Kamala Harris’ economic strategies are expected to remain largely aligned with those of President Biden if she becomes the Democratic presidential nominee, according to recent insights from Goldman Sachs.
In a significant development, President Biden announced on Sunday that he will not seek the Democratic nomination for a second term. This decision came amid increasing pressure following his underwhelming debate performance against former President Donald Trump.
Biden subsequently endorsed Vice President Kamala Harris, who has expressed her intention to continue her candidacy. She quickly garnered support from prominent figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the leadership change, experts do not anticipate substantial shifts in policy.
Goldman Sachs analysts, led by chief economist Jan Hatzius, indicated that the Democrats’ fiscal and trade policy agenda is unlikely to change significantly under a Harris nomination. They noted the odds of Democrats winning the White House slightly improved, yet remain just under 40%.
The firm highlighted that the upcoming year will focus heavily on tax policy, especially as the personal income tax provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. This means that the next administration will have to determine the extent of the tax cuts’ continuation and the potential introduction of new taxes or cuts.
Goldman Sachs outlined several key fiscal policy predictions if Biden were to win:
– A potential tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35%/37%.
– A proposed corporate tax rate hike to 28%, up from 21%, although Goldman expressed skepticism about congressional agreement, suggesting a rate of 25% as more likely. In contrast, Trump has promised to lower the corporate rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate for incomes exceeding $400,000 from 3.8% to 5%.
If Harris secures the nomination, speculation suggests that the vice-presidential candidacy could go to governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly from Arizona.