In a recent analysis, Goldman Sachs has indicated that if Vice President Kamala Harris becomes the Democratic presidential nominee, her economic policies would not differ significantly from those of President Biden. This comes in the wake of Biden’s decision to withdraw from the race following criticism over his debate performance against former President Donald Trump.
Following his announcement, Biden endorsed Harris, who confirmed her candidacy and garnered support from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this shift in leadership, analysts believe there will be little change in the Democratic Party’s fiscal and trade policies.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated that the Democrats’ fiscal and trade policy agenda is unlikely to shift considerably with Harris as the nominee. They estimated that the odds of Democrats winning the presidency have increased slightly but remain below 40%.
Looking ahead, Goldman Sachs notes a focus on taxes, particularly as the personal income tax provisions from the Tax Cut and Jobs Act are set to expire at the end of 2025. This will necessitate decisions on extending those cuts and the potential introduction of new taxes or cuts.
The firm provided specific projections for fiscal policy should Biden win, including:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rate of 35%/37%.
– A corporate tax rate proposal of 28%, up from 21%, although Goldman expressed skepticism that Congress would agree to this, suggesting a 25% rate is more realistic. In contrast, Trump has promised to lower the corporate rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes exceeding $400,000 to 5%, up from 3.8%.
Additionally, should Harris secure the nomination, there are predictions regarding potential vice presidential candidates, with governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly being considered the top contenders.