In a recent analysis, Goldman Sachs revealed that Vice President Kamala Harris’ economic strategies are not expected to significantly differ from those of President Biden if she secures the Democratic presidential nomination. This comes after President Biden announced that he would withdraw from the race, following mounting pressure and criticism following a challenging debate with former President Donald Trump.
Upon Biden’s announcement, he promptly endorsed Harris, who confirmed her intent to continue her candidacy. Harris has since received notable endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs indicates that the shift in leadership may not lead to a substantial change in fiscal or trade policy. Analysts, led by chief economist Jan Hatzius, noted, “We would not expect the Democrats’ fiscal and trade policy agenda to shift meaningfully in the event that Harris is the nominee.”
Goldman analysts estimate that the chances of the Democrats winning the presidential election have slightly increased to just below 40%. They highlighted the critical fiscal focus that will arise towards the end of 2025, when key provisions of the Tax Cuts and Jobs Act are set to expire. The focal point will be how potential winners handle tax policies, particularly concerning significant income brackets.
Key forecasts from Goldman regarding potential fiscal policy include the following:
– A proposed tax rate of 39.6% on incomes exceeding $400,000, up from the previous rates of 35% and 37%.
– A suggested corporate tax rate increase to 28%, from the current 21%, although Goldman doubts Congress would approve that rate, predicting a more likely outcome of 25%. In contrast, Trump has suggested lowering this rate to 20%.
– An adjustment to the Social Security and Medicare tax rate on high incomes (over $400,000) proposed to rise to 5% from 3.8%.
Should Kamala Harris ascend to the nomination, there is speculation about potential vice presidential candidates, with high odds given to notable governors such as Shapiro from Pennsylvania, Roy Cooper from North Carolina, Andy Beshear from Kentucky, and Mark Kelly, a senator from Arizona.
This political shift brings forth the possibility of a new chapter for the Democratic Party and a renewed focus on economic policies that could resonate with many voters in the upcoming election. As the Democratic landscape evolves, there is hope that Harris could galvanize support and present a unified front against Republican opponents. The emphasis on fiscal policies indicates a proactive approach to addressing economic challenges, potentially leading to a comprehensive plan that appeals to a broader base.