Goldman Sachs anticipates that Kamala Harris’ economic policies will not significantly differ from those of President Biden if she becomes the Democratic presidential nominee. This outlook follows Biden’s announcement that he would withdraw from the race amid increasing calls for him to step down after a less-than-stellar debate performance against Donald Trump.
After Biden’s statement, he endorsed Vice President Harris, who has expressed her commitment to continue her candidacy. She has already received notable endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman analysts predict that this shift in leadership will not lead to major changes in the Democratic Party’s fiscal and trade policies.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated that they do not expect a meaningful shift in the Democrats’ policy agenda should Harris secure the nomination. The firm’s assessment suggests that the likelihood of a Democratic victory in the upcoming presidential election has increased slightly but remains below 40%.
Looking ahead, Goldman researchers have identified the expiration of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025 as a significant factor in the next administration’s fiscal landscape. This means the incoming president will face decisions about extending these tax cuts and implementing new tax measures.
Goldman Sachs provided some numerical forecasts regarding potential fiscal policies under a Biden administration:
– 39.6%: The proposed tax rate for individuals earning $400,000 or more, an increase from the current rates of 35%/37%.
– 28%: The suggested corporate tax rate under Biden, which exceeds the current rate of 21%. Goldman expressed skepticism about Congress agreeing to this rate, suggesting a 25% rate is more feasible.
– 5%: The proposed increase in the Social Security and Medicare tax rate for incomes above $400,000 from the current 3.8%.
If Harris becomes the nominee, speculation surrounding the vice presidential pick includes candidates like Governor Shapiro of Pennsylvania, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.