Goldman Sachs has indicated that if Vice President Kamala Harris becomes the Democratic presidential nominee, her economic policies are unlikely to see significant changes compared to President Biden’s plans.
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On Sunday, President Biden announced he would not seek the Democratic nomination, following increasing pressure for him to step down after a weak debate performance against former President Donald Trump. In his statement, Biden endorsed Harris, who expressed her intention to continue her candidacy and garnered endorsements from influential figures like California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts from Goldman note that the transition from Biden to Harris will not drastically alter the Democratic policy platform.
Goldman analysts, led by chief economist Jan Hatzius, stated that they do not anticipate significant shifts in the Democrats’ fiscal and trade policies should Harris become the nominee. They estimate that the likelihood of a Democratic victory in the upcoming election has increased slightly but remains below 40%.
Previously, Goldman had projected that taxes would be a key focus next year, especially with certain provisions from the Tax Cuts and Jobs Act set to expire at the end of 2025. The outcome of the election will determine the future of these tax cuts and any potential new taxes.
Specific fiscal policy forecasts under a Biden administration include:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, compared to the current rates of 35% and 37%.
– A corporate tax rate of 28%, an increase from the current 21%. Goldman expresses skepticism that Congress would support such a hike, suggesting a more likely outcome would be a 25% rate, while Trump has promised to reduce it to 20%.
– A proposed increase in the Social Security and Medicare tax rate for high earners (over $400,000) from 3.8% to 5%.
If Harris secures the nomination, speculation points to several potential candidates for the vice presidential slot, including Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.