Goldman Sachs believes that Vice President Kamala Harris’ economic policies will remain largely consistent if she becomes the Democratic presidential nominee. This assessment comes in light of President Biden’s announcement that he is stepping back from the race for the nomination after a challenging debate performance against Republican candidate Donald Trump.
Following Biden’s statement, he endorsed Harris, who expressed her commitment to running for president. She has already secured significant endorsements from figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs indicated that a transition from Biden to Harris would not lead to substantial changes in the Democratic Party’s fiscal and trade policy agenda.
“We would not expect the Democrats’ fiscal and trade policy agenda to shift meaningfully in the event that Harris is the nominee,” noted Goldman Sachs chief economist Jan Hatzius in a recent analysis. The change in leadership is expected to slightly increase the likelihood of Democrats winning the presidency, now estimated at just under 40%.
Goldman researchers have previously highlighted that taxes will be a focal point for fiscal policy as the expiration of certain provisions from the Tax Cuts and Jobs Act approaches at the end of 2025. The outcome of the upcoming election will determine whether existing tax cuts are extended or if new tax measures are implemented.
The firm provided several projections regarding fiscal policy should Biden win, including:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, up from the current 35%/37%.
– A suggested corporate tax rate of 28%, an increase from the current 21%, though Goldman expressed doubts that Congress would agree to this figure, seeing a 25% rate as more achievable. In contrast, Trump aims to lower the corporate rate to 20%.
– A proposed Social Security and Medicare tax rate of 5% on incomes exceeding $400,000, increased from the existing 3.8%.
If Harris secures the nomination, speculation about potential vice presidential candidates points to figures such as Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly.