President Biden announced on Sunday that he will withdraw from the race for the Democratic nomination, following significant pressure for him to step down after a shaky debate performance against former President Donald Trump. In his statement, Biden expressed his support for Vice President Kamala Harris, who then confirmed her intention to continue her candidacy. She has since received endorsements from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy.
According to analysts at Goldman Sachs, if Harris becomes the Democratic nominee, there will likely be no significant changes to the party’s fiscal and trade policy agenda. Chief economist Jan Hatzius and his team stated that they do not expect a meaningful shift in policies. The analysts noted that while Harris’s nomination could slightly improve Democrats’ odds of winning the presidency—now estimated at just below 40%—the overall policy direction will remain consistent.
Goldman Sachs analysts highlighted that tax policy will be a major focus for the upcoming election, particularly as the provisions of the Tax Cut and Jobs Act are set to expire at the end of 2025. The outcome of the election will determine how these tax cuts are handled.
The analysts outlined several key fiscal policies if Biden were to win, including:
– A proposed tax rate of 39.6% for individuals earning over $400,000, an increase from the current rates of 35% and 37%.
– A suggested increase in the corporate tax rate to 28% from the current 21%, though the analysts are doubtful Congress would agree to this and predict a more feasible rate around 25%. Meanwhile, Donald Trump has proposed lowering the corporate rate to 20%.
– An increase in the Social Security and Medicare tax for incomes over $400,000 to 5%, up from the current 3.8%.
If VP Harris becomes the nominee, speculation suggests that the likely candidates for the vice presidential slot could include Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.