Goldman Sachs predicts that if Kamala Harris becomes the Democratic presidential nominee, her economic policies will largely align with those of President Biden. This comes after Biden announced he would not seek re-election, following intense pressure for him to withdraw, especially after a challenging debate against Donald Trump.
Biden has endorsed Harris for the nomination, receiving support from influential figures like California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the leadership change, Goldman Sachs analysts, led by chief economist Jan Hatzius, believe there will not be a significant shift in the Democrats’ fiscal and trade policy agenda if Harris takes the lead.
Goldman estimates that the Democratic chances of winning the White House have increased slightly, bringing the odds to just under 40%. Furthermore, the firm highlights that taxes will be a central issue heading into next year, particularly with the impending expiration of the personal income tax provisions of the Tax Cut and Jobs Act at the end of 2025.
Goldman’s economic forecasts regarding potential fiscal policies under a Biden administration are as follows:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rate of 35%/37%.
– An increase in the corporate tax rate to 28%, from the current 21%, although Goldman expresses skepticism about Congress agreeing to this, suggesting a more likely outcome might be a 25% rate. In contrast, Trump intends to propose a reduction to 20%.
– A proposed increase in the Social Security and Medicare tax rate on incomes exceeding $400,000 from 3.8% to 5%.
If Harris secures the nomination, experts forecast potential vice presidential picks to include Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.