Goldman Sachs analysts predict that if Vice President Kamala Harris becomes the Democratic presidential nominee, her economic agenda will not significantly differ from that of President Biden. This assessment follows Biden’s announcement that he will withdraw from the Democratic nomination due to mounting pressure after a poor debate performance against former President Donald Trump.
Following Biden’s statement, he endorsed Harris, who confirmed her intention to continue her campaign. She has since garnered notable endorsements from leaders such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this shift, Goldman Sachs indicates that there will be minimal changes to the Democrats’ fiscal and trade policy.
According to a note from Goldman, led by chief economist Jan Hatzius, the odds of the Democrats winning the presidency improved slightly if Harris becomes the nominee, though the likelihood remains just below 40%. The firm has previously noted that tax policy will be a primary focus next year, particularly with the impending expiration of the personal income tax changes from the Tax Cuts and Jobs Act by the end of 2025. This scenario will require the winning candidate to determine the fate of these tax cuts and other potential tax adjustments.
Goldman Sachs has shared specific fiscal policy forecasts in the event of a Biden victory:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current 35%/37%.
– An increase in the corporate tax rate to 28% from 21%, although Goldman expresses skepticism about Congress approving this and suggests 25% is more feasible. In contrast, Trump has pledged to reduce the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax on incomes over $400,000, proposed to rise to 5% from the current 3.8%.
If Harris secures the nomination, speculation arises regarding potential vice presidential candidates, with high odds favoring Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly from Arizona.