Goldman Sachs predicts that vice president Kamala Harris’ economic policies will largely mirror those of President Biden if she becomes the Democratic presidential nominee. This assessment comes after Biden announced on Sunday that he would not seek re-election, following increased pressure for him to step down after a lackluster debate performance against former President Donald Trump.
Following Biden’s announcement, he endorsed Harris, who has expressed her intent to continue her candidacy. She has received high-profile endorsements, including support from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the leadership change, Goldman analysts, led by chief economist Jan Hatzius, believe there will not be significant shifts in fiscal and trade policies.
Goldman’s analysis indicates that the likelihood of Democrats winning the presidency increased slightly, but remains just below 40%. The firm also highlighted that tax policy will be a major point of focus next year, particularly with the impending expiration of certain tax cuts at the end of 2025. The next president will have to decide on extending these cuts and whether to implement any new taxes or cuts.
Specifically, Goldman forecasts that Democrats may propose raising the tax rate to 39.6% for individuals earning $400,000 or more, up from the current combined rate of 35% and 37%. They also project that Biden’s proposed corporate tax rate could rise from 21% to 28%, though they express skepticism about Congress agreeing to this figure; a 25% rate may be more realistic. Additionally, Biden’s suggested Social Security and Medicare tax rate on earnings above $400,000 could increase to 5% from the current 3.8%.
If Harris secures the nomination, prediction markets suggest that the vice presidential nominee could likely be Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.