Goldman Sachs predicts that Kamala Harris’ economic policies are unlikely to differ significantly from those of President Biden if she secures the Democratic presidential nomination.
On Sunday, President Biden announced he would not seek re-election, responding to mounting pressure following a lackluster debate performance against former President Donald Trump. He subsequently endorsed Vice President Kamala Harris, who expressed her commitment to continue her candidacy. She has already garnered support from notable figures like California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy.
Goldman analysts, led by chief economist Jan Hatzius, noted that they do not expect a substantial shift in the Democrats’ fiscal and trade policy agenda even if Harris becomes the nominee. They estimate that the chance of Democrats winning the presidency has increased slightly, yet remains below 40%.
The firm previously highlighted that taxes will be a key fiscal issue in the upcoming year, particularly with the expiration of certain tax provisions from the Tax Cut and Jobs Act slated for the end of 2025. The outcome of the election will determine whether the current cuts are extended, or if new taxes or cuts will be introduced.
Goldman provided specific forecasts for fiscal policy anticipating a Biden victory, which include a proposed tax rate of 39.6% for individuals earning over $400,000, an increase in the corporate tax rate to 28% from the current 21%, and the introduction of a 5% Social Security and Medicare tax on incomes above $400,000, up from 3.8%.
In the event that Harris secures the nomination, prediction markets suggest potential vice presidential candidates could include Pennsylvania’s Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, or Arizona’s Senator Mark Kelly.