Goldman Sachs suggests that Kamala Harris’ economic strategies will not vary significantly if she becomes the Democratic presidential nominee.
Amid growing calls for President Biden to step aside following a shaky debate performance against Donald Trump, he announced on Sunday that he would no longer seek the Democratic nomination. Shortly thereafter, Biden endorsed Vice President Kamala Harris, who expressed her intent to continue her campaign and received prominent endorsements from leaders like California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs indicated that the policy landscape would remain relatively unchanged.
Analysts, led by chief economist Jan Hatzius, noted that they do not anticipate a substantial shift in the Democrats’ fiscal and trade policy if Harris secures the nomination. Goldman posits that this transition has marginally increased the Democratic Party’s chances of winning the presidency, now estimated to be just below 40%.
As the expiration of certain tax provisions approaches the end of 2025, Goldman researchers emphasized that tax policy will become a central focus in the coming year. The upcoming election will be crucial in determining which parts of the Tax Cuts and Jobs Act may be extended or altered.
Goldman’s forecasts for fiscal policy, should Biden prevail, include a prospective tax rate of 39.6% on incomes exceeding $400,000, up from the current 35%/37%. They project a corporate tax rate of 28%, an increase from 21%, though they remain skeptical about Congress’s agreement, suggesting that a 25% rate may be more feasible, as Trump aims to lower the rate to 20%. Additionally, Biden has proposed increasing the Social Security and Medicare tax rate on high incomes to 5%, up from 3.8%.
Should Harris emerge as the nominee, speculation regarding the vice presidential pick includes governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly.