Goldman Sachs anticipates that Kamala Harris’ economic agenda will not significantly differ if she becomes the Democratic presidential nominee.
On Sunday, President Biden announced that he would withdraw from the race for the Democratic nomination amid increasing pressure following a poor debate performance against former President Donald Trump. Shortly thereafter, Biden endorsed Vice President Harris, who expressed her intent to continue her candidacy and secured notable endorsements from figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, the expected policy changes under Harris are not anticipated to be drastic.
Goldman Sachs analysts, led by Chief Economist Jan Hatzius, stated that they do not foresee any major shifts in the Democrats’ fiscal and trade policy if Harris is nominated. The firm’s analysis indicates that the likelihood of Democrats winning the White House has slightly increased but remains below 40 percent.
The analysts noted that taxes will become a primary fiscal concern next year, particularly with the impending expiration of the Tax Cuts and Jobs Act’s personal income tax provisions at the end of 2025. This situation means that the incoming administration, whoever that may be, will determine the future of these tax cuts and any potential new taxes.
Goldman Sachs provided several key projections for fiscal policy in the event of a Biden victory:
– 39.6%: The proposed tax rate under consideration for individuals earning $400,000 or more, an increase from the current 35%/37%.
– 28%: President Biden’s suggested corporate tax rate, rising from the present 21%, though Goldman expresses skepticism that Congress would agree, predicting a more likely outcome of a 25% rate.
– 5%: The proposed increase in the Social Security and Medicare tax rate on incomes exceeding $400,000, up from the current 3.8%.
Should Harris become the nominee, prediction markets suggest that the vice presidential nomination is most likely to go to governors such as Josh Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona.