Goldman Sachs believes that if Kamala Harris becomes the Democratic presidential nominee, her economic policies will not significantly differ from those of President Biden.
In a recent statement, President Biden announced he would not seek the Democratic nomination amid increasing pressure to step down following a lackluster debate performance against former President Donald Trump. Shortly after his announcement, Biden endorsed Vice President Harris, who expressed her intent to continue her candidacy. She has garnered support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs indicates that this leadership change will not lead to substantial changes in policy.
Goldman analysts, led by chief economist Jan Hatzius, stated in their report, “We would not expect the Democrats’ fiscal and trade policy agenda to shift meaningfully in the event that Harris is the nominee.” Their analysis suggests that the likelihood of Democrats winning the White House will increase slightly but will still be just under 40%.
Researchers at Goldman Sachs have previously noted that taxation will become a key fiscal focus next year with the expected expiration of the personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. This will put the next president in a position to determine whether to extend these cuts and consider new taxes.
Goldman’s specific fiscal policy forecasts include:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, up from the current rates of 35% and 37%.
– A suggested corporate tax rate of 28% proposed by Biden, up from the current 21%. Goldman expressed skepticism about Congress’s approval and considered a 25% rate more feasible, while Trump aims for a reduction to 20%.
– A proposed increase in the tax rate for Social Security and Medicare on incomes above $400,000, from 3.8% to 5%.
If Harris secures the nomination, prediction markets suggest that key contenders for the vice presidential spot include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.