Goldman Sachs believes that Vice President Kamala Harris’ economic plans will not significantly differ from those of President Biden if she becomes the Democratic presidential nominee. This analysis comes following Biden’s announcement on Sunday that he is withdrawing from the race amid increasing pressure to step down, especially after a difficult debate performance against former President Donald Trump.
In his statement, Biden endorsed Harris, who expressed her intent to continue her candidacy and gained several significant endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the change in leadership, Goldman analysts led by chief economist Jan Hatzius predict the Democratic fiscal and trade policy agenda will remain largely unchanged under Harris.
Goldman’s analysis indicates that the shift to Harris has subtly increased the likelihood of a Democratic victory in the presidential election to nearly 40%. The firm noted that fiscal policy will become increasingly significant next year, especially with the expiration of certain tax provisions set for the end of 2025. The outcome of the election will determine the future of the tax cuts and any potential new tax measures.
In terms of specific fiscal policies under a Biden administration, Goldman provides several forecasts: they suggest a proposed tax rate of 39.6% for individuals earning over $400,000, an increase in the corporate tax rate to 28% from the current 21%, and a rise in the Social Security and Medicare tax rate on high earners to 5% from 3.8%.
If Harris secures the nomination, speculation indicates that her potential running mates could include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.