Goldman Sachs has indicated that, should Kamala Harris become the Democratic presidential nominee, her economic policies are unlikely to differ significantly from those of President Biden. This assessment comes in the wake of Biden withdrawing from the race after pressures intensified following a less-than-stellar debate performance against former President Donald Trump.
Following Biden’s announcement, he endorsed Vice President Harris, who confirmed her intention to run. She has already garnered several influential endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs believe that a transition in leadership won’t drastically alter the Democratic policy agenda.
Goldman Sachs economists, led by chief economist Jan Hatzius, noted that they do not anticipate meaningful changes to fiscal and trade policies if Harris takes the lead. The likelihood of the Democrats maintaining control of the White House has reportedly increased slightly, with current estimates positioning it at just below 40%.
The firm has previously highlighted that taxes will become a central issue in the upcoming year, particularly with the impending expiration of certain provisions from the Tax Cuts and Jobs Act by the end of 2025. Therefore, the next administration will have crucial decisions to make regarding the extension of the tax cuts and the potential introduction of new tax policies.
Goldman’s projections for fiscal policy under a potential Biden victory include a proposed tax rate of 39.6% for individuals earning over $400,000, up from the current 35%/37%. They also suggested a potential increase in the corporate tax rate to 28%, although they expressed skepticism about Congress agreeing to this, suggesting a more likely outcome of around 25%. Additionally, Biden aims to raise the Social Security and Medicare tax rate on incomes above $400,000 to 5%, from the current 3.8%.
If Harris secures the nomination, predictions for the vice presidential candidate include figures such as Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.