Goldman Sachs believes that if Vice President Kamala Harris becomes the Democratic presidential nominee, her economic policies will closely resemble President Biden’s current plans. This assessment aligns with the recent announcement by President Biden, who declared he will no longer seek the Democratic nomination following significant pressure for him to step aside after a challenging debate against former President Donald Trump.
Shortly after his announcement, Biden officially endorsed Harris, who confirmed her intent to run for the presidency. She quickly garnered support from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts from Goldman Sachs predict that the overall policy direction is unlikely to change significantly.
Goldman analysts, directed by chief economist Jan Hatzius, noted in a recent report that they do not anticipate a substantial shift in the fiscal and trade policy agendas if Harris secures the nomination. According to their evaluation, the chances of the Democrats retaining the White House have improved slightly but are still under 40%.
The firm also highlighted that taxation is poised to be a primary focus next year, particularly with the expiration of certain provisions from the Tax Cuts and Jobs Act set for the end of 2025. The outcome of the election will be pivotal in determining whether those tax cuts will be extended and if new taxes will be introduced.
Notable fiscal forecasts from Goldman Sachs include a proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%. They also project a potential corporate tax rate of 28%, up from the existing 21%, although they suggest that a 25% rate could be more realistic given congressional negotiations. Additionally, they expect a hike in Social Security and Medicare taxes on high-income earners, raising the rate from 3.8% to 5%.
If Harris becomes the nominee, there is speculation about potential vice presidential picks, with names like Governors Josh Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona being mentioned as likely candidates.