Goldman Sachs has indicated that Vice President Kamala Harris’ economic policies will likely remain consistent if she becomes the Democratic presidential nominee. This follows President Biden’s announcement that he is stepping aside for the nomination, which came after criticism of his debate performance against former President Donald Trump.
Biden’s endorsement of Harris was met with support from influential figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts from Goldman suggest that the Democratic fiscal and trade policy agenda will not see significant changes with Harris in the lead.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that the odds of the Democrats winning the presidency increased slightly but still hover below 40%. They previously reported that taxation will be a key focus in the coming year, particularly with the expiration of certain provisions of the Tax Cuts and Jobs Act in 2025, necessitating decisions on tax extensions and potential new taxes.
The firm’s forecasts for fiscal policy, assuming a Biden victory, include a proposed tax rate of 39.6% for individuals earning over $400,000—up from 35%/37%—and a corporate tax rate that Biden aims to raise to 28%, although Goldman expresses skepticism about Congress agreeing to such a hike, suggesting a more likely outcome would be 25%. Additionally, Biden proposes a tax rate increase for Social Security and Medicare on incomes above $400,000 from 3.8% to 5%.
If Harris secures the nomination, speculation surrounds potential vice presidential candidates, with names such as governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly being considered likely contenders.