While Republican politicians offered up many crypto-related promises at the recent Bitcoin conference in Nashville, the now infamous Project 2025 Policy Agenda does not mention any crypto-related policies at all. So from a financial perspective, what will be the impact on the US economy on different segments of the population if Project 2025 is implemented next year?
As the 2024 presidential election campaign intensifies, both Republican and Democratic candidates are rapidly evolving their position on cryptocurrencies. The recent Nashville Bitcoin conference saw Donald Trump and other candidates hold nothing back in their pitch for crypto votes. Despite this, the Project 2025 Policy Agenda actually doesn’t mention Bitcoin or crypto at all.
Although President Trump says he knows nothing about Project 2025, it does line up with many of his policy positions and previous statements and there’s no reason to think it wouldn’t be implemented should he retake the Oval Office. So good or bad, what’s in it for Americans?
The Genesis and Goals of Project 2025
The Project 2025 Policy Agenda is a 900-page conservative blueprint, developed by the Heritage Foundation, which lays out a comprehensive plan for overhauling the admittedly bloated US federal government. With proposals spanning tax reforms, energy production, labour laws, and social issues, Project 2025 promises to reshape the American landscape profoundly if implemented by the next Republican president.
Project 2025 was crafted by over 400 conservative contributors under the guidance of former Trump administration officials Paul Dans and Spencer Chretien. It is envisioned as a detailed roadmap for the next Republican presidency, proposing significant restructuring of federal agencies, rolling back climate policies, and shifting economic strategies. The blueprint has been embraced by conservative circles as a potential guide for a second Trump administration.
Sweeping Tax Reforms
One of the most significant and contentious aspects of Project 2025 is its proposal to overhaul the U.S. tax system. The current tax structure, which includes seven tax brackets ranging from 10% to 37%, is fairly criticised by the project as overly complex and burdensome. No one is denying this. Indeed, in his ill-fated debate with Donald Trump, President Biden stated “what I’m going to do is fix the tax system” before throwing out a host of nonsensical statements about billionaires paying their fair share. So instead of the current seven brackets, Project 2025 advocates for a simplified system with just two tax brackets: a 15% flat tax for incomes up to approximately $168,000 and a 30% tax for higher incomes. Additionally, the plan aims to eliminate most deductions, credits, and exclusions, though it does not specify which ones would be removed.
While this seems reasonable, some economists warn that these changes could lead to significant tax increases for middle-class families.
For example, a family earning $100,000 annually could see their tax bill rise by $2,600 under the 15% flat tax, especially if the Child Tax Credit is eliminated. In contrast, wealthy individuals could benefit from substantial tax cuts, with estimates suggesting that a married couple earning $5 million a year could enjoy a $325,000 tax reduction. Multi-millionaire couples would be rare, of course, as according to US Census data, the average personal income in the U.S. is approximately $63,214, while the median household income is around $74,580.
Corporate and Capital Gains Taxes
Project 2025 also proposes reducing the corporate tax rate from 21% to 18%, aiming to stimulate investment and economic growth. Additionally, in measures are designed to boost economic activity, it calls for lowering the capital gains tax for high earners from 20% to 15%.
Other Economic Proposals
Beyond tax reforms, Project 2025 includes several other economic proposals:
- Energy Production: Expanding oil and natural gas production to increase energy security.
- Federal Reserve: Some proposals suggest eliminating the Federal Reserve or diminishing its powers, with others advocating a return to “free banking.”
- Medicare and Medicaid: Transforming Medicaid into a block grant program and making Medicare Advantage the default option for new enrollees.
- Labour Laws: Weaken child labour protections, allowing teens to work in dangerous jobs with parental consent. The plan also proposes changes to overtime laws and additional labour reforms.
- Consumer Protections: Eliminating the Consumer Financial Protection Bureau and potentially the Federal Trade Commission.
- Immigration: Increasing funding for a border wall, restricting visa access, and dismantling the Department of Homeland Security.
Political Reactions and Implications
President Joe Biden and Vice President Kamala Harris have highlighted Project 2025 as a significant threat to the country’s economic stability and social progress. Biden has described it as “the biggest attack on our system of government and our personal freedom that has ever been proposed in the history of this country.”
As mentioned, Trump has distanced himself from the plan, claiming no involvement in its creation and expressing disagreement with some of its recommendations. Despite this, many former Trump officials were involved in developing the blueprint, indicating alignment with his administration’s broader goals.
Conclusion
Project 2025 represents an ambitious and controversial vision for the future of the United States. Read in its entirety, it is not the ‘end of the world’ it is being portrayed as. Certainly, there is plenty that goes further than most would be comfortable with, but its implementation would require significant legislative support from both parties, which likely dooms the most radical changes anyway. Nonetheless, its potential impact on the economy and American society could be profound.
While initial reactions have been predictably negative, it’s undeniable that many U.S. federal agencies are inefficient and wasteful. The proposal to eliminate the Federal Reserve could gain support after the economic debacle of the COVID years and run away inflation. As the election approaches, the debate over these proposals will likely intensify, along with the place for crypto in the US economy, as few believe the status quo is working anymore.