Kamala Harris’ economic plans are unlikely to differ significantly if she secures the Democratic presidential nomination, according to Goldman Sachs.
Amidst increasing pressure following President Biden’s underwhelming debate performance against Republican contender Donald Trump, Biden announced on Sunday that he would withdraw from the race for the Democratic nomination. Shortly after, he endorsed Vice President Harris, who expressed her commitment to continue her campaign and received endorsements from notable governors, including California’s Gavin Newsom, Pennsylvania’s Josh Shapiro, and New Jersey’s Phil Murphy. However, experts suggest that there will not be a major shift in policy.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that they do not expect a meaningful change in the Democrats’ fiscal and trade policy agenda if Harris is nominated. The analysts indicated that although Harris’ nomination could improve the Democrats’ chances of winning the presidency by a few percentage points, the odds remain just below 40%.
Potential changes in fiscal policy are likely to focus on taxes, particularly as the provisions of the Tax Cut and Jobs Act are set to expire at the end of 2025. Consequently, whoever wins the upcoming election will have to make decisions regarding the extension of these cuts and any new tax measures.
The firm provided some key forecasts regarding fiscal policy in the event of a Democratic victory:
– 39.6%: The tax rate that Democrats are considering for individuals earning $400,000 or more, an increase from the current 35%/37%.
– 28%: The proposed increase in the corporate tax rate from Biden, raising it from 21%. Goldman is skeptical that Congress will agree to this and predicts a more likely outcome of a 25% rate. In contrast, Trump aims to reduce it to 20%.
– 5%: The proposed increase in the Social Security and Medicare tax rate on incomes over $400,000, up from the current 3.8%.
If Harris becomes the nominee, prediction markets suggest that potential choices for the vice presidential slot may include governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona.