Goldman Sachs has indicated that Kamala Harris’ economic policies would not significantly differ from those of President Biden if she becomes the Democratic presidential nominee.
As Boeing seeks to raise $19 billion amid ongoing delivery delays and worker stoppages, the political landscape in the U.S. is shifting. President Biden announced on Sunday that he would withdraw from the Democratic nomination race, following intense criticism over his recent debate performance against former President Donald Trump.
In a statement following his announcement, Biden endorsed Vice President Kamala Harris, who expressed her commitment to continuing her campaign. She subsequently received endorsements from influential figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, despite these changes, Goldman Sachs does not anticipate a significant shift in the Democratic policy agenda.
Goldman analysts, led by chief economist Jan Hatzius, stated in a recent note that they do not expect the Democrats’ fiscal and trade policy agenda to dramatically change if Harris becomes the nominee. Their analysis suggests that the likelihood of Democrats retaining the White House receives a slight boost, now estimated to be just under 40%.
Looking ahead to next year, Goldman researchers have highlighted that tax policy will be a key focus, particularly with the impending expiration of the personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. The incoming administration will be tasked with determining the fate of these cuts and any new tax measures.
Key fiscal policy forecasts under Biden’s potential victory include a proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%. Additionally, Biden’s proposal includes raising the corporate tax rate to 28%, up from 21%, though Goldman expresses skepticism about Congress agreeing to this figure, suggesting a rate of 25% is more likely. The plan also includes increasing the Social Security and Medicare tax rate for incomes exceeding $400,000 from 3.8% to 5%.
In terms of potential candidates for the vice presidency if Harris secures the nomination, prediction markets are placing the highest odds on Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.