Kamala Harris’ economic policies are expected to remain largely consistent if she becomes the Democratic presidential nominee, according to analysts at Goldman Sachs.
President Biden announced his withdrawal from the race for the Democratic nomination following significant pressure to step aside after a disappointing debate performance against former President Donald Trump. In his statement, Biden endorsed Vice President Harris, who has confirmed her intention to proceed with her campaign and has garnered endorsements from prominent figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, the shift in candidacy is not anticipated to lead to significant changes in policy.
Goldman Sachs analysts, led by Chief Economist Jan Hatzius, indicated in a note that they do not expect a substantial change in the Democrats’ fiscal and trade policy agenda if Harris becomes the nominee. While Harris replacing Biden may slightly increase the Democrats’ chances of securing the presidency, Goldman estimates those odds remain just below 40%.
The firm has also pointed out that taxes will likely become a central fiscal focus heading into next year, particularly as the personal income tax provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. This means that the next administration will need to determine the extent to which tax cuts are continued or whether new taxes will be implemented.
Goldman’s forecasts for fiscal policy under a potential Biden victory include:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35%/37%.
– An increase in the corporate tax rate to 28% from 21%, although Goldman expresses doubts about Congress agreeing to such a hike, suggesting a more likely outcome of a 25% rate. In contrast, Donald Trump, the presumptive Republican nominee, has pledged to reduce the corporate tax rate to 20%.
– A proposed increase in the tax rate for Social Security and Medicare on incomes exceeding $400,000 to 5%, up from 3.8%.
If Harris secures the nomination, speculation indicates that potential vice presidential candidates may include Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona.