Goldman Sachs analysts indicate that if Kamala Harris becomes the Democratic presidential nominee, her economic policies are unlikely to differ significantly from those of President Biden. This perspective comes in light of Biden’s recent decision to withdraw from the race following pressure to step down after a lackluster debate performance against former President Donald Trump.
In a statement, Biden formally endorsed Vice President Harris, who has affirmed her intention to run. She has garnered notable endorsements from prominent political figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite these changes, Goldman Sachs believes that there will be minimal shifts in the Democrats’ fiscal and trade policy agenda.
Goldman analysts, led by chief economist Jan Hatzius, noted that the chances of a Democratic victory in the upcoming presidential election have increased slightly but remain under 40%. The firm anticipates that tax policy will take center stage next year, particularly as provisions from the Tax Cut and Jobs Act are set to expire at the end of 2025. The victor of the election will influence whether these tax cuts are extended or if new taxes will be implemented.
Some projections for fiscal policy in the event of a Biden win include a potential tax rate of 39.6% for individuals earning $400,000 or more, an increase in the corporate tax rate to 28%, and a rise in the Social Security and Medicare tax rate to 5% for high earners. If Harris secures the nomination, leading candidates for the vice presidential slot include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.