Recent analysis from Goldman Sachs suggests that if Kamala Harris becomes the Democratic presidential nominee, her economic policies may not differ significantly from those of President Biden. This comes in light of President Biden’s announcement on Sunday that he is stepping back from the race for the Democratic nomination due to increasing pressure following a lackluster debate performance against Republican candidate Donald Trump.
Following Biden’s statement, he endorsed Vice President Harris, who has expressed her intention to continue her candidacy. She has garnered support from prominent figures such as California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro. However, Goldman Sachs asserts that the shift in leadership will not lead to substantial changes in policy.
Goldman analysts, led by chief economist Jan Hatzius, noted that they do not anticipate a significant shift in the Democrats’ fiscal and trade policy agenda if Harris secures the nomination. The analysts increased the odds of a Democratic win in the White House by a small margin but pegged the likelihood at just under 40%.
The firm’s earlier research indicated that taxes will be a primary focus in the coming year, especially with the impending expiration of the personal income tax provisions from the Tax Cut and Jobs Act in 2025. The winning candidate will determine the future of this tax cut and whether new taxes or cuts will be implemented.
Goldman provided several forecasts regarding potential fiscal policy under a Biden presidency, indicating that discussions may include a proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase in the corporate tax rate proposed by Biden to 28%, and an increase in the Social Security and Medicare tax rate on higher incomes.
If Harris becomes the nominee, prediction markets suggest that the vice presidential candidate could likely be among governors like Josh Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona.