Goldman Sachs has suggested that Vice President Kamala Harris’ economic policies would not significantly differ from those of President Biden if she were to become the Democratic presidential nominee. This outlook follows Biden’s announcement on Sunday that he would withdraw from the race for the nomination, amid increasing calls for him to step aside following a poor debate performance against Donald Trump.
After Biden’s statement, he endorsed Harris, who expressed her intention to continue her campaign and received support from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman analysts, led by chief economist Jan Hatzius, indicated that the Democratic Party’s fiscal and trade policy agenda would likely remain unchanged even if Harris assumes the nomination.
Goldman Sachs noted that this leadership change increased the Democrats’ chances of securing the presidency by only a few points, leaving those odds just below 40%. The firm’s earlier analysis indicated a focus on taxes in the upcoming year, particularly due to the expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The outcome of the election will influence decisions regarding the continuity of these tax cuts and potential new taxes or reductions.
Specific forecasts concerning fiscal policy, should Biden secure a victory, included a proposed tax rate of 39.6% for individuals earning over $400,000, an increase from the current rates of 35% or 37%. Additionally, Biden has suggested a corporate tax rate of 28%, up from the current 21%, although Goldman expressed doubts that Congress would agree, predicting a more feasible rate of 25%. Furthermore, Biden plans to raise the Social Security and Medicare tax rate for high earners from 3.8% to 5%.
If Harris secures the nomination, speculation surrounds potential vice presidential candidates, with the highest odds favoring Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.