Goldman Sachs suggests that Kamala Harris’ economic policies would likely mirror those of President Biden, should she secure the Democratic presidential nomination. Following President Biden’s decision to withdraw from the race amid pressures intensified by a challenging debate against Donald Trump, he endorsed Harris, who has since confirmed her intention to run. She has garnered support from prominent figures such as California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro.
Goldman Sachs’ chief economist, Jan Hatzius, noted that there would be minimal changes to the Democrats’ fiscal and trade policy agenda if Harris were to become the nominee. While the shift in leadership theoretically increases the Democratic Party’s chances of winning the presidency, those odds are still estimated to be less than 40%.
The firm indicates that tax policy will take center stage in the coming year, particularly with the expiration of the personal income tax provisions from the Tax Cuts and Jobs Act looming at the end of 2025. Future decisions, including the potential extension of these cuts and the introduction of new taxes, will significantly impact the next administration’s fiscal approach.
Goldman’s forecasts under a potential Biden victory include a proposed personal tax rate increase to 39.6% for individuals earning over $400,000 and a corporate tax rate rise to 28%. However, they express skepticism about Congress agreeing to the higher tax rate, suggesting a more likely compromise at around 25%. Moreover, Biden’s proposal for an increase in Social Security and Medicare taxes for high-income earners raises concerns about public reaction and legislative support.
As the political landscape evolves, speculation also surrounds potential contenders for the vice presidency if Harris claims the nomination, with candidates including governors and senators from various states.
This scenario presents an opportunity for the Democratic Party to unite under a shared economic vision, as evidenced by Harris’ strong alignment with current policies. As the campaign unfolds, fostering a proactive dialogue on fiscal matters can resonate with voters who prioritize economic stability and growth.