Goldman Sachs has suggested that Vice President Kamala Harris’ economic policies are unlikely to differ significantly from those of President Biden, should she become the Democratic presidential nominee.
President Biden announced on Sunday that he will withdraw from the race for the Democratic nomination, following mounting pressure for him to step aside after a less-than-stellar debate performance against former President Donald Trump. Following this announcement, Biden endorsed Harris, who confirmed her intent to pursue the candidacy and has garnered support from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy.
Goldman analysts, led by chief economist Jan Hatzius, stated in a note that they do not anticipate substantial changes in the Democrats’ fiscal and trade policy agenda with Harris as the nominee. They noted that while her nomination may slightly increase the Democrats’ chances of securing the presidency, those odds remain just below 40%.
The firm previously indicated that tax policy will be a crucial focus in the upcoming year, particularly with the expiration of certain provisions from the Tax Cuts and Jobs Act at the end of 2025. The next president will play a key role in determining whether tax cuts are extended or if new taxes will be introduced.
Some forecasts regarding fiscal policy under a potential Biden victory include a proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the existing 35%/37%. Biden’s proposed corporate tax rate would rise to 28%, although Goldman is skeptical that Congress would agree to this, suggesting that a 25% rate is more likely. Additionally, there is a proposal to increase the Social Security and Medicare tax rate on incomes over $400,000 to 5%, up from 3.8%.
Should Harris secure the nomination, speculation arises regarding potential vice presidential candidates, with the highest odds assigned to Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.