Goldman Sachs predicts that Kamala Harris’ economic policies are unlikely to differ significantly from those of President Biden should she become the Democratic presidential nominee. This analysis comes on the heels of Biden’s announcement that he is withdrawing from the race amid increased pressure for him to step aside following a lackluster debate performance against Donald Trump.
Biden expressed his support for Harris, who has confirmed her intention to run for the presidency. She has garnered key endorsements from prominent figures like California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs believe that this leadership change will not lead to substantial shifts in policy.
Goldman analysts, led by chief economist Jan Hatzius, noted that they do not anticipate any significant changes in the Democrats’ fiscal and trade policy platforms should Harris secure the nomination. They assessed that the likelihood of a Democratic victory in the upcoming election has increased slightly but remains below 40%.
The firm highlighted that tax policy will become a focal point in the next fiscal year, particularly with the impending expiration of personal income tax provisions established by the Tax Cuts and Jobs Act at the end of 2025. The next administration will play a crucial role in determining whether to extend these cuts or introduce new taxes.
Goldman Sachs provided a glimpse of expected fiscal policies under a potential Biden administration, including:
– 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%. However, Goldman expressed skepticism about Congress agreeing to this figure, suggesting that a 25% rate seems more realistic. Conversely, Trump has committed to reducing the corporate rate to 20%.
– An increase in the Social Security and Medicare tax rate for incomes above $400,000 from 3.8% to 5%.
Should Harris advance to the nomination, speculation around potential vice-presidential candidates includes names such as Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.