Project 2025 Impact on Middle Class

Project 2025: Impact on Middle Class Finances

There is not a specific section in the Project 2025 plan titled “Middle Class Finances”. But there are directives scattered throughout that will have enormous impact on the finances of middle-class Americans.

This document includes information about:

Taxes	Medicare
Federal Disaster Aid	Family Planning, Child Care, Child Support
Jobs, Wages, Overtime, & Benefits	Food Assistance
Student Loans	Housing
Medical Insurance	Privatization and Deregulation
Restrictions on Medical Care	Finance and Bank Regulations
Medicaid & Long-Term Care	Veterans Benefits

Note this list may not be exhaustive. And there are no recommendations in Project 2025 designed to mitigate the impacts listed here. In fact, Project 2025 calls for substantial tax cuts for top income earners and corporations. So, the financial changes directed at the middle class are not part of any effort to reduce the deficit.

The page numbers refer to the .pdf version of the Project 2025 document, which you can download here:

(Ref 1) Mandate for Leadership, The Conservative Promise, Project 2025; https://static.project2025.org/2025_MandateForLeadership_FULL.pdf

Other references link to web articles you can click to open (works best to right click and choose “open link in new tab”).

Read More Here

Tax Changes

Project 2025 has two major sections on Tax Rates, the “intermediate” and longer term “fundamental”.

Intermediate Tax Reform. “The Treasury should work with Congress to simplify the tax code by enacting a simple two-rate individual tax system of 15 percent and 30 percent that eliminates most deductions, credits and exclusions… The corporate income tax rate should be reduced to 18 percent. Capital gains and qualified dividends should be taxed at 15 percent.” (Ref 1, page 696)

This 2-bracket system shifts the tax obligation toward the middle class. The Center for American Progress (CAP) has worked the numbers and found it would: (Ref 12)

“Enact a two-income tax bracket system that would raise taxes by $3,000 for the median family of four—which makes about $110,000 a year—and raise taxes by $950 for the typical single-person household, which makes about $40,000 a year.
Provide an average $1.5–2.4 million tax cut for the 45,000 U.S. households making more than $10 million annually from the combination of the “two-bracket” system and cuts to taxes on the wealthy’s investment income.
Cut the corporate tax rate to 18 percent, which amounts to a $24 billion tax cut for the Fortune 100.”

Read more here:

Fundamental tax reform: “The federal income tax system heavily taxes capital and corporate income and discourages work, savings, and investment. The public finance literature is clear that a consumption tax would minimize government’s distortion of private economic decisions and thus be the least economically harmful way to raise federal tax revenues. There are several forms that a consumption tax could take, including a national sales tax, a business transfer tax, a Hall–Rabushka flat tax, or a cash flow tax.” (Ref 1, page 698)

The same CAP report (Ref 12) explains in detail how a consumption tax works and the drawbacks and economic system shocks it causes and states:

“The end result is a staggering redistribution of taxes from the wealthy and corporations to low- and middle-income households. The lowest-income households (the bottom 20 percent) would pay $4,100 more in taxes, and middle-income households (the middle 20 percent) would pay $5,900 more. The top 1 percent, meanwhile, would see a $360,000 tax cut, and the top 0.1 percent would see a $2 million tax cut.”

“Project 2025’s tax plans—both their intermediate changes to tax rates or fundamental restructuring of the tax system—would raise taxes on low- and middle-income households while cutting taxes for the wealthy.”

Federal Disaster Aid

“These opportunities include privatizing TSA screening and the Federal Emergency Management Agency (FEMA) National Flood Insurance Program, reforming FEMA emergency spending to shift the majority of preparedness and response costs to states and localities instead of the federal government.” Ref 1, page 135)

Note: TSA is the Transportation Security Agency.

The Federal Emergency Management Agency would be scaled down to “limited” status. There is no consideration mentioned of the ability of various states and localities to take over the responsibility or how they would afford the necessary equipment. Nor is there any consideration of the impact on local economies without federal disaster aid.

