Goldman Sachs suggests that Vice President Kamala Harris’ economic policies will not significantly differ from those of President Biden if she becomes the Democratic presidential nominee.
Following calls for him to step aside after a rocky debate performance against former President Donald Trump, President Biden announced Sunday that he would not seek reelection and endorsed Harris, who has confirmed her candidacy. She has already received endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, experts believe that there will be little change in the Democratic policy agenda.
Goldman analysts, under the leadership of chief economist Jan Hatzius, indicated in a statement that they do not anticipate a major shift in the Democrats’ fiscal and trade policies if Harris secures the nomination. They noted that Harris taking the reins would raise the chances of a Democratic victory in the upcoming election by only a few percentage points, keeping the likelihood under 40%.
Goldman Sachs also highlighted that tax policy will be a crucial focus next year, given that the personal income tax provisions from the Tax Cuts and Jobs Act are set to expire at the end of 2025. Therefore, the next president will play a vital role in determining whether to extend tax cuts or introduce new taxes.
Analysts provided specific predictions regarding fiscal policy under a potential Biden victory. They forecast a tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35%/37%. They project a proposed corporate tax rate of 28%, which they consider unlikely to receive congressional approval, leading to a more plausible rate of 25%. Additionally, they anticipate a proposed Social Security and Medicare tax rate of 5% on incomes exceeding $400,000, up from the current 3.8%.
If Harris emerges as the nominee, various prediction markets suggest that the vice presidential candidates could include Pennsylvania Governor Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.