Goldman Sachs predicts that Kamala Harris’ economic policies will not see significant changes if she becomes the Democratic presidential nominee. This comes in the wake of President Biden’s announcement that he will not pursue the Democratic nomination, following criticism of his debate performance against Republican contender Donald Trump.
After his statement, Biden endorsed Harris, who expressed her intention to run for president. She has already secured endorsements from prominent figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, the impact on policy is expected to be minimal.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that they do not foresee major changes in the Democrats’ fiscal and trade agendas should Harris become the nominee. The shift has slightly improved the Democrats’ chances of retaining the presidency, estimated at just under 40%.
In their analysis, Goldman indicated that tax policy will be a central issue in the upcoming year, particularly with the expiration of personal income tax provisions from the Tax Cuts and Jobs Act set for the end of 2025. The next president will play a crucial role in determining the fate of these tax cuts and any new tax policies.
Specific forecasts from Goldman regarding potential fiscal policies under a Biden administration include: a proposed tax rate of 39.6% on high earners making $400,000 or more, up from the current rates of 35% and 37%; a suggested corporate tax rate increase to 28%, though Goldman remains doubtful Congress would approve this, positing a 25% rate as more feasible; and a proposed rise in the Social Security and Medicare tax rate on incomes exceeding $400,000 to 5%, up from 3.8%.
If 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 of Arizona.