Goldman Sachs suggests that Kamala Harris’ economic policies will not significantly differ from those of President Biden if she becomes the Democratic presidential nominee. This assessment comes in light of Biden’s announcement on Sunday that he will withdraw from the race, following criticism of his debate performance against Donald Trump.
In his statement, Biden endorsed Harris, who has expressed her intent to proceed with her candidacy and has garnered backing from influential figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, according to Goldman analysts led by chief economist Jan Hatzius, a shift in the Democratic fiscal and trade policy agenda is unlikely.
Goldman has indicated that the probability of Democrats securing the White House could see a slight increase with Harris as the nominee, yet it remains just below 40%. Their research also highlights that tax policy will be a primary focus for 2024, particularly due to the pending expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The winning candidate will face decisions on extending tax cuts and implementing 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, an increase from the current rates of 35% or 37%. Additionally, Biden’s plan calls for raising the corporate tax rate to 28% from 21%, although Goldman expresses doubt about Congress agreeing to that, suggesting a more realistic outcome might be a rate of 25%. Furthermore, Biden intends to increase Social Security and Medicare tax rates on incomes above $400,000 to 5%, up from the current 3.8%.
If Harris secures the nomination, prediction markets indicate that Pennsylvania Governor Josh Shapiro, Roy Cooper of North Carolina, Kentucky’s Andy Beshear, or Arizona Senator Mark Kelly are the leading candidates for the vice presidential position.