Goldman Sachs has analyzed Vice President Kamala Harris’ economic proposals in light of President Biden’s recent decision to withdraw from the Democratic presidential race and endorse her. They suggest that Harris’ economic agenda would not represent a significant departure from Biden’s policies if she becomes the Democratic nominee.
Following Biden’s endorsement, Harris expressed her intention to continue her candidacy, garnering support from notable figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. These endorsements lend weight to her campaign, although Goldman Sachs noted that the overall fiscal and trade policies would likely remain stable under her leadership.
In their report, Goldman analysts highlighted an increase in Democrats’ odds of winning the White House to just under 40%. However, they maintain that significant shifts in fiscal policy are not expected, even with Harris at the helm. The expiration of certain tax provisions from the Tax Cut and Jobs Act by the end of 2025 will necessitate crucial fiscal decisions for the next administration, with tax rates becoming a focus moving forward.
Among the proposed changes are an increase in the tax rate for individuals making $400,000 or more, potentially rising to 39.6%, and a corporate tax rate that Biden has suggested increasing to 28%. There remains skepticism, however, that Congress would approve such hikes, with a 25% rate seen as more feasible. Furthermore, Biden has proposed a tax rate increase on Social Security and Medicare for high earners.
As for potential vice presidential candidates should Harris secure the nominee position, market predictions include significant figures like Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.
In summary, as the Democratic landscape evolves, it appears that continuity might be the hallmark of upcoming economic policies under Kamala Harris, which may offer both stability and predictability for voters concerned about fiscal issues. Ultimately, this scenario could foster a sense of assurance in maintaining the trajectory of existing policies while potentially exploring new approaches to taxation and fiscal management as needed.