Goldman Sachs predicts that Vice President Kamala Harris’ economic plans will largely mirror those of President Biden if she becomes the Democratic presidential nominee. This sentiment follows Biden’s announcement on Sunday that he would no longer seek the Democratic nomination amidst growing calls for him to withdraw following a challenging debate performance against former President Donald Trump.
After the announcement, Biden endorsed Harris, who confirmed her intention to run. She has already secured notable endorsements from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the leadership change, analysts suggest minimal alterations to policy direction.
Goldman Sachs, in a report led by chief economist Jan Hatzius, stated that they do not anticipate significant shifts in the Democrats’ fiscal and trade policies if Harris takes the lead. The firm noted that the possibility of Democrats winning the White House has increased slightly but remains just under 40%.
Furthermore, Goldman had previously highlighted that taxes will be a central issue in the upcoming election, especially with personal income tax provisions from the Tax Cuts and Jobs Act set to expire at the end of 2025. The next president will face critical decisions regarding the extension of these cuts and potential new tax measures.
In terms of fiscal policy predictions, Goldman Sachs outlined several key figures under a potential Biden victory. They expect a proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current rates of 35% and 37%. The proposed corporate tax rate is expected to rise to 28%, an increase from the current 21%, though analysts believe a rate of 25% is more realistic given Congress’s hesitance. Additionally, Biden’s plan includes a rise in the Social Security and Medicare tax rate on high earners to 5%, up from 3.8%.
Should Harris secure the nomination, speculation suggests that potential candidates for the vice presidential position may include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.