Goldman Sachs has indicated that if Kamala Harris becomes the Democratic presidential nominee, her economic plans will not differ significantly from those of President Biden. This analysis comes following Biden’s announcement that he would withdraw from the race for the Democratic nomination, amid growing pressure after a less-than-ideal debate performance against former President Donald Trump.
Shortly after Biden’s statement, he endorsed Harris, who expressed her intent to proceed with her candidacy. She has since garnered several prominent endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, significant shifts in policy are not expected.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that they do not anticipate a major change in the Democrats’ fiscal and trade agenda if Harris becomes the nominee. They projected that the likelihood of the Democrats securing the White House has increased slightly, though it remains just under 40%.
The firm emphasized that taxes will likely become a central fiscal issue next year, particularly with the impending expiration of certain personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The next administration will face decisions regarding the extension of these cuts and the introduction of new taxes or cuts.
Regarding fiscal policy under a potential Biden win, Goldman Sachs provided several forecasts. They suggested a potential tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates. They also noted Biden’s proposal to raise the corporate tax rate from 21% to 28%, but expressed skepticism that Congress would agree, suggesting a 25% rate might be more feasible. Additionally, Biden has proposed a 5% tax rate on incomes above $400,000 for Social Security and Medicare, up from 3.8%.
Should Harris secure the nomination, prediction markets highlight governors such as Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly as top contenders for the vice presidential position.