President Biden has officially announced that he is withdrawing from consideration for the Democratic presidential nomination, following intensifying calls for him to step aside after a lackluster debate performance against former President Donald Trump. In his absence, Biden endorsed Vice President Kamala Harris, who has expressed her intention to pursue the nomination and has garnered significant endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy.
Goldman Sachs has indicated that if Harris becomes the nominee, her economic policies are unlikely to differ substantially from Biden’s. Analysts from Goldman, led by chief economist Jan Hatzius, stated in a note that they do not expect significant changes in the Democrats’ fiscal and trade policy agenda with Harris at the helm.
The shift from Biden to Harris has marginally increased the Democrats’ chances of securing the presidency, raising the odds to just under 40%, as noted by Goldman. The firm also highlighted that fiscal policy will focus heavily on taxes next year, particularly with the impending expiration of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. This will place the next administration in a position to determine the future of these tax cuts and consider new taxation measures.
Goldman’s projections for fiscal policy under a Biden-led administration include several potential tax changes:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A corporate tax rate increase to 28%, up from the existing 21%, although Goldman expresses skepticism about Congress agreeing to it, suggesting a more likely rate of 25%. In contrast, Trump has promised to reduce the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes above $400,000 to 5%, raised from the current 3.8%.
Should Harris secure the nomination, speculation regarding the vice presidential pick includes governors such as Josh Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.