Kamala Harris’ economic strategy is expected to remain largely consistent if she becomes the Democratic presidential nominee, according to analysts at Goldman Sachs.
In a significant political shift, President Biden announced that he will not seek the Democratic nomination, following increasing pressure for him to step aside after a contentious debate with former President Donald Trump. Shortly thereafter, he endorsed Vice President Kamala Harris, who has expressed her intent to pursue the nomination and has garnered support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts suggest that this transition is unlikely to result in major changes to policy.
Goldman Sachs reported that they do not anticipate a significant alteration in the Democrats’ fiscal and trade policies should Harris become the nominee. In their latest analysis, led by chief economist Jan Hatzius, they noted that while the chances of Democrats securing the White House have increased slightly, they still estimate it to be below 40%.
The firm previously indicated that taxes will become a central focus for the upcoming year as key provisions of the Tax Cuts and Jobs Act are set to expire by the end of 2025. The outcome of the election will determine whether these cuts are extended or if new taxes will be imposed.
Goldman Sachs provided specific forecasts for fiscal policy if Biden were to win, including a proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current rates of 35% and 37%. Additionally, they predicted a corporate tax rate of 28% under Biden, although they expressed skepticism that Congress would approve this, suggesting a more likely rate of 25%. Biden’s plan also includes a proposed increase in the Social Security and Medicare tax rate for high earners, from 3.8% to 5%.
If Harris secures the nomination, speculation arises regarding potential vice presidential candidates, with governors and a senator from various states, including Shapiro of Pennsylvania and Roy Cooper of North Carolina, being considered likely picks.