Goldman Sachs anticipates that Kamala Harris’ economic policies, should she become the Democratic presidential nominee, will not differ significantly from those of President Biden. This assessment follows Biden’s announcement that he would withdraw from the race for the Democratic nomination, a decision influenced by mounting pressure after a challenging debate against former President Donald Trump.
In his announcement, Biden endorsed Vice President Harris, who has expressed her intention to pursue the nomination and has garnered support from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite these changes, Goldman analysts predict that there will be little meaningful alteration in the party’s fiscal and trade agendas if Harris leads the ticket.
According to Goldman Sachs, the overall likelihood of a Democratic victory in the upcoming presidential election has increased slightly but still stands under 40%. They noted that taxes are poised to become a central issue in the next year, particularly with the impending expiration of tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The outcome of the election will significantly influence decisions regarding tax extensions and potential new taxes or cuts.
Specific forecasts for fiscal policy under a potential Biden administration include a proposed tax rate of 39.6% for individuals earning over $400,000, up from the current 35%-37%, and a corporate tax rate increase to 28%, although Goldman expressed skepticism about Congress approving more than a 25% rate. Additionally, Biden’s plan includes raising the Social Security and Medicare tax rate on incomes exceeding $400,000 from 3.8% to 5%.
Should Harris secure the nomination, various prediction markets suggest that the vice presidential role may go to states’ governors such as Shapiro from Pennsylvania, Roy Cooper from North Carolina, Andy Beshear from Kentucky, or Arizona Senator Mark Kelly.