Goldman Sachs has suggested that Kamala Harris’ economic policies are unlikely to differ significantly if she becomes the Democratic presidential nominee.
This comes as President Biden announced on Sunday that he would not seek re-election, following mounting pressure for him to step aside after a lackluster debate performance against former President Donald Trump. In the wake of this announcement, Biden endorsed Vice President Kamala Harris, who expressed her commitment to her candidacy and received notable endorsements from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts believe these changes will not lead to major shifts in policy.
Goldman Sachs, led by chief economist Jan Hatzius, indicated that the Democrats’ fiscal and trade policy agenda is not expected to change meaningfully under Harris’ nomination. They assessed that the odds of a Democratic victory in the presidential race have increased slightly but remain just below 40%.
The analysts emphasized that taxes will be a key focus in the upcoming year, particularly as certain provisions from the Tax Cuts and Jobs Act are set to expire at the end of 2025. This means the incoming administration will have to make decisions regarding the extension of tax cuts and any new tax policies.
Specific forecasts for fiscal policy under a potential Biden victory include considerations for tax rates on higher earners and corporate taxes. Goldman projects a 39.6% tax rate on individuals making $400,000 or more, an increase from current rates, and a likely corporate tax rate rise to around 28%, although they note that a 25% rate is more feasible in Congress. Additionally, there is a proposal for a 5% tax on incomes greater than $400,000 for Social Security and Medicare, up from the current rate of 3.8%.
If Harris is elected as the nominee, there is speculation about potential vice presidential candidates, with Pennsylvania’s Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, and Arizona Senator Mark Kelly being considered strong contenders.