Goldman Sachs analysts have weighed in on the potential economic landscape should Kamala Harris become the Democratic presidential nominee. Following President Biden’s announcement that he will not seek re-election, many, including several prominent governors, have rallied behind Harris, indicating her viability as the leading candidate for the Democrats.
Despite this transition in leadership, Goldman Sachs does not foresee a significant change in the Democratic party’s fiscal and trade policy agenda if Harris were to take the reins. According to chief economist Jan Hatzius and his team, the fundamental economic strategies are likely to remain consistent, which might suggest continuity for businesses and investors.
Their analysis pointed out that while the nomination could slightly improve Democrats’ chances of winning the White House—now estimated to be just below 40%—the overarching themes of fiscal policy would largely be retained. Significant tax reforms are on the horizon, especially with the impending expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. This means that the incoming administration will have critical tax decisions to make.
Goldman’s forecasts include the possibility of raising tax rates for high earners to 39.6% from the current rates, an increase in corporate tax rates to as high as 28%, and adjustments to Social Security and Medicare taxes. Such measures indicate that the economic implications of the upcoming election could be substantial.
In terms of running mates, should Harris secure the nomination, there are several contenders being eyed for the vice presidential slot, including notable state governors and senators, demonstrating a strong bench of potential allies.
In summary, while the political landscape shifts with Biden stepping back, the economic framework that supports the Democratic agenda remains stable, with potential implications for tax policies that would impact higher earners and corporations specifically. This scenario may provide a sense of stability and predictability, which can be reassuring for investors and the markets as the country approaches a pivotal election year. The groundwork laid now could lead to a more cohesive strategy moving forward, regardless of changes in leadership.