Goldman Sachs anticipates that Vice President Kamala Harris’ economic policies will not significantly differ from those of President Biden if she secures the Democratic presidential nomination.
Following a disappointing debate performance against former President Donald Trump, President Biden announced he would not seek re-election, leading to widespread calls for his departure. He subsequently endorsed Harris, who affirmed her intention to run and garnered support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs analysts predict that Harris’ nomination will not result in major shifts in the Democratic fiscal and trade policy agenda.
Goldman analysts, including chief economist Jan Hatzius, stated in a report that while the odds of a Democratic victory in the presidential race have slightly increased with Harris as the likely nominee, the likelihood remains under 40%. The firm had previously noted that tax policy is expected to be a significant focus in the upcoming year as the Tax Cut and Jobs Act’s personal income tax provisions are set to expire at the end of 2025. The incoming administration will thus determine the future of these tax cuts and whether to introduce new taxes.
Key projections from Goldman Sachs regarding potential fiscal policies under a Biden administration include a proposed increase in the tax rate for individuals earning $400,000 or more to 39.6%, up from the current rates of 35%-37%. Additionally, President Biden has suggested raising the corporate tax rate to 28%, although Goldman expressed skepticism about Congress agreeing to this figure, forecasting a more likely outcome of 25%. There is also a proposed increase in the Social Security and Medicare tax rate on higher incomes from 3.8% to 5%.
Should Harris become the nominee, speculation points towards several potential candidates for the vice presidential slot, including governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly.