Goldman Sachs predicts that Kamala Harris’ economic policies will closely mirror those of President Biden if she secures the Democratic presidential nomination. This comes after Biden’s announcement on Sunday that he is stepping back from the race, following mounting pressure to withdraw following his performance in a debate against former President Donald Trump.
In his statement, Biden endorsed Harris, who expressed her intention to continue her candidacy. She has already received significant endorsements from notable political figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs report that there will likely be no major shifts in policy.
According to Goldman’s chief economist Jan Hatzius, the fiscal and trade policy agenda of the Democrats is expected to remain largely unchanged under Harris’ leadership. In terms of election outcomes, Goldman estimates that the Democrats’ chances of winning the White House have slightly increased but are still below 40%.
With the expiration of tax provisions tied to the Tax Cut and Jobs Act looming at the end of 2025, tax policy is anticipated to be a significant focus for whoever wins the presidency. Goldman previously indicated a potential increase in taxes next year, especially regarding high-income earners and corporate taxes.
The firm outlined key fiscal policy forecasts should Biden secure another term, which include:
– A proposed 39.6% tax rate for individuals making over $400,000, an increase from the current 35%/37%.
– A corporate tax rate proposal of 28%, up from 21%, though Goldman expresses doubt that Congress would support such an increase, suggesting a more feasible outcome could be a rate of 25%. In contrast, Trump’s campaign suggests lowering the rate to 20%.
– A proposed increase to a 5% tax rate for Social Security and Medicare on incomes exceeding $400,000, up from the current 3.8%.
If Harris advances as the nominee, speculation about potential vice presidential candidates includes Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.