Kamala Harris’ economic agenda is expected to remain largely consistent with President Biden’s plans even if she secures the Democratic presidential nomination, according to analysts at Goldman Sachs.
On Sunday, President Biden announced his decision to withdraw from the race for the Democratic nomination, following increasing pressure for him to do so after a lackluster debate performance against former President Donald Trump, the Republican candidate.
Shortly after his announcement, Biden endorsed Harris, who expressed her intention to continue her campaign. She quickly garnered support from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the transition, Goldman Sachs predicts minimal changes in policy direction.
Goldman analysts, led by chief economist Jan Hatzius, noted that “we would not expect the Democrats’ fiscal and trade policy agenda to shift meaningfully in the event that Harris is the nominee.” They assessed that the chances of the Democrats winning the White House have increased slightly but remain just under 40%.
The analysts had previously indicated that taxes are set to become a central topic of fiscal policy discussions next year, especially with the pending expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The outcome of the election will significantly influence which tax cuts are maintained and whether new tax policies are implemented.
Goldman Sachs provided several projections for fiscal policies should Biden win:
– A potential tax rate of 39.6% for individuals earning $400,000 or more, increased from the current 35%/37%.
– A proposed increase in the corporate tax rate to 28% from 21%, although the firm is skeptical Congress would agree to this, suggesting a 25% rate is more realistic. In contrast, Donald Trump has promised to lower the rate to 20%.
– A proposed hike in the Social Security and Medicare tax rate on incomes over $400,000, raising it from 3.8% to 5%.
If Harris becomes the Democratic nominee, market predictions indicate potential candidates for the vice-presidential position could include governors Shapiro (Pennsylvania), Roy Cooper (North Carolina), Andy Beshear (Kentucky), or Senator Mark Kelly (Arizona).