Goldman Sachs analysts believe that if Kamala Harris becomes the Democratic presidential nominee, her economic policies will not significantly differ from those of President Biden. This assessment comes after Biden announced he would withdraw from the race, following intense pressure to step down following a lackluster debate against Donald Trump.
Post-announcement, Biden endorsed Vice President Harris, who confirmed her intention to pursue the nomination and has since garnered support from several prominent figures, including California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro. Despite the change in candidacy, Goldman Sachs indicates that there will be little deviation in fiscal and trade policies.
The firm’s analysts, led by chief economist Jan Hatzius, noted that the chances of Democrats winning the White House increased slightly but remain just below 40%. They pointed out that with the expiration of certain provisions of the Tax Cuts and Jobs Act approaching at the end of 2025, tax policy will become a central issue in the upcoming election.
Goldman Sachs outlined specific fiscal policy forecasts: Democrats are considering raising the tax rate for individuals earning $400,000 or more to 39.6% from the current 35%/37%. Additionally, Biden has proposed increasing the corporate tax rate to 28% from 21%, although analysts believe a more likely outcome would be a rate around 25%. For those earning above $400,000, a proposed increase in the Social Security and Medicare tax rate from 3.8% to 5% is also on the table.
Should Harris secure the nomination, speculation about potential vice presidential candidates includes Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.