Goldman Sachs has indicated that Kamala Harris’ economic policies are unlikely to differ significantly from those of President Biden if she becomes the Democratic presidential nominee. This comes in the wake of Biden’s announcement that he would no longer pursue the Democratic nomination, following increasing pressure for him to withdraw after a lackluster debate against Donald Trump.
Biden subsequently endorsed Vice President Harris, who affirmed her candidacy and garnered support from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the change in leadership, the analysts at Goldman Sachs believe that the Democratic Party’s fiscal and trade policies will remain relatively stable under Harris.
In a note released on Sunday, Goldman analysts led by chief economist Jan Hatzius stated that they do not expect any significant changes to the Democratic fiscal and trade policy agenda should Harris be nominated. They estimate that the chances of Democrats securing the presidency have increased slightly, now standing at just under 40%.
Previously, Goldman analysts projected that tax policy would be a major focus in the coming year, particularly as the personal income tax provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. This indicates that the incoming administration will be pivotal in deciding whether to extend the tax cuts or implement new taxes.
The firm outlined specific fiscal policy forecasts under a potential Biden administration:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35%/37%.
– A suggested corporate tax rate of 28%, up from 21%, although Goldman expressed skepticism regarding congressional approval for this rate, suggesting a 25% rate as more likely. In contrast, Donald Trump has pledged to reduce the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax rate for higher earners, proposed at 5% on incomes over $400,000, up from the current 3.8%.
Should Harris secure the nomination, speculation suggests that the vice presidential candidate could likely be Governor Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, or Arizona Senator Mark Kelly.