Goldman Sachs suggests that Vice President Kamala Harris’ economic plans would not significantly differ if she becomes the Democratic presidential nominee. This assessment follows President Biden’s announcement that he would not pursue the Democratic nomination amid increasing pressure for him to step aside after a challenging debate against former President Donald Trump.
In his statement, Biden endorsed Harris, who expressed her commitment to continue her candidacy. She has received endorsements from several notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this leadership change, analysts believe that the Democratic fiscal and trade policy agenda will largely remain unchanged.
Goldman analysts, led by chief economist Jan Hatzius, indicated that the likelihood of the Democrats securing the White House has increased slightly, but remains just below 40%. They also pointed out that taxes will be a significant fiscal issue next year, especially with the upcoming expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The winner of the election will play a crucial role in determining the future of these tax cuts.
Specifically, Goldman outlined potential fiscal policy changes that could occur if Biden were reelected. For instance, they noted a proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current 35%/37%. Additionally, Biden’s suggested corporate tax rate would rise to 28% from the current 21%, although Goldman expressed skepticism about Congress agreeing to this rate, suggesting a more feasible rate might be around 25%. Meanwhile, Biden’s plan includes a proposed 5% Social Security and Medicare tax rate on incomes exceeding $400,000, an increase from the current 3.8%.
Should Harris become the nominee, speculation arises regarding potential vice presidential candidates, with Pennsylvania’s Governor Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, and Arizona Senator Mark Kelly being among the top contenders.