Kamala Harris’ economic policies are unlikely to differ significantly from President Biden’s if she becomes the Democratic presidential nominee, according to Goldman Sachs.
On Sunday, President Biden announced that he would withdraw from the race for the Democratic nomination amid overwhelming calls for him to step aside following a lackluster debate performance against former President Donald Trump. Shortly after his announcement, Biden endorsed Vice President Kamala Harris, who has expressed her intention to continue her candidacy. She has since received notable endorsements from governors including Gavin Newsom of California, Josh Shapiro of Pennsylvania, and Phil Murphy of New Jersey. Despite the change in leadership, policy shifts are expected to be minimal.
Goldman analysts, led by chief economist Jan Hatzius, noted that they do not anticipate any significant changes in the Democratic Party’s fiscal and trade policy agenda if Harris is nominated. They indicated that the likelihood of the Democrats winning the presidency has improved slightly, now standing at just under 40%.
Goldman researchers had earlier highlighted that taxes will be a primary fiscal concern next year, particularly with the expiration of the personal income tax provisions of the Tax Cuts and Jobs Act set for the end of 2025. The outcome of the election will determine whether these tax cuts are extended or new taxes are introduced.
The firm provided specific projections regarding fiscal policy under a potential Biden victory, including:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current 35%/37%.
– An increase in the corporate tax rate proposed by Biden to 28%, up from the current 21%, although Goldman expressed skepticism that Congress would agree to this rate, suggesting a 25% rate is more likely. In contrast, Donald Trump, the presumptive Republican nominee, has promised to lower the corporate tax rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate on incomes exceeding $400,000 to 5%, up from the existing 3.8%.
Should Harris become the nominee, prediction markets suggest strong odds for Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly being considered for the vice presidential position.