Goldman Sachs suggests that Kamala Harris’ economic policies will not differ significantly from those of President Joe Biden, should she secure the Democratic presidential nomination. This assessment comes in the wake of Biden’s announcement that he will step aside from the race after facing increasing pressure following a lackluster debate against former President Donald Trump.
Following this news, Biden endorsed Harris, who has expressed her commitment to run for the presidency, receiving endorsements from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman analysts, led by chief economist Jan Hatzius, predict limited changes to the Democratic fiscal and trade policy agenda, even with Harris as the nominee.
The transition from Biden to Harris is expected to slightly improve the Democratic chances of winning the presidency, raising their odds to just below 40%, according to Goldman’s analysis. The firm has previously indicated that tax reforms will be a primary focus for the next administration, particularly with the personal income tax cuts from the Tax Cut and Jobs Act expiring at the end of 2025. This means that the next president will play a crucial role in determining the future of these tax provisions.
Goldman’s projections for fiscal policy, should Biden win reelection, include a proposed tax rate of 39.6% for individuals earning over $400,000, an increase from the current rate of 35%/37%. Additionally, Biden’s plan to raise the corporate tax rate to 28% from 21% has been met with skepticism regarding Congressional approval, with a 25% rate seen as more feasible. Furthermore, there is a proposal for a 5% tax on Social Security and Medicare for incomes above $400,000, an increase from the current 3.8%.
If Harris is nominated, experts suggest potential contenders for the vice presidential slot could include Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.