Vice President Kamala Harris’ economic policies are expected to remain largely consistent if she becomes the Democratic presidential nominee, according to analysts at Goldman Sachs.
This comes as President Biden announced he would withdraw from the Democratic race, following significant pressure after a lackluster debate performance against former President Donald Trump. In his statement, Biden endorsed Harris for the nomination, who has expressed her intention to continue her candidacy and has garnered support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Nevertheless, the transition in leadership is unlikely to impact policy significantly.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that there would likely be no substantial changes in the Democrats’ fiscal and trade policy agenda if Harris is nominated. The projected chances of a Democratic victory in the upcoming election have increased slightly due to Biden’s endorsement, but remain just under 40%.
The firm has highlighted that fiscal issues, especially taxes, will take center stage next year as the personal income tax provisions of the Tax Cut and Jobs Act are set to expire at the end of 2025. The election winner will face decisions on extending parts of the tax cut and introducing new taxes or cuts.
Goldman’s fiscal policy forecasts indicate that the Democrats are considering a tax rate of 39.6% for individuals earning over $400,000, an increase from the current rates of 35% and 37%. They estimate that President Biden’s proposed corporate tax rate may rise to 28%, although they express doubts about Congressional approval, suggesting a 25% rate could be more feasible. Additionally, Biden has proposed increasing the tax rate on Social Security and Medicare for incomes exceeding $400,000 from 3.8% to 5%.
If Harris secures the nomination, speculation about potential vice presidential candidates includes Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.