Goldman Sachs predicts that Kamala Harris’ economic policies would not significantly differ from those of President Biden if she becomes the Democratic presidential nominee.
On Sunday, President Biden announced he would withdraw from the Democratic nomination amid increasing pressure following a lackluster debate against Donald Trump, the former Republican president. Shortly after his announcement, Biden endorsed Vice President Harris, who expressed her intent to continue her campaign. She quickly garnered several endorsements from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts suggest this transition will not lead to substantial changes in policy.
Goldman Sachs analysts, led by chief economist Jan Hatzius, indicated that they do not expect any significant shifts in the Democratic fiscal and trade agenda should Harris become the nominee. They estimate that the likelihood of the Democrats winning the White House has increased slightly but remains under 40%.
Research from Goldman had previously highlighted that next year will see a focus on taxes, particularly with the expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. This means that the next president will play a key role in determining the future of these tax cuts and potential new taxes.
Goldman provided specific forecasts for fiscal policy under a Biden win:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% or 37%.
– A corporate tax rate of 28%, proposed by Biden, which Goldman suspects Congress may not approve, suggesting a more realistic outcome might be a 25% rate. In contrast, Trump has pledged to reduce it to 20%.
– A Social Security and Medicare tax rate of 5% on incomes above $400,000, raised from the current 3.8%.
If Harris secures the nomination, prediction markets suggest that potential running mates could include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.