Goldman Sachs indicates that Kamala Harris’ economic policies are unlikely to differ significantly from those of President Biden should she become the Democratic presidential nominee.
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President Biden announced on Sunday his withdrawal from the race for the Democratic nomination amidst increasing pressure following a lackluster debate performance against former President Donald Trump. Shortly after his announcement, Biden endorsed Harris, who expressed her commitment to her candidacy. Harris has since garnered notable endorsements from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, policy shifts are expected to be minimal.
Goldman analysts, led by chief economist Jan Hatzius, noted in a recent report that they do not anticipate significant changes to the Democrats’ fiscal and trade policy agendas under Harris.
Though the transition from Biden to Harris is expected to slightly improve the Democrats’ chances of securing the White House—bringing the odds to just under 40%—the path ahead may be largely defined by fiscal policy debates. Goldman forecasts project that the focus will shift to taxes next year, with the sunsetting of personal income tax provisions from the Tax Cut and Jobs Act set for the end of 2025. The winner of the upcoming election will thus play a critical role in determining the future of these tax cuts.
The report outlined specific fiscal policy forecasts, including the following:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current 35%/37%.
– An increased corporate tax rate of 28%, as suggested by Biden, rising from 21%. Goldman remains doubtful about Congress’s approval of this increase, viewing a 25% rate as more realistic, while Trump has promised to reduce the rate to 20%.
– A proposed rise in Social Security and Medicare tax rates on incomes over $400,000, increasing from 3.8% to 5%.
In the event that Harris secures the nomination, prediction markets suggest that the most likely candidates for the vice presidential slot include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.