Goldman Sachs analysts predict that if Vice President Kamala Harris becomes the Democratic presidential nominee, her economic policies will remain similar to those of President Biden. This assessment follows Biden’s recent announcement that he is stepping aside from the race amid growing calls for his departure after a challenging debate against Donald Trump.
Biden’s endorsement of Harris was quickly matched by significant endorsements from influential figures like California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Nevertheless, Goldman Sachs suggests that a shift in the Democratic fiscal and trade policy agenda under a Harris nomination is unlikely.
Analysts, led by chief economist Jan Hatzius, noted that the probability of Democrats winning the White House may slightly increase but remains under 40%. They highlighted that taxes will take center stage in the upcoming fiscal discussions, particularly with the looming expiration of certain provisions from the Tax Cuts and Jobs Act by the end of 2025. The outcome of the election will significantly influence potential tax extensions or new tax policies.
Goldman’s forecasts on fiscal policy include a proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rate of 35%/37%. They also project a corporate tax rate of 28%, although they express skepticism about Congress agreeing to this figure, suggesting a more likely rate of 25%. Additionally, there is a proposed increase in the Social Security and Medicare tax for high earners from 3.8% to 5%.
If Harris becomes the nominee, speculation about her choices for a running mate includes governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly.