Goldman Sachs anticipates that Kamala Harris’ economic plans will largely mirror those of President Biden if she becomes the Democratic presidential nominee. This assessment follows Biden’s announcement on Sunday that he is stepping aside from the race, amid increasing pressure after a challenging debate performance against former President Donald Trump.
Following this announcement, Biden endorsed Harris, who expressed her intention to proceed with her candidacy. She has also received significant endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, experts believe that this transition in leadership will not lead to substantial changes in policy.
Goldman analysts, led by chief economist Jan Hatzius, indicated in a note that they do not foresee a significant shift in the Democrats’ fiscal and trade policy agenda if Harris secures the nomination. The odds of Democrats winning the White House have slightly increased, yet remain below 40%, according to their estimates.
Goldman also noted that tax policy will be a central focus in the next year’s fiscal discussions, particularly as certain provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. The outcome of the upcoming election will heavily influence decisions on the potential extension of tax cuts and the introduction of new taxes or cuts.
Key forecasts from Goldman regarding fiscal policy under a potential Biden victory include:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from current rates of 35%/37%.
– A suggested corporate tax rate of 28%, rising from the current 21%, although they express skepticism that Congress would approve this, considering a 25% rate to be more likely. In contrast, Trump has promised to reduce the corporate tax rate to 20%.
– An increase in the tax rate for Social Security and Medicare on incomes over $400,000 to 5%, up from the current 3.8%.
Should Harris become the nominee, there is speculation about possible vice presidential candidates, including Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly from Arizona.