In an analysis of potential changes to economic policies, Goldman Sachs asserts that Vice President Kamala Harris’ economic strategies are unlikely to differ significantly from those of President Biden if she secures the Democratic presidential nomination.
On Sunday, President Biden announced his withdrawal from the race for the Democratic nomination, following calls for him to step aside after a lackluster debate performance against former President Donald Trump. In a subsequent statement, Biden endorsed Harris for the nomination, who expressed her intention to proceed with her candidacy and received support from several prominent figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that a change in leadership would likely not lead to a substantial shift in the Democratic Party’s fiscal and trade policy agenda.
Goldman Sachs indicated that the likelihood of a Democratic victory in the white house increased slightly with Harris as a candidate, estimating the odds to be just below 40%. They noted that the expiration of certain tax provisions from the Tax Cut and Jobs Act at the end of 2025 would be a major focus for future fiscal policy, making tax decisions a priority for the upcoming administration, regardless of who wins.
The firm also projected various fiscal policy outcomes under a potential Biden administration. They suggested a potential tax rate increase to 39.6% on individuals earning over $400,000, an increase in the corporate tax rate to 28% with skepticism regarding Congress’ approval of this rate, and a raise in the Social Security and Medicare tax rate on high earners to 5%.
If Harris does emerge as the Democratic nominee, analysts predict a strong chance of her selecting one of several governors or Senator Mark Kelly from Arizona for the vice presidential position.