Goldman Sachs believes that Vice President Kamala Harris’ economic policies will remain similar if she becomes the Democratic presidential nominee.
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President Biden announced on Sunday that he will withdraw from the race for the Democratic nomination as pressure mounts for him to step down following a disappointing debate performance against former President Donald Trump. Shortly thereafter, Biden endorsed Harris, who confirmed her intent to run and garnered support from notable figures like California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs suggest that there won’t be significant changes in policy direction.
Goldman economists, led by Chief Economist Jan Hatzius, indicated that they do not expect a substantial shift in the Democrats’ fiscal and trade policies should Harris become the nominee. They estimate that the chances of Democrats winning the White House have seen a slight increase but still remain just below 40%.
The firm previously highlighted that upcoming fiscal policies, especially relating to taxes, will be a focal point next year due to the impending expiration of the Tax Cut and Jobs Act’s personal income tax provisions by the end of 2025. This means the outcome of the election will influence decisions regarding the continuation of the tax cuts and any potential new taxes.
In terms of fiscal policy predictions under a potential Biden victory, Goldman has outlined specific figures: they estimate a 39.6% tax rate for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%. They also project an increase in the corporate tax rate to 28%, though they express skepticism about Congress agreeing to this, suggesting a more likely rate of 25%. Additionally, Biden’s plan includes a hike in the Social Security and Medicare tax rate on incomes above $400,000, proposing an increase from 3.8% to 5%.
Should Harris become the nominee, prediction markets indicate that possible candidates for the vice presidential position include governors Shapiro of Pennsylvania, Roy Cooper from North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona.