Goldman Sachs predicts that Kamala Harris’ economic strategies will not significantly differ from President Biden’s if she becomes the Democratic presidential nominee.
Following increasing pressure for him to withdraw, President Biden announced on Sunday that he would not seek reelection. He subsequently endorsed Vice President Harris, who expressed her intent to continue her campaign and received backing from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this transition, experts do not foresee major shifts in policy.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated that they do not expect substantial changes to the Democratic fiscal and trade policy agenda even if Harris is nominated. They estimate the likelihood of a Democratic victory in the upcoming presidential election has increased slightly but remains just below 40%.
The firm’s analysts highlighted that taxes will become a key issue in the next election cycle, especially with the impending expiration of personal income tax provisions from the Tax Cuts and Jobs Act by the end of 2025. The next administration will play a crucial role in deciding whether to extend these cuts or introduce new taxation measures.
Goldman’s forecasts for fiscal policy under a potential Biden administration include a proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase in corporate tax rate to 28% from the current 21%, and a hike in Social Security and Medicare tax from 3.8% to 5% on incomes exceeding $400,000. They expressed skepticism regarding Congress agreeing to the proposed tax increases, suggesting a 25% corporate tax rate as a more realistic outcome, especially since presumptive Republican nominee Donald Trump has committed to reducing the corporate tax to 20%.
If Harris becomes the nominee, various prediction markets suggest that the vice presidential nomination could be allocated to governors like Shapiro from Pennsylvania, Roy Cooper from North Carolina, Andy Beshear from Kentucky, or Senator Mark Kelly from Arizona.