Goldman Sachs predicts that Vice President Kamala Harris’ economic policies will closely resemble those of President Biden if she secures the Democratic presidential nomination. This analysis follows Biden’s recent announcement that he will not run for re-election, a decision influenced by mounting pressure after a challenging debate against former President Donald Trump.
In his statement, Biden endorsed Harris, who expressed her intent to proceed with her candidacy. She quickly gained support from notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman analysts believe that a transition from Biden to Harris will not lead to significant changes in policy.
Goldman Sachs, led by chief economist Jan Hatzius, indicated in a report that the Democrats’ fiscal and trade policy agenda is unlikely to shift substantially under Harris. They estimated that the odds of Democrats retaining the White House have increased slightly to below 40%.
The firm also noted that major tax policies will be a key focus in the upcoming year, particularly with the expiration of certain provisions from the Tax Cuts and Jobs Act in 2025. The next president will have to make decisions regarding the extension of these cuts and the potential introduction of new taxes.
Goldman’s forecasts for fiscal policy under a Biden administration include a proposed tax rate of 39.6% for individuals earning $400,000 and above, an increase from the current rates of 35% to 37%. They also predicted a rise in the corporate tax rate to 28%, up from 21%, although they expressed skepticism about Congress agreeing to this, suggesting a more likely outcome of a 25% rate. Additionally, Biden has proposed raising the Social Security and Medicare tax rate on high earners from 3.8% to 5%.
Should Harris become the nominee, speculation surrounds potential vice presidential picks, with high odds for candidates such as Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.