Goldman Sachs predicts that Vice President Kamala Harris’ economic agenda will largely align with that of President Biden if she secures the Democratic presidential nomination. This follows Biden’s announcement that he will withdraw from the race, amid mounting pressure following a contentious debate against former President Donald Trump.
Following Biden’s statement, he endorsed Harris, who expressed her intention to continue her campaign and received backing from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, experts at Goldman Sachs believe there will not be significant shifts in policy.
Goldman analysts, led by chief economist Jan Hatzius, noted that the Democrats’ fiscal and trade policies are unlikely to change drastically if Harris becomes the nominee. Adjustments to the Democratic chances of taking the White House increased slightly but still remain under a 40% likelihood.
Goldman previously indicated that taxes will be a primary focus next year, particularly as the personal income tax provisions of the Tax Cut and Jobs Act are set to expire at the end of 2025. The outcome of the election will influence decisions regarding the extension of tax cuts and potential new taxes or cuts.
Specific forecasts for fiscal policy under a potential Biden victory include:
– A proposed 39.6% tax rate on individuals earning $400,000 or more, a rise from the current 35%/37%.
– An anticipated increase in the corporate tax rate to 28%, up from the current 21%, although Goldman expressed skepticism about Congressional approval, suggesting a 25% rate is more likely.
– A proposed tax rate increase for Social Security and Medicare on incomes over $400,000, from 3.8% to 5%.
Should Harris be nominated, speculation suggests that the vice presidential pick may likely come from figures such as Governors Shapiro (Pennsylvania), Roy Cooper (North Carolina), Andy Beshear (Kentucky), or Senator Mark Kelly (Arizona).