Goldman Sachs has indicated that Vice President Kamala Harris’ economic policies will likely remain consistent if she becomes the Democratic presidential nominee. This comes after President Biden announced he would not seek reelection due to pressure following a lackluster debate performance against former President Donald Trump.
In a statement, Biden endorsed Harris, who is eager to continue her candidacy. She has garnered support from notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs predict that there will be little policy change.
Goldman economists, led by chief economist Jan Hatzius, noted that they do not anticipate any significant shifts in the Democrats’ fiscal and trade policies should Harris secure the nomination. They estimate that the likelihood of Democrats winning the presidency has increased slightly but remains just below 40%.
The firm previously pointed out that taxes are likely to become a significant focus in the upcoming year, particularly with the expiration of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. The winner of the election will have to decide the future of these cuts and any new tax measures.
Goldman’s projections for fiscal policy under a potential Biden victory include a proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates of 35%/37%. The analysts also suggested a corporate tax rate of 28%, up from the existing 21%, though they expressed skepticism about Congress agreeing to such an increase, deeming a rate of 25% more realistic. Additionally, Biden’s proposed tax for Social Security and Medicare on incomes exceeding $400,000 is set to rise to 5%, up from 3.8%.
If Harris becomes the nominee, there is speculation regarding potential vice presidential candidates, with high odds for candidates such as Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.