Goldman Sachs has indicated that if Kamala Harris becomes the Democratic presidential nominee, her economic plans will not differ significantly from those of President Biden. This assessment follows Biden’s announcement that he is stepping aside from the Democratic nomination race due to increasing pressure after a lackluster debate performance against Republican candidate Donald Trump.
In a statement, Biden endorsed Vice President Harris, who has expressed her commitment to run for the presidency. She has gained several notable endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman analysts, led by chief economist Jan Hatzius, suggest that the Democratic agenda on fiscal and trade policies will remain largely unchanged if Harris leads the ticket.
The transition from Biden to Harris has marginally improved the Democrats’ chances of retaining the White House, now estimated at just under 40%, according to Goldman. The firm has previously noted that tax policy will be a significant focus in the upcoming year, particularly due to the impending expiration of personal income tax provisions established under the Tax Cuts and Jobs Act at the end of 2025. The next president will have the authority to decide on the future of these cuts and any potential new taxes.
Goldman Sachs provided specific forecasts regarding fiscal policy under a potential Biden victory:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A proposed increase in the corporate tax rate to 28%, up from 21%, though Goldman expressed skepticism about this being approved by Congress, suggesting that a 25% rate would be more likely. In contrast, Donald Trump, the presumed Republican nominee, has pledged to lower the corporate tax rate to 20%.
– A proposed rise in the Social Security and Medicare tax rate to 5% on incomes over $400,000, up from the current 3.8%.
If Harris secures the nomination, prediction markets suggest that the leading candidates for the vice presidency could include Governors Shapiro and Roy Cooper from North Carolina, Andy Beshear from Kentucky, or Senator Mark Kelly of Arizona.