As the political landscape shifts, Goldman Sachs analysts suggest that Kamala Harris’ economic policies will likely mirror those of President Biden if she secures the Democratic presidential nomination. This insight follows Biden’s announcement on Sunday that he is stepping away from the race amid increasing calls for him to do so, particularly after a challenging debate against former President Donald Trump.
In his statement, Biden endorsed Vice President Harris, who has expressed her commitment to pursuing the nomination. She has already garnered support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this transition, Goldman Sachs expects little change in the Democrats’ fiscal and trade policy agenda.
Analysts from Goldman, led by chief economist Jan Hatzius, noted that while the odds of a Democratic victory in the presidential race have slightly increased with Harris as the potential nominee, they remain just under 40%. The firm had previously highlighted that tax policy will be a significant focus for whichever party wins in 2024, particularly with the expected expiration of certain provisions of the Tax Cuts and Jobs Act at the end of 2025.
Goldman Sachs outlined specific fiscal policy predictions under a Biden presidency, suggesting a tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates of 35% to 37%. They also projected a corporate tax rate of 28%, up from 21%, though expressed skepticism regarding Congressional approval, positing that a more realistic outcome might be a 25% rate. In addition, Biden proposes raising the Social Security and Medicare tax on incomes above $400,000 to 5%, up from 3.8%.
Looking ahead, should Harris become the Democratic nominee, speculation arises regarding potential vice presidential picks, with the highest odds attributed to Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly.