Goldman Sachs has indicated that if Vice President Kamala Harris becomes the Democratic presidential nominee, her economic agenda is unlikely to differ significantly from that of President Biden. This assessment follows Biden’s announcement that he is stepping down from the race after facing intense pressure following a challenging debate against former President Donald Trump.
In a statement released shortly after his announcement, Biden endorsed Harris, who has confirmed her intention to run for president. She has garnered support from notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the leadership change, analysts at Goldman Sachs, led by chief economist Jan Hatzius, foresee little change in the Democratic party’s fiscal and trade policy direction if Harris secures the nomination.
Goldman’s analysts noted that the odds of the Democrats winning the presidency have increased slightly but remain under 40%. They previously highlighted that taxes will become a key focus in the coming year, particularly with the expiration of the personal income tax provisions from the Tax Cuts and Jobs Act set for the end of 2025. This context means the next administration will determine the future of tax cuts and potential new taxes.
Goldman Sachs provided specific predictions for fiscal policy should Biden win reelection. They anticipate a tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current 35%/37%. Additionally, they forecast a proposed corporate tax rate of 28%, up from 21%, though they express skepticism that Congress would approve this, considering a 25% rate more likely. Furthermore, Biden’s proposal includes raising the Social Security and Medicare tax rate on earnings over $400,000 from 3.8% to 5%.
Should Harris become the nominee, speculation about potential vice presidential candidates points to governors such as Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.