Goldman Sachs has indicated that Kamala Harris’ economic policies are unlikely to differ significantly from those of President Biden should she secure the Democratic presidential nomination.
In a notable turn of events, President Biden announced on Sunday that he is stepping aside from the race for the Democratic nomination, following increasing pressure for him to withdraw after a less than favorable debate against former President Donald Trump. Shortly after his announcement, Biden endorsed Vice President Harris, who expressed her intent to continue her candidacy. She has since garnered support from various prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts believe that this shift will not dramatically alter the party’s policies.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated in a report that they do not anticipate a significant change in the Democrats’ fiscal and trade policy agenda if Harris becomes the nominee.
Following the endorsement of Harris, the likelihood of the Democrats securing the White House has increased slightly but remains below 40%, according to Goldman.
The researchers also pointed out that taxes will be a central focus in the upcoming year, especially with the expiration of the personal income tax provisions of the Tax Cuts and Jobs Act approaching at the end of 2025. The future president will play a crucial role in determining which parts of the tax cut will be extended and whether any new taxes will be implemented.
Goldman’s projections for fiscal policy, should Biden win, include a proposed tax rate of 39.6% for individuals earning over $400,000, an increase from the current rate of 35%/37%. They also predict a corporate tax rate increase to 28%, up from 21%, though they suggest that Congress may only consent to a rate of around 25%. Additionally, Biden has proposed raising the Social Security and Medicare tax rate on high earners to 5%, an increase from 3.8%.
If Harris is nominated, prediction markets suggest that the vice presidential slot could likely go to figures such as Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.