Goldman Sachs believes that Kamala Harris’ economic policies would not differ significantly from those of President Biden if she becomes the Democratic presidential nominee. This perspective comes as President Biden announced his withdrawal from the race amid increasing pressure following a weak debate against former President Donald Trump.
In the aftermath of this announcement, Biden endorsed Vice President Harris, who expressed her intention to pursue her candidacy. She has garnered high-profile endorsements from prominent figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, the anticipated policy changes under Harris are expected to be minimal.
Goldman analysts, led by chief economist Jan Hatzius, stated in a note that they do not foresee any substantial shifts in fiscal and trade policies if Harris secures the nomination. While the change in leadership might slightly improve the Democrats’ chances of winning the presidency, Goldman places those odds at just under 40%.
The firm previously indicated that tax policy will be a central focus in the coming year, particularly with the expiration of certain provisions from the Tax Cuts 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 taxation initiatives.
Goldman provided several predictions regarding fiscal policy if Biden remains in office. These include a proposed 39.6% tax rate on individuals earning $400,000 or more, an increase from the current rates of 35% or 37%. They also noted a proposed corporate tax rate of 28%, up from the present 21%, though they express skepticism that Congress would accept such a proposal, suggesting a more likely outcome would be around 25%. Additionally, Biden has suggested raising the Social Security and Medicare tax rate on incomes above $400,000 to 5%, up from the existing 3.8%.
If Harris is chosen as the nominee, betting markets predict that the vice presidential candidate might be one of several governors, including Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly from Arizona.