Goldman Sachs has indicated that if Kamala Harris becomes the Democratic presidential nominee, her economic plans will likely align closely with those of President Biden. This comes after Biden announced on Sunday that he is withdrawing his candidacy amid mounting pressure following a lackluster debate performance against former President Donald Trump.
In his statement, Biden endorsed Vice President Harris, who expressed her intention to continue her campaign. Harris has already garnered support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, despite this shift in leadership, Goldman analysts, led by chief economist Jan Hatzius, suggest there won’t be significant changes to the Democrats’ fiscal and trade policy agenda.
Goldman’s analysis suggests that the chances of Democrats winning the presidency have marginally improved, with current odds hovering slightly under 40%. The firm also projects that tax policy is set to become a focal point in the coming year, particularly with the expiration of individual income tax provisions from the Tax Cuts and Jobs Act by the end of 2025. The next administration will have to determine the extent of any tax changes, including possible extensions of the current cuts or the introduction of new taxes.
Key fiscal policy forecasts from Goldman for a potential Biden reelection include a proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35%/37%. Additionally, Biden has proposed raising the corporate tax rate to 28% from the current 21%, although Goldman raises doubts about Congress agreeing to this and suggests a more realistic rate might be 25%. Biden is also advocating for a rise in the Social Security and Medicare tax rate on incomes exceeding $400,000 from 3.8% to 5%.
If Harris secures the nomination, speculation regarding her running mate points to Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly as top contenders for the vice presidential position.