Goldman Sachs anticipates that Kamala Harris’ economic policies will not differ significantly from those of President Biden if she becomes the Democratic presidential nominee.
On Sunday, President Biden announced that he would withdraw from the race for the Democratic nomination amid growing calls for him to step aside after a challenging debate performance against Republican candidate Donald Trump. Following his announcement, Biden endorsed Vice President Harris, who expressed her intention to pursue her candidacy further and received endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs assert that the policy shift will be minimal.
In a note released on Sunday, chief economist Jan Hatzius and his team stated that they do not expect significant changes in the Democrats’ fiscal and trade policy agendas if Harris becomes the nominee. They noted that this transition has slightly increased the likelihood of the Democratic Party winning the White House, estimating the chances to be just under 40%.
Goldman analysts had previously pointed out that the focal point for taxes will be in the coming year due to the impending expiration of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. This scenario means the future president will be responsible for determining the fate of tax cuts and any potential new taxes or cuts.
The firm provided several forecasts regarding fiscal policy under a potential Biden victory. The proposed tax rate for individuals earning $400,000 or more is expected to rise to 39.6% from the current rates of 35% or 37%. The corporate tax rate proposed by Biden is set to increase to 28%, up from the current 21%, though Goldman expressed skepticism that Congress would agree to this increase, suggesting a more realistic rate of 25%. Additionally, Biden’s proposed Medicare and Social Security tax rate on incomes exceeding $400,000 would rise from 3.8% to 5%.
If Harris secures the nomination, prediction markets indicate strong possibilities for governors such as Josh Shapiro from Pennsylvania, Roy Cooper from North Carolina, Andy Beshear from Kentucky, or Arizona Senator Mark Kelly to be considered for the vice presidential position.