Goldman Sachs predicts that Kamala Harris’ economic policies will not significantly differ from those of President Biden, should she become the Democratic presidential nominee. This follows Biden’s announcement that he is withdrawing from the race after facing intense pressure and criticism regarding his recent debate performance against former President Donald Trump.
In a statement following his withdrawal, Biden endorsed Harris, who subsequently confirmed her intention to pursue the nomination. She has already garnered support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts from Goldman Sachs indicate that the shift in leadership is unlikely to lead to major changes in policy.
Goldman Sachs, led by chief economist Jan Hatzius, noted that the fiscal and trade policy agenda for the Democrats is expected to remain stable even if Harris becomes the nominee. They have assessed that the chances of Democrats maintaining the White House have increased slightly, but remain just under 40%.
Future fiscal policy will largely depend on the expiration of tax provisions from the Tax Cuts and Jobs Act, which is set to end in 2025. Consequently, the incoming administration will face decisions regarding the extension of tax cuts as well as potential new taxes or cuts.
Goldman’s projections for tax policy under a Biden administration include:
– A proposed tax rate of 39.6% for individuals earning over $400,000, an increase from the current rates of 35% and 37%.
– A suggested corporate tax rate of 28%, up from the current 21%, though analysts are skeptical that Congress will agree to this and suggest a more likely rate of 25%. In contrast, Trump has pledged to reduce the rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes above $400,000, rising from 3.8% to 5%.
If Harris secures the nomination, speculation arises regarding potential vice presidential candidates, with the most likely being Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.