Goldman Sachs analysts predict that Kamala Harris’ economic policies will largely mirror those of President Biden if she becomes the Democratic presidential nominee. This analysis follows President Biden’s recent announcement that he will not seek re-election, which comes after mounting pressure for him to step aside amid concerns over his debate performance against former President Donald Trump.
Biden has endorsed Vice President Harris, who has expressed her intention to continue her campaign and has secured endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs suggests that this transition will not lead to significant changes in policy direction.
In their analysis, chief economist Jan Hatzius noted that they do not expect any substantial alterations in the Democrats’ fiscal and trade policies should Harris become the nominee. They estimate that the likelihood of a Democratic win in the 2024 presidential election has increased slightly but remains below 40%.
Goldman Sachs had previously indicated that tax policies would be a key focus in 2024, particularly with the impending expiration of the Tax Cut and Jobs Act’s personal income tax provisions at the end of 2025. The future nominee will play a crucial role in determining the fate of these tax cuts and potential new taxes.
The firm’s specific forecasts for fiscal policy under a potential Biden victory are as follows: a tax rate of 39.6% on individuals earning $400,000 or more; an increased corporate tax rate proposal of 28%, though a compromise at 25% is deemed more realistic; and a 5% tax rate on incomes exceeding $400,000 for Social Security and Medicare, up from the current 3.8%.
If Harris secures the nomination, prediction markets suggest strong candidates for the vice presidential slot could include Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.