Goldman Sachs anticipates that Vice President Kamala Harris’ economic policies, should she become the Democratic presidential nominee, will not vary significantly from those of President Biden.
This speculation follows Biden’s announcement on Sunday that he would withdraw from the race for the Democratic nomination in light of growing calls for him to step aside after a shaky debate performance against former President Donald Trump. Following this decision, Biden endorsed Harris, who reaffirmed her intention to run and garnered support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the transition, analysts predict minimal changes in policy direction.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated in a note that they do not expect a substantial shift in the Democrats’ fiscal and trade policy agenda if Harris were to become the nominee. They also reported that the odds of Democrats securing the White House have slightly increased, but remain just under 40%.
Looking ahead, Goldman analysts have noted that taxes will increasingly become a focal point for fiscal policy next year with the expiration of certain provisions from the Tax Cut and Jobs Act set for the end of 2025. This creates a critical decision for the upcoming election winner regarding the future of tax cuts and new tax policies.
The firm provided several key forecasts concerning fiscal policy under a potential Biden victory:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% or 37%.
– A suggested corporate tax rate of 28%, an increase from the current 21%, though they express doubt that Congress would approve this, suggesting a more likely rate of 25%. In contrast, Trump has promised to reduce the corporate rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate on incomes over $400,000, from 3.8% to 5%.
Should Harris secure the nomination, betting markets indicate that the most likely candidates for the vice presidential slot include Governors Shapiro from Pennsylvania, Roy Cooper from North Carolina, Andy Beshear from Kentucky, and Senator Mark Kelly from Arizona.