Goldman Sachs believes that if Kamala Harris becomes the Democratic presidential nominee, her economic plans will largely mirror those of President Biden. This comes in the wake of Biden’s announcement on Sunday that he would step aside from the race following mounting calls for his resignation due to a lackluster debate performance against Donald Trump.
In his statement, Biden endorsed Vice President Harris, who has expressed her intention to continue her candidacy. She has already garnered support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, experts from Goldman Sachs note that there will not be significant changes in policy direction.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated in a report that they do not foresee a substantial shift in the Democrats’ fiscal and trade policies if Harris takes the reins as the nominee. Although the prospect of her candidacy has slightly increased the likelihood of a Democratic win in the upcoming election to under 40%, the anticipated policy framework remains intact.
The firm previously highlighted that taxes are projected to be a central fiscal issue in the next year, particularly with the personal income tax provisions from the Tax Cut and Jobs Act set to expire at the end of 2025. This situation will put significant pressure on the next administration, whether it be a continuation of Biden’s agenda or Harris’s potential presidency, to navigate tax reforms.
Specific fiscal policy forecasts under a Biden administration include a proposed tax rate increase to 39.6% for individuals earning over $400,000, up from the current rates of 35% and 37%. Additionally, Biden’s suggested corporate tax rate may rise to 28%, a proposal Goldman notes may face challenges in Congress—suggesting a more likely outcome would be a rate around 25%, especially in contrast to Trump’s plan to reduce it to 20%. Furthermore, Biden seeks to increase the Social Security and Medicare tax on high incomes from 3.8% to 5%.
Should Harris become the nominee, speculation arises regarding her choice for a running mate, with top contenders including Governors Shapiro and Roy Cooper of North Carolina, Kentucky’s Andy Beshear, and Arizona Senator Mark Kelly.