Goldman Sachs predicts that if Vice President Kamala Harris becomes the Democratic presidential nominee, her economic policies are unlikely to differ significantly from those of President Biden. This assessment follows Biden’s recent announcement that he will not seek re-election, which came after increased pressure for him to step down due to a lackluster debate performance against former President Donald Trump.
Following Biden’s statement, he endorsed Harris, who expressed her intent to continue her candidacy, garnering several prominent endorsements, including support from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs, led by Chief Economist Jan Hatzius, believe that there will be minimal changes to the Democrats’ fiscal and trade policy agenda if Harris wins the nomination.
Goldman has slightly increased the likelihood of a Democratic victory in the presidential race, estimating the odds at just below 40%. They noted that taxes will be a significant issue next year, especially with certain provisions of the Tax Cuts and Jobs Act set to expire at the end of 2025. This means the winning candidate will have substantial influence over tax policy decisions.
Their economic forecasts include:
– A proposed tax rate increase to 39.6% for individuals earning $400,000 or more, up from the current rates of 35% to 37%.
– A suggested rise in the corporate tax rate to 28% from the current 21%, although Goldman expresses skepticism that Congress would agree to this and anticipates a more realistic outcome of 25%. In contrast, Trump has promised to reduce the rate to 20%.
– An increase in the Social Security and Medicare tax rate on high earners to 5%, up from 3.8%.
If Harris is nominated, betting markets suggest that notable contenders for the vice presidential slot could include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly from Arizona.