Goldman Sachs has indicated that Kamala Harris’ economic strategies are unlikely to differ significantly from President Biden’s if she becomes the Democratic presidential nominee. This assessment comes in light of Biden’s recent decision to withdraw from the race amid increasing calls for him to step down following a subpar debate performance against Donald Trump.
Biden publicly endorsed Harris shortly after his announcement, and she has since confirmed her intention to run, garnering support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this transition in leadership, Goldman analysts, led by chief economist Jan Hatzius, predict that there will not be a substantial change in the Democratic fiscal and trade policy agenda under Harris’ potential nomination.
Goldman Sachs estimates that the chances of Democrats winning the presidency may improve slightly but remains below 40%. The firm has previously stated that tax policies will be a central issue in the coming year, particularly as provisions from the Tax Cuts and Jobs Act are set to expire at the end of 2025. The outcome of the election will determine whether these tax cuts are extended or if new taxes are introduced.
The firm’s fiscal policy forecasts include several key figures: a proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates; a corporate tax rate proposal from Biden of 28%, although Goldman expresses skepticism about Congress agreeing to that figure, suggesting a 25% rate is more feasible; and a rise in the proposed Social Security and Medicare tax rate for high earners from 3.8% to 5%.
If Harris secures the nomination, predictions suggest that potential vice presidential candidates could include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona.