Kamala Harris’ economic policies are expected to remain largely consistent even if she secures the Democratic presidential nomination, according to insights from Goldman Sachs.
On Sunday, President Biden announced he would no longer pursue the Democratic nomination amid growing pressure for him to step aside following a contentious debate with former President Donald Trump. Shortly after his announcement, Biden endorsed Vice President Harris, who expressed her intent to continue her campaign and garnered significant endorsements from key figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the leadership change, policy shifts are anticipated to be minimal.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated in a note that they do not expect substantial changes to the Democrats’ fiscal and trade policy agenda if Harris becomes the nominee. They noted a slight increase in the probability of a Democratic victory, estimating it at just under 40%.
Previously, Goldman analysts had indicated that taxes would be a primary focus in the upcoming year, particularly with the expiration of certain provisions of the Tax Cuts and Jobs Act at the end of 2025. The next presidential election winner will play a critical role in determining the future of these tax cuts and whether new taxes will be implemented.
In particular, Goldman’s forecasts for fiscal policy under a potential Biden administration included:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A suggested corporate tax rate of 28%, up from the current 21%, although analysts expressed skepticism regarding Congress’s willingness to approve this and suggested a 25% rate as more realistic. Meanwhile, Donald Trump, the likely Republican nominee, has proposed lowering the corporate tax rate to 20%.
– A proposed 5% Social Security and Medicare tax rate on incomes exceeding $400,000, an increase from the current 3.8%.
If Harris is nominated, speculation points to potential vice presidential candidates including Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.