Goldman Sachs predicts that Kamala Harris’ economic policies would not significantly differ from those of President Biden if she becomes the Democratic presidential nominee.
In a notable political shift, President Biden announced on Sunday that he is stepping away from the presidential race following increasing pressure for him to withdraw after a lackluster debate performance against former President Donald Trump. Shortly after, he endorsed Vice President Kamala Harris, who has expressed her intention to continue her candidacy and has received support from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts believe that the transition from Biden to Harris will not greatly alter the Democratic Party’s policy direction.
Goldman analysts, led by chief economist Jan Hatzius, indicated in a report that they do not expect substantial changes to the Democrats’ fiscal and trade policy agenda should Harris become the nominee. They also mentioned that this change slightly increases the likelihood of a Democratic victory in the presidential election, currently estimated at just below 40%.
Moreover, the firm highlighted that next year, taxes will be a critical focus, particularly with the impending expiration of certain provisions of the Tax Cuts and Jobs Act by the end of 2025. This will place pressure on whoever wins the election regarding potential extensions and modifications to tax rates.
Some key projections concerning fiscal policy should Biden win include:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A corporate tax rate proposal from Biden of 28%, up from the current 21%. Goldman analysts expressed skepticism about Congress approving this rate, suggesting that a more realistic outcome might be around 25%. In contrast, Trump has committed to lowering the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes above $400,000 proposed by Biden, moving from 3.8% to 5%.
If Harris secures the nomination, speculation suggests that the vice presidential candidate could likely be one of several governors, including Pennsylvania’s Josh Shapiro, Roy Cooper from North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.