In a significant political shift, President Biden announced that he will not pursue the Democratic nomination for president, endorsing Vice President Kamala Harris as his successor. This decision comes after mounting pressure for Biden to step down following a lackluster debate performance against former President Donald Trump.
Harris has expressed her readiness to continue her candidacy and has received support from prominent figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Financial analysts at Goldman Sachs have weighed in on the implications of this transition, suggesting that if Harris becomes the Democratic nominee, there will be minimal changes to the party’s economic policies.
Goldman Sachs chief economist Jan Hatzius noted that substantial shifts in fiscal and trade policy are not expected under Harris, should she secure the nomination. The firm raised the likelihood of Democrats winning the presidency by a few percentage points, although they estimate it to remain under 40%.
Importantly, as the expiration of certain tax provisions looms at the end of 2025, the next administration will face critical decisions regarding tax cuts and potential new tax measures. Goldman Sachs forecasted specific changes under a potential Democratic victory: they suggested a tax rate increase from 35%/37% to 39.6% for individuals earning $400,000 or more and a proposed rise in the corporate tax rate from the current rate of 21% to 28%, although they expressed doubt Congress would agree to such changes.
Potential vice presidential candidates have also emerged, with speculation about individuals such as Josh Shapiro, Roy Cooper, Andy Beshear, and Mark Kelly being in the running for the second spot on the ticket should Harris become the nominee.
As the political landscape continues to evolve, many will be watching closely how the Democratic Party adapts its strategies and policies in the lead-up to the election.
This scenario may present an opportunity for a renewed focus on bipartisanship in policymaking, as Harris may need to appeal to a broader electorate. The active engagement of high-profile endorsements could energize her campaign and foster unity within the party as it prepares for the forthcoming election challenges.