Goldman Sachs predicts that Kamala Harris’ economic policies would not differ significantly from Joe Biden’s if she becomes the Democratic presidential nominee.
On Sunday, President Biden announced that he would withdraw from the race for the Democratic nomination following intense pressure for him to step aside after a lackluster debate performance against former President Donald Trump. Shortly after, Biden endorsed Vice President Harris, who expressed her intention to continue her campaign. She garnered support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the transition, experts believe there will be little change in policy direction.
Goldman Sachs analysts, led by chief economist Jan Hatzius, indicated that they do not expect any significant alterations to the Democrats’ fiscal and trade policy agenda if Harris secures the nomination. The likelihood of a Democratic victory in the presidential race slightly increased to just under 40%, according to bank projections.
As taxes are anticipated to become a primary focus next year, with the expiration of personal income tax provisions from the Tax Cuts and Jobs Act approaching in 2025, the next administration will need to determine the future of these cuts and consider any new taxes or financial incentives.
Goldman Sachs provided several key projections for fiscal policy under a Biden administration. They include a proposed tax rate of 39.6% for individuals earning over $400,000 (up from current rates of 35%-37%), a corporate tax rate increase to 28% (from 21%), though they are doubtful Congress will agree and suggest a more likely outcome of 25%. Additionally, Biden proposed raising the Social Security and Medicare tax on incomes above $400,000 to 5% from 3.8%.
Should Harris become the nominee, various political analysts believe the top contenders for her vice presidential pick could include governors Shapiro, Roy Cooper from North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.