Goldman Sachs has indicated that Vice President Kamala Harris’s economic policies are unlikely to differ significantly from those of President Biden, particularly if she secures the Democratic presidential nomination. This analysis comes in light of President Biden’s recent decision to withdraw from the race after receiving substantial pressure following his performance in a debate against former President Donald Trump.
Upon announcing his exit from the race, Biden endorsed Harris, who has expressed her determination to continue her campaign. Shortly thereafter, she garnered support from notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the leadership change, Goldman Sachs forecasts minimal shifts in the Democratic Party’s fiscal and trade policies.
Goldman’s chief economist, Jan Hatzius, stated in a note that, although Harris’s nomination may slightly increase the odds of a Democratic victory in the election—suggesting a figure just below 40%—core policy frameworks are expected to remain intact. With key tax provisions set to expire at the end of 2025, the forthcoming election will play a crucial role in determining future tax rates.
To highlight the potential fiscal developments under a continuation of Democratic leadership, Goldman outlined several projected tax changes:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current rates of 35%/37%.
– A potential increase in the corporate tax rate to 28%, although more realistic estimates suggest a rate around 25%.
– An increase in the Social Security and Medicare tax rate for high earners, proposed to rise to 5% from the current 3.8%.
In the event of Harris’s nomination, potential candidates for the vice presidential slot appear to include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.
In summary, while the Democratic landscape is shifting with Kamala Harris positioned to lead the party, analysts predict continuity in key economic policies. This suggests that voters can expect a familiar approach to fiscal matters that aligns with Biden’s administration, ensuring stability as the party navigates through the upcoming election cycle. There’s hope that a Harris nomination could invigorate the party’s base and bring fresh perspectives on economic growth, especially in terms of addressing the upcoming tax policy changes that may impact many Americans.
Overall, the political climate remains dynamic, and with Harris’s leadership, there is potential for innovative solutions within the Democratic framework.