Goldman Sachs analysts believe that Vice President Kamala Harris’ economic policies, should she become the Democratic presidential nominee, will not differ significantly from those of President Biden. This assessment comes in the wake of Biden announcing his withdrawal from the race for the Democratic nomination, following criticism over his debate performance against former President Donald Trump.
In a statement shortly after his announcement, Biden endorsed Harris, who expressed her intent to continue her candidacy and received support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs indicated that this transition in leadership is unlikely to result in major policy changes.
Goldman analysts, led by chief economist Jan Hatzius, noted that they do not anticipate any substantial shift in the Democrats’ fiscal and trade policies if Harris is nominated. Following the endorsement, the odds of a Democratic victory in the presidential race increased slightly, but they remain below 40%.
Research from Goldman Sachs highlights that next year will likely see taxes become a key focus, especially as the provisions of the Tax Cut and Jobs Act are set to expire at the end of 2025. The outcome of the election will play a crucial role in determining the fate of these tax cuts and any potential new tax policies.
The firm outlined several fiscal policy predictions under a potential Biden victory:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current 35%/37%.
– A suggested corporate tax rate of 28%, up from 21%, though Goldman expressed doubt that Congress would agree, estimating a more likely outcome would be a 25% rate. In contrast, Trump has pledged to lower it to 20%.
– An increase in the Social Security and Medicare tax rate on incomes above $400,000 from the current 3.8% to 5%.
If Harris secures the nomination, various prediction markets suggest that potential candidates for the vice presidential position may include governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.