Kamala Harris’ economic policies are expected to remain largely unchanged if she secures the Democratic presidential nomination, according to Goldman Sachs.
This observation comes in light of President Biden’s recent announcement that he is withdrawing from the race for the Democratic nomination, following increased pressure for him to step aside after a subpar debate performance against former President Donald Trump. In his statement, Biden endorsed Vice President Harris, who has expressed her determination to proceed with her candidacy, garnering endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs analysts believe that this transition will not significantly alter the party’s policy direction.
Goldman analysts, led by chief economist Jan Hatzius, indicated that they do not anticipate any meaningful changes to the Democrats’ fiscal and trade policy agenda should Harris become the nominee. They reported an uptick in the likelihood of Democrats clinching the White House, now slightly below 40%.
Previously, Goldman researchers pointed out that taxes will be a critical fiscal issue next year, especially as the personal income tax provisions from the Tax Cut and Jobs Act are set to expire at the end of 2025. The winner of the upcoming election will be responsible for determining the extent to which these tax cuts are continued or altered.
Among Goldman’s projections for fiscal policy under a potential Biden victory are:
– 39.6%: Proposed tax rate for individuals earning $400,000 or more, an increase from the current rates of 35%/37%.
– 28%: Suggested corporate tax rate by Biden, up from the existing 21%. Goldman expressed skepticism that Congress would approve this rate, suggesting a more realistic outcome would be around 25% (in contrast, Republican nominee Donald Trump aims to reduce the rate to 20%).
– 5%: Proposed tax rate on Social Security and Medicare for incomes exceeding $400,000, up from the current 3.8%.
If Harris emerges as the Democratic nominee, prediction markets suggest that the vice presidential nomination may go to governors including Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly from Arizona.