Goldman Sachs suggests that Kamala Harris’ economic strategies would likely remain consistent if she secures the Democratic presidential nomination. This insight comes following President Biden’s announcement to withdraw from the race, prompted by increasing pressure for him to step aside after a challenging debate performance against former President Donald Trump.
After Biden’s statement, he endorsed Vice President Harris, who expressed her intention to continue her campaign. She has since gained significant endorsements from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs believe that this change in leadership would not lead to a significant shift in policy.
Goldman’s chief economist Jan Hatzius noted that they do not anticipate any major alterations to the Democrats’ fiscal and trade policy objectives if Harris assumes the nomination. Although the likelihood of a Democratic victory in the upcoming election has increased slightly, it still stands below 40%, as per Goldman’s analysis.
Looking ahead to next year, Goldman predicts that tax policy will come under scrutiny due to the approaching expiration of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. The outcome of the election will dictate the extent to which these tax cuts are extended or if new taxes or reductions are introduced.
Several fiscal policy predictions from Goldman include:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current 35%/37%.
– A suggested corporate tax rate of 28%, up from the existing 21%, although Goldman expresses skepticism that Congress will agree to this, suggesting a 25% rate is more plausible. In contrast, Donald Trump has promised to reduce the corporate tax rate to 20%.
– An increase in the tax rate on incomes exceeding $400,000 for Social Security and Medicare to 5%, from the current 3.8%.
Should Harris become the Democratic nominee, prediction markets indicate that governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly would be leading contenders for the vice presidential nomination.