Goldman Sachs believes that Vice President Kamala Harris’ economic policies will likely mirror those of President Biden if she secures the Democratic presidential nomination. This assessment comes amid President Biden’s announcement that he will withdraw from the race following a tumultuous debate against former President Donald Trump.
Biden’s endorsement of Harris shortly after his announcement, along with her confirmations of intent to proceed with her candidacy, have garnered high-profile endorsements from figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, according to Goldman Sachs, there is unlikely to be significant change in Democratic fiscal and trade policy with Harris as the nominee.
Goldman analysts, led by chief economist Jan Hatzius, noted that while the transition from Biden to Harris may marginally improve the Democrats’ chances of winning the White House—now considered to be just below 40%—the fundamental policy direction is expected to remain consistent.
Looking ahead, Goldman Sachs indicated that taxes will emerge as a primary fiscal issue for the next administration due to the upcoming expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. This will put pressure on the next president to decide on the extension of these cuts or the introduction of new taxes.
In terms of fiscal policy forecasts for a Biden-Harris administration, Goldman outlined the following projections:
– A potential tax rate of 39.6% for individuals earning above $400,000, an increase from the current 35%-37%.
– A corporate tax rate proposed at 28%, up from the current 21%, although the firm expressed skepticism about Congress agreeing to this figure, suggesting a more likely outcome of a 25% rate, contrasting with Trump’s proposal to lower it to 20%.
– An increase in the Social Security and Medicare tax rate on incomes exceeding $400,000, which Biden has suggested should rise from 3.8% to 5%.
If Harris becomes the nominee, speculation suggests that the vice presidential slot could go to various governors, including Shapiro from Pennsylvania, Roy Cooper from North Carolina, Andy Beshear from Kentucky, or Senator Mark Kelly from Arizona.