Goldman Sachs anticipates that Vice President Kamala Harris’ economic policies will largely align with those of President Biden if she secures the Democratic presidential nomination. The prediction follows Biden’s announcement to withdraw from the race, which came amid mounting pressure for him to step aside after a contentious debate against former President Donald Trump.
In light of Biden’s decision, he endorsed Harris, who has confirmed her intention to run. She has garnered significant support from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the leadership change, Goldman Sachs suggests that the Democratic Party’s fiscal and trade strategies are unlikely to experience substantial changes.
Goldman analysts, led by chief economist Jan Hatzius, noted that the likelihood of a Democratic victory has increased slightly, though it remains just under 40%. The analysts previously indicated that tax policy will be a key issue as the 2025 expiration of certain provisions from the Tax Cuts and Jobs Act approaches. The outcome of the upcoming election will significantly impact decisions regarding tax extensions or revisions.
Goldman’s projections for potential fiscal policies under a Biden administration include a proposed tax rate of 39.6% on individuals earning over $400,000, a rise from the current 35%/37%, and an increased corporate tax rate of 28%, although they express doubts about Congress agreeing to such a hike, suggesting a more likely rate of 25%. Additionally, the proposed Social Security and Medicare tax rate for high earners could rise to 5% from 3.8%.
If Harris is nominated, speculation arises regarding potential vice presidential candidates, including governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.