Goldman Sachs suggests that Kamala Harris’ economic policies would not vary significantly from those of President Biden if she becomes the Democratic presidential nominee.
Following Biden’s announcement on Sunday that he would withdraw from the presidential race amid increasing calls for him to step down after a lackluster debate against Donald Trump, he endorsed Harris, who affirmed her intention to continue her candidacy. She has garnered endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy.
Goldman analysts, led by chief economist Jan Hatzius, indicated that the Democrats’ fiscal and trade policy agendas are unlikely to change significantly if Harris becomes the nominee. They noted that while the shift from Biden to Harris could slightly enhance the Democrats’ chances of winning the White House, those odds remain just under 40%.
Goldman previously highlighted that tax policy will be a primary focus in the upcoming year, particularly with the impending expiration of several provisions of the Tax Cuts and Jobs Act set for the end of 2025. The outcome of the election will determine whether these cuts are extended or if new taxes or cuts are introduced.
In terms of fiscal policy projections under a potential Biden victory, some key figures include:
– 39.6%: The tax rate being considered for individuals earning $400,000 or more, an increase from the current 35%/37%.
– 28%: Biden’s proposed corporate tax rate, which would rise from the current 21%. However, Goldman expressed doubt that Congress would agree to this, suggesting a 25% rate as a more realistic outcome. Conversely, Trump has promised to reduce the rate to 20%.
– 5%: The proposed increase in the Social Security and Medicare tax rate on incomes above $400,000, from the current 3.8%.
If Harris secures the nomination, prediction markets suggest that the vice presidential slot could likely go to Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.