Goldman Sachs believes that if Kamala Harris becomes the Democratic presidential nominee, her economic policies will closely resemble those of President Biden.
In a recent announcement, President Biden declared that he will not be seeking re-election, following intense pressure to step aside after a challenging debate against former President Donald Trump. Shortly after his announcement, Biden endorsed Vice President Harris, who has expressed her commitment to continue her campaign. She has garnered significant endorsements, including support from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs predict that there will not be a significant shift in policy direction.
Goldman analysts, led by chief economist Jan Hatzius, stated that they do not anticipate major changes in the Democrats’ fiscal and trade policies if Harris is nominated. While her nomination slightly increases the Democrats’ chances of winning the election to just below 40%, analysts have noted that the upcoming elections will bring critical decisions regarding tax policies, particularly as the personal income tax provisions from the Tax Cuts and Jobs Act are set to expire at the end of 2025.
The firm has provided specific forecasts regarding fiscal policies under a possible Biden administration. They estimate that Democrats may consider a tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% or 37%. Furthermore, the proposed corporate tax rate under Biden’s plans could rise to 28%, although Goldman expresses skepticism about achieving this, suggesting a more achievable rate might be 25%. Additionally, Biden has proposed increasing the Social Security and Medicare tax rate on high incomes from 3.8% to 5%.
Should Harris secure the nomination, prediction markets suggest that potential candidates for the vice presidential spot could include Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.