Goldman Sachs has indicated that if Kamala Harris becomes the Democratic presidential nominee, her economic policies are unlikely to differ significantly from those of President Biden.
On Sunday, President Biden announced he would not pursue the Democratic nomination amid increasing pressure for him to step down following a lackluster debate performance against former President Donald Trump. Shortly thereafter, Biden endorsed Vice President Harris, who confirmed her intention to run and secured several notable endorsements from figures such as California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro. However, Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that if Harris were to become the nominee, the Democratic fiscal and trade policy agenda would not see substantial changes.
Goldman Sachs suggests that the shift in leadership raises the likelihood of Democratic success in the presidential election by a few points, although their estimates put those odds just under 40%. Analysts previously highlighted that taxes will be a significant focus in the coming year, particularly with some provisions of the Tax Cut and Jobs Act set to expire at the end of 2025. The next president will face decisions about extending these cuts or implementing new taxes.
The firm provided several fiscal policy forecasts should Biden secure another term:
– 39.6%: The proposed tax rate for individuals earning $400,000 or more, an increase from the current rate of 35%/37%.
– 28%: President Biden’s suggested corporate tax rate, up from the current 21%. Goldman expressed skepticism about Congress agreeing to this, proposing a more feasible outcome of a 25% rate.
– 5%: The proposed increase in the Social Security and Medicare tax rate on incomes over $400,000, raised from the current 3.8%.
If Harris is confirmed as the nominee, there is speculation regarding her choice for a running mate, with the highest probabilities assigned to Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.