Goldman Sachs predicts that Kamala Harris’s economic policies would not differ significantly from those of President Biden if she becomes the Democratic presidential nominee.
On Sunday, President Biden announced that he would not seek the Democratic nomination, responding to mounting pressure following a lackluster debate performance against former President Donald Trump. Shortly thereafter, he endorsed Vice President Harris, who expressed her intention to run and garnered support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Nonetheless, analysts suggest that this political shift is unlikely to drastically alter policy direction.
Goldman’s analysts, led by chief economist Jan Hatzius, indicated that the Democrats’ fiscal and trade policy agenda will likely remain consistent if Harris becomes the nominee. They noted that the chances of a Democratic victory in the upcoming presidential election have slightly increased but still fall below 40%.
The firm highlighted that taxes will be a key focus in the coming year, particularly with the impending expiration of personal income tax provisions from the Tax Cuts and Jobs Act by the end of 2025. The outcome of the election will influence decisions on extending these cuts or introducing new tax measures.
Goldman Sachs outlined anticipated fiscal policy changes under a potential Biden victory, projecting a tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates of 35% and 37%. They also anticipate a proposed corporate tax rate of 28%, up from 21%, though they express skepticism about Congress agreeing to such a rate, suggesting that a rate of 25% is more realistic. Additionally, Biden has proposed raising the Social Security and Medicare tax rate on high earners to 5% from 3.8%.
Should Harris secure the nomination, odds indicate that potential candidates for the vice presidential slot may include governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.