Goldman Sachs analysts suggest that Kamala Harris’ economic policies would not significantly diverge from those under President Biden if she becomes the Democratic presidential nominee. This follows Biden’s announcement that he would withdraw from the race, citing mounting pressure after a weak debate performance against Donald Trump.
Biden has since endorsed Harris, who has expressed her intent to proceed with her campaign. She has also garnered backing from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs anticipates that there will be continuity in fiscal and trade policies under Harris’ leadership.
In a note released on Sunday, chief economist Jan Hatzius and his team stated that the Democrats’ fiscal agenda would likely remain stable in the event of Harris being nominated. According to their analysis, the chances of a Democratic win in the upcoming presidential election have increased slightly but remain just under 40%.
Looking ahead, Goldman analysts noted that tax policy will be a critical focus in 2024, particularly with regards to the expiration of personal income tax cuts from the Tax Cut and Jobs Act at the end of 2025. This upcoming election will be pivotal in determining whether these tax cuts will be extended or if new taxes will be introduced.
Goldman’s projections for Biden’s fiscal policy include a proposed tax increase on high earners, with a potential new rate of 39.6% for individuals earning over $400,000, an increase from the current 35% or 37%. They also foresee Biden advocating for a corporate tax rate of 28%, up from 21%, although they are uncertain if Congress would agree and believe a rate of 25% is more feasible. Additionally, Biden has proposed raising the Social Security and Medicare tax rate on incomes over $400,000 from 3.8% to 5%.
Should Harris secure the nomination, speculation suggests that potential vice presidential candidates might include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.