Goldman Sachs has indicated that if Kamala Harris becomes the Democratic presidential nominee, her economic plans will not significantly differ from those of President Biden. This comes as President Biden announced he would not seek re-election amid increasing pressure following a disappointing debate against Donald Trump.
In a statement, Biden endorsed Harris, who has expressed her intention to pursue the presidency and garnered support from prominent figures such as California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro. However, Goldman analysts, led by chief economist Jan Hatzius, predict that the Democratic fiscal and trade policy agenda is unlikely to change much with Harris at the helm.
Goldman estimates that the odds of the Democratic Party securing the White House have slightly improved, now standing under 40%. The firm previously highlighted that tax policy will become a central issue following the scheduled expiration of certain provisions of the Tax Cut and Jobs Act in 2025. The incoming administration will have to decide on extending the tax cuts and whether to impose new taxes.
Goldman’s projections for potential fiscal policies under a Biden victory include a proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rate of 35% to 37%. They anticipate Biden’s corporate tax proposal may raise the rate to 28%, though they express skepticism about Congress agreeing to this, deeming a 25% rate more realistic. Additionally, Biden has proposed increasing the Social Security and Medicare tax rate on high earners to 5%, up from 3.8%.
If Harris becomes the nominee, speculation is rising about potential vice presidential candidates, with governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly seen as front runners.