Goldman Sachs has indicated that if Kamala Harris becomes the Democratic presidential nominee, her economic policies will likely align closely with those of President Biden. This assessment comes in the wake of Biden announcing his withdrawal from the race, following pressure for him to step aside after a disappointing debate performance against former President Donald Trump.
Biden has since endorsed Harris, who has made her intentions to continue her candidacy clear. She has garnered significant support, including endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, experts suggest that this transition in leadership is unlikely to result in major shifts in policy.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that they do not anticipate meaningful changes to the Democrats’ fiscal and trade policy agenda if Harris wins the nomination. The firm also assessed that the likelihood of Democrats securing the presidency has increased slightly but remains below 40%.
Furthermore, Goldman Sachs has projected that next year will see taxes become a primary focus, especially with upcoming expirations of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. Therefore, the upcoming election will significantly influence decisions on extending these cuts or implementing new taxes.
Among their forecasts for potential fiscal policy under a Democratic administration, they highlighted several key points:
A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current 35%/37%.
A corporate tax rate suggested by Biden of 28%, up from the current 21%, though Goldman expressed skepticism around Congress supporting this figure, predicting a more likely rate of 25%. In contrast, Trump has proposed lowering the corporate tax rate to 20%.
A proposed increase in Social Security and Medicare taxes for incomes exceeding $400,000 to 5%, up from the previous 3.8%.
Should Harris become the nominee, speculation suggests that her running mate could be one of several governors, including Shapiro from Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.