Goldman Sachs indicates that Kamala Harris’ economic policies are unlikely to differ significantly from President Biden’s if she becomes the Democratic presidential nominee.
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In a surprising announcement on Sunday, President Biden withdrew from the race for the Democratic nomination amidst escalating pressures following a subpar debate performance against Republican candidate Donald Trump. Shortly after his announcement, he endorsed Vice President Kamala Harris, who expressed her commitment to continue her candidacy. She has already received notable endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts believe that this shift will not result in major changes to the party’s policies.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that they do not expect a significant change in the Democrats’ fiscal and trade policies if Harris secures the nomination. They project that the odds of the Democrats winning the presidency have improved slightly to just below 40%.
Previous analyses by Goldman indicate that tax policy will be a primary concern in the upcoming year, as the personal income tax benefits from the Tax Cuts and Jobs Act are set to expire at the end of 2025. The outcome of the election will determine whether these cuts are extended or if new taxes are introduced.
Here are some key fiscal policy forecasts based on a potential Biden victory:
– 39.6%: Proposed tax rate for individuals earning $400,000 or more, an increase from the current 35%/37%.
– 28%: Proposed corporate tax rate under Biden’s plan, up from 21%. However, Goldman expressed skepticism about Congress agreeing to this, suggesting a more realistic outcome might be a rate of 25%. In contrast, Trump has pledged to reduce the corporate tax rate to 20%.
– 5%: Proposed tax rate for Social Security and Medicare on incomes exceeding $400,000, increased from the existing 3.8%.
Should Harris become the nominee, prediction markets suggest that the most likely candidates for the vice presidential slot could include governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.