Goldman Sachs suggests that Kamala Harris’ economic policies will likely mirror those of President Biden if she becomes the Democratic presidential nominee.
On Sunday, President Biden announced that he is stepping down from the race for the Democratic nomination following mounting pressure after a lackluster debate performance against former President Donald Trump. Shortly after his announcement, Biden endorsed Vice President Harris, who expressed her intent to continue her candidacy. She has since garnered support from prominent figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, market analysts do not anticipate significant changes in policy as a result.
Goldman Sachs analysts, including chief economist Jan Hatzius, noted that they do not expect any major shifts in the Democrats’ fiscal and trade policy agenda should Harris secure the nomination. Their report indicated that replacing Biden with Harris marginally increased the Democratic Party’s chances of winning the White House to just below 40%.
The firm’s research pointed out that taxes are likely to become a central issue for the upcoming election, especially with the personal income tax provisions of the Tax Cuts and Jobs Act set to expire at the end of 2025, leaving the next president to determine the future of these tax cuts and the possibility of new tax measures.
Goldman Sachs provided several forecasts regarding fiscal policy if Biden were to win reelection:
– 39.6%: The proposed tax rate for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– 28%: President Biden’s suggested corporate tax rate, elevated from the current 21%, though Goldman expressed skepticism about Congress approving such a hike; a 25% rate might be more realistic. In contrast, Donald Trump, the likely Republican nominee, has pledged to reduce the corporate tax rate to 20%.
– 5%: The proposed tax rate for Social Security and Medicare on incomes exceeding $400,000, up from the current rate of 3.8%.
Should Harris become the nominee, prediction markets indicate that the vice presidential spot could likely go to candidates like Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly from Arizona.