Goldman Sachs has indicated that if Kamala Harris becomes the Democratic presidential nominee, her economic policies are expected to remain largely similar to those of President Biden. This assessment follows Biden’s announcement over the weekend that he would withdraw from the race due to mounting pressure after a struggling debate performance against Donald Trump.
Shortly after his statement, Biden endorsed Harris, who has confirmed her intention to run. She has garnered endorsements from prominent figures, including California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro. However, analysts at Goldman Sachs, led by chief economist Jan Hatzius, expressed that they do not anticipate significant changes to the Democrats’ fiscal and trade policy agenda if Harris is elected.
Goldman’s analysis suggests that the odds of a Democratic victory in the presidential election have increased slightly, but still remain below 40%. The firm highlighted that taxes will likely become a key focus for the next administration, particularly due to the impending expiration of certain provisions from the Tax Cut and Jobs Act at the end of 2025. The outcome of the election will determine the future of these tax cuts and any potential new taxes.
Goldman provided specific projections for fiscal policy under a potential Biden administration. They estimate a tax rate of 39.6% on individuals earning over $400,000, an increase from the current rates of 35% and 37%. Additionally, Biden’s proposed corporate tax rate would rise to 28%, although Goldman expressed skepticism about Congress agreeing to this, suggesting a more likely compromise rate of 25%. There is also a proposed increase in Social Security and Medicare taxes on higher incomes, rising from 3.8% to 5%.
In the event of a Harris nomination, prediction markets suggest that the vice presidential slot could go to governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona.