Goldman Sachs has analyzed the potential economic policies of Vice President Kamala Harris should she secure the Democratic presidential nomination, indicating that her plans would largely align with those of President Biden.
President Biden announced on Sunday that he would not seek the Democratic nomination, a decision prompted by increasing calls for his withdrawal following a challenging debate with former President Donald Trump. Following his announcement, Biden endorsed Harris, who expressed her intention to pursue the nomination. She has already garnered several prominent endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs suggests that this leadership change is unlikely to result in significant policy shifts.
Goldman analysts, led by chief economist Jan Hatzius, noted that they do not expect meaningful changes in the Democrats’ fiscal and trade policy agendas if Harris becomes the nominee. According to Goldman’s assessment, the likelihood of Democrats winning the presidency has risen slightly but remains below 40%.
The analysts highlighted that taxes will be a critical focus next year, especially with the impending expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. This will put pressure on the next president to decide whether to extend tax cuts or implement new taxes.
Goldman’s fiscal policy forecasts include the following projections should Biden be reelected:
– 39.6%: The proposed tax rate for individuals earning $400,000 or more, an increase from the current rate of 35%/37%.
– 28%: The proposed increase in the corporate tax rate from the current 21%, with Goldman expressing skepticism that Congress would support this, suggesting a more likely outcome of a 25% rate. In contrast, Trump has pledged to reduce the corporate tax rate to 20%.
– 5%: The proposed increase in the Social Security and Medicare tax rate on incomes exceeding $400,000, up from the current 3.8%.
Should Harris become the nominee, prediction markets indicate potential candidates for the vice presidential position, including Pennsylvania Governor Josh Shapiro, North Carolina’s Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.