Goldman Sachs believes that Vice President Kamala Harris’ economic plans would likely remain consistent with those of President Biden if she becomes the Democratic presidential nominee. This conclusion comes on the heels of Biden’s announcement that he would withdraw from the race, following mounting pressure for him to step aside after a lackluster debate performance against Donald Trump.
In a statement shortly after his announcement, Biden endorsed Harris, who has expressed her intent to pursue her candidacy. She has garnered significant endorsements from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts predict that there will not be a drastic change in policy direction.
Goldman Sachs, led by chief economist Jan Hatzius, indicated that the Democrats’ fiscal and trade policy agenda is not expected to shift significantly should Harris become the nominee. They noted that this transition could slightly improve the Democrats’ chances of winning the White House, estimating the odds to be under 40%.
Looking ahead, Goldman researchers have highlighted that tax policy will become a key focus in the near future, particularly with the impending expiration of certain tax provisions from the Tax Cuts and Jobs Act in 2025. The winner of the upcoming election will play a crucial role in determining the fate of these tax cuts and the introduction of new taxes.
Specific forecasts regarding fiscal policy under a potential Biden victory include raising the tax rate for individuals earning $400,000 or more to 39.6%, increasing the corporate tax rate to 28%, and a proposed tax rate of 5% on high-income earners for Social Security and Medicare, up from the current 3.8%.
Should Harris secure the nomination, speculation about her potential running mate includes governors such as Josh Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.