Goldman Sachs believes that Kamala Harris’ economic policies would not significantly differ from President Biden’s if she becomes the Democratic presidential nominee. This analysis follows Biden’s announcement that he is withdrawing from the race amid pressures for him to step down after a lackluster debate performance against former President Donald Trump.
Biden subsequently endorsed Vice President Harris, who has expressed her intent to continue her candidacy, garnering support from prominent figures, including California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro. However, analysts at Goldman Sachs indicate that there will likely be continuity in fiscal and trade policies under Harris.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated that they do not anticipate substantial changes in the Democrats’ economic agenda should Harris become the nominee. The shift in candidates has marginally increased the Democrats’ chances of securing the presidency, estimated to be just under 40%.
The research team at Goldman previously highlighted that tax policy will be a significant issue in the upcoming election cycle, particularly with the impending expiration of certain tax provisions set to conclude in 2025. The next president will play a crucial role in determining the future of these tax cuts.
Key forecasts from Goldman Sachs regarding potential fiscal policies under a Biden administration include:
– A proposed 39.6% tax rate on individuals earning $400,000 or more, an increase from the current 35%/37%.
– A suggested corporate tax rate of 28%, which is higher than the current 21%, although Goldman expressed skepticism about Congress approving this and proposed that a 25% rate is more likely. In contrast, Trump has pledged to reduce the rate to 20%.
– An increase in the tax rate for Social Security and Medicare on incomes exceeding $400,000 from 3.8% to 5%.
If Harris secures the nomination, analysts suggest that the vice presidential slot could likely go to governors such as Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.