Goldman Sachs has assessed that Vice President Kamala Harris’ economic policies would not significantly differ from those of President Joe Biden if she secures the Democratic presidential nomination. This conclusion comes in the wake of Biden’s announcement on Sunday to withdraw from the race amidst mounting pressure following his debate performance against Republican contender Donald Trump.
Shortly after announcing his withdrawal, Biden endorsed Harris, who confirmed her intention to run for the presidency. She quickly garnered support from high-profile figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs anticipates that there will be little change in the party’s policy direction.
Goldman analysts, led by chief economist Jan Hatzius, noted in a report that they do not expect significant changes to the Democrats’ fiscal and trade policy agenda should Harris become the nominee. They estimated that the likelihood of a Democratic victory in the upcoming presidential election has slightly increased but remains just below 40%.
The firm previously indicated that taxes will be a central theme in fiscal discussions next year, especially with the scheduled expiration of certain provisions of the Tax Cuts and Jobs Act at the end of 2025. Consequently, the next administration will determine whether to extend these cuts or implement new taxes.
Goldman provided specific forecasts for fiscal policy in the event of a Biden victory, highlighting several key figures:
– 39.6%: Proposed tax rate for individuals earning $400,000 or more, an increase from the current rates of 35% or 37%.
– 28%: Suggested corporate tax rate by President Biden, up from the current 21%, although Goldman expressed skepticism about Congress approving such a rate. They consider a 25% rate more likely, especially as Trump proposes lowering it to 20%.
– 5%: Proposed increase in the Social Security and Medicare tax rate on incomes over $400,000, up from 3.8%.
If Harris becomes the nominee, speculation suggests that the vice presidential slot could go to Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.