Goldman Sachs predicts that if Vice President Kamala Harris becomes the Democratic presidential nominee, her economic policies will largely align with those of President Biden. This assessment follows Biden’s recent announcement that he would withdraw from the race amid escalating calls for his departure after an underwhelming debate performance against former President Donald Trump.
Shortly after Biden’s statement, he endorsed Harris for the nomination. She has since expressed her commitment to running and has garnered support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs suggests that this change in leadership will not lead to significant alterations in fiscal and trade policies.
In a note released over the weekend, Goldman analysts, led by chief economist Jan Hatzius, stated that they do not expect meaningful shifts in the Democrats’ economic agenda should Harris be nominated. The likelihood of the Democratic Party securing the White House has increased slightly, now estimated at just under 40%, according to Goldman’s projections.
The firm previously indicated that fiscal policy will be heavily influenced by the expiration of the personal income tax provisions of the Tax Cuts and Jobs Act at the end of 2025. Consequently, the incoming administration will play a crucial role in determining the future of tax cuts and potential new taxes.
Goldman has outlined several key fiscal policy forecasts if Biden were to win, including:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35%/37%.
– A suggested corporate tax rate of 28%, up from 21%, although Goldman expresses skepticism about Congressional approval, anticipating a more realistic outcome around 25%. In contrast, Trump has pledged to reduce the corporate tax rate to 20%.
– An increase of Biden’s proposed Social Security and Medicare tax rate to 5% on incomes exceeding $400,000, up from 3.8%.
Should Harris secure the nomination, speculation suggests high odds for Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly as potential vice presidential picks.