Goldman Sachs suggests that Vice President Kamala Harris’ economic plans would not significantly differ from those of President Biden if she becomes the Democratic presidential nominee. This follows Biden’s announcement that he will withdraw from the race amid increasing pressure to step back after a lackluster debate performance against Donald Trump.
In a statement released shortly after his decision, Biden endorsed Harris, who has expressed her intention to continue her campaign. She has already garnered several high-profile endorsements, including support from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs indicate that there will be no major shifts in policy should Harris take the lead.
Goldman analysts, led by chief economist Jan Hatzius, noted that they do not anticipate any meaningful changes to the Democrats’ fiscal and trade policy agenda under a Harris nomination. The changes could slightly improve the odds of a Democratic victory in the presidential race, now assessed at just under 40%.
The firm also pointed out that taxes are expected to be a primary focus in the upcoming year, especially with the impending expiration of certain personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. This will influence whoever wins the election regarding the extension of these cuts and potential new taxes.
Goldman Sachs outlined key fiscal policy forecasts under a potential Biden administration:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, up from the current 35%-37%.
– A suggested corporate tax rate increase to 28%, from the existing 21%. The firm expressed skepticism about congressional approval, estimating a more likely outcome of 25%. In contrast, Trump aims to reduce the rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate for high earners to 5%, up from 3.8%.
In the event that Harris secures the nomination, speculation about potential vice presidential candidates includes Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.