Goldman Sachs has indicated that if Kamala Harris becomes the Democratic presidential nominee, her economic plans would not significantly diverge from those of President Biden. This insight follows Biden’s announcement that he will not seek re-election amid mounting pressure for him to step aside after a challenging debate with Republican candidate Donald Trump.
Biden has formally endorsed Vice President Harris, who has expressed her commitment to continue her candidacy. She has garnered endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, despite the shift in leadership, Goldman Sachs analysts, headed by chief economist Jan Hatzius, expect the Democratic fiscal and trade policy agenda to remain largely unchanged.
Following Biden’s endorsement of Harris, Goldman raised the odds of the Democrats securing the White House by a few percentage points, although they estimate it to be slightly below 40%. The firm has previously noted that taxation will take center stage in fiscal policy discussions next year, especially with the nearing expiration of certain provisions from the Tax Cut and Jobs Act at the end of 2025. The outcome of the election will heavily influence decisions regarding the extension of these cuts and the introduction of new taxes.
Goldman’s projections for potential fiscal policies under a Biden administration include a proposed tax rate of 39.6% for individuals earning over $400,000, an increase from the current rates of 35% to 37%. They also forecast a corporate tax rate of 28%, up from the current 21%, though they express skepticism that Congress might agree to anything higher than 25%. Additionally, Biden has proposed raising the Social Security and Medicare tax rate from 3.8% to 5% for incomes exceeding $400,000.
Should Harris become the nominee, speculation surrounds potential vice presidential candidates, with names like Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly being highlighted as strong contenders.