduced.
The firm outlined potential fiscal policies under a Biden administration, reflecting on specific figures:
– 39.6%: Proposed tax rate for individuals earning $400,000 or more, an increase from the current 35%/37%.
– 28%: Suggested corporate tax rate from Biden, up from the current 21%. Goldman expressed skepticism about Congress approving this rate, suggesting a 25% rate is more realistic. In contrast, Trump has pledged to reduce it to 20%.
– 5%: Proposed increase in the tax rate for Social Security and Medicare on incomes exceeding $400,000, up from 3.8%.
Should Harris emerge as the nominee, prediction markets indicate a strong possibility that the vice presidential candidate could be one of the following: Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.