Goldman Sachs suggests that if Kamala Harris becomes the Democratic presidential nominee, her economic plans are unlikely to differ significantly from those of President Biden. This assessment follows Biden’s announcement that he will not seek re-election, prompted by intense pressure after his contentious debate performance against Donald Trump.
In his statement, Biden endorsed Vice President Harris, who then expressed her intention to pursue her candidacy and received endorsements from notable figures such as California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro. Despite this political shift, Goldman analysts, led by chief economist Jan Hatzius, believe that there will not be substantial changes to the Democrats’ fiscal and trade policies under a Harris nomination.
Goldman has adjusted the odds of a Democratic win in the presidential election to slightly below 40%. Their analysis indicates that the upcoming year will focus heavily on taxes, particularly due to the upcoming expiration of personal income tax provisions from the Tax Cuts and Jobs Act by the end of 2025. This situation means that the next president will face decisions regarding the extension of these tax cuts and potential new taxation.
The firm forecasts several key elements of fiscal policy that could result from a Biden presidency: a proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase in the corporate tax rate to 28% (with uncertainty about Congress’s approval), and a rise in the tax for Social Security and Medicare for high earners to 5%, up from the current 3.8%.
If Harris secures the nomination, analysts predict that possible candidates for the vice presidency could include Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.