Goldman Sachs anticipates that Vice President Kamala Harris’ economic policies would not significantly diverge from those of President Biden if she secures the Democratic presidential nomination. This analysis follows President Biden’s recent announcement that he would withdraw from the race, a decision spurred by increasing calls for him to step aside following a challenging debate performance against former President Donald Trump.
In a statement, Biden endorsed Harris, who has expressed her commitment to continuing her candidacy. She has already garnered notable endorsements from figures like California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, according to Goldman analysts, any policy shifts under a Harris nomination are expected to be minimal.
Goldman Sachs estimates that the probability of a Democratic victory in the upcoming presidential election has slightly improved but still sits below 40%. The firm also highlighted that the political landscape is primed for significant fiscal decisions, particularly with the impending expiration of key provisions from the Tax Cuts and Jobs Act at the end of 2025. This will require the next administration to determine the fate of tax cuts and possible new tax policies.
Among the specific fiscal forecasts, Goldman predicts a potential increase in tax rates. They suggest a 39.6% tax rate for individuals earning over $400,000, an increase from the current rates of 35% and 37%. Additionally, they foresee plans for a corporate tax rate rising to 28%, although they express skepticism regarding Congressional approval, presenting a 25% rate as a more feasible outcome. Furthermore, they note a proposed increase to a 5% rate for Social Security and Medicare taxes on high earners, up from 3.8%.
If Harris becomes the Democratic nominee, various political analysts see a strong likelihood that potential vice presidential candidates could include Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.