“Under a conservative Administration, success would yield an end to SBA direct lending” Ref 1, page 750)

SBA is the Small Business Administration.

“Federal agencies play a critical role in providing swift and efficient support to these families and businesses reckoning with extreme weather events and searching for a semblance of control in their lives during a period of significant instability. One such resource is the Small Business Administration’s (SBA) disaster loan program—the federal government’s largest source of disaster recovery funds for survivors, which provides low-interest direct loans to small-business owners and households who need to repair and rebuild their properties.” (Ref 14)

“Project 2025 suggests privatization as one potential solution and claims, without evidence, that loan availability “reduces individuals’ incentives to purchase disaster-related insurance.” However, it makes no mention of the skyrocketing costs for families in these situations.” (Ref 14)

Jobs, Wages, Overtime, & Benefits

“Repeal Davis–Bacon. Congress should enact the Davis–Bacon Repeal Act and allow markets to determine market wages.” (Ref 1, page 604)

The Davis–Bacon Act requires paying the “prevailing local wage” to contractors and subcontractors working on federally funded contracts more than $2,000 for the construction, alteration, or repair of public buildings or public works. This ensures a minimum wage rate for laborers and mechanics on such projects.

Project 2025 recommends repealing the Davis-Bacon act. This would allow contractors to hire temporary workers at lower than the prevailing wage, to the detriment of local laborers and mechanics.

“Congress should provide flexibility to employers and employees to calculate the overtime period over a longer number of weeks.” (Ref 1, page 592)

This is best explained by example. An employer could declare a 160hr “work month” instead of a 40hr “work week”. That employer could require and employee to work 60 hours in the first week, cut their hours to 20 the last week, and pay no overtime during the month.

This article from Center for America Progress explains other ways that Project 2025 is trying to reduce the number of workers eligible to receive overtime (Ref 9) and concludes:

“Overtime eligibility and access are already among the most common forms of wage theft and other violations of the law by employers. From 2013 to 2023, overtime violations accounted for 82 percent of back wages for Fair Labor Standards Act violations—which cover minimum wage, overtime, retaliation, and tip theft by employers. Most violators of these laws face minimal consequences. A system rife with abuse needs clearer guidance and more enforcement, not additional “flexibility” for employers to decide who gets overtime pay and when.” (Ref 9)

“Support repeal of massive spending bills like the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA), which established new programs and are providing hundreds of billions of dollars in subsidies to renewable energy developers, their investors, and special interests, and support the rescinding of all funds not already spent by these programs.” (Ref 1, page 365)

The IIJA and IRA together have created 334,500 new clean energy and infrastructure jobs. If Project 2025 succeeds in repealing them it potentially eliminates hundreds of thousands of jobs. That will obviously impact not only the individuals holding those jobs, but the communities where the jobs are located. (Ref 11)

Unions: The AFL-CIO has created this website to cover Project 2025’s impact on labor unions: Project 2025 and Unions

Reforming Federal Retirement Benefits (Ref 1, page 77).

The Project 2025 document says,“Career civil servants enjoy retirement benefits that are nearly unheard of in the private sector.” and “Although the government pension system has become more like private pension systems, it still remains much more generous, and other means might be considered in the future to move it even closer to private plans.” (Ref 1, page 76)

Student Loans

” The Secretary should phase out all existing IDR plans by making new loans (including consolidation loans) ineligible and should implement a new IDR plan.” (Ref 1, page 337)

IDR plans are income-driven repayment plans for student loan borrowers, such as the Biden-Harris administration’s new Saving on a Valuable Education (SAVE) plan. An IDR adjusts the payments for a past student loan based on the borrower’s income. The proposed Project 2025 IDR is a one-size-fits-all plan with no interest rate subsidies and no loan forgiveness. (Ref 1, page 338).

This is not just for new loans; even people who have already refinanced or are currently in the SAVE plan would see their payments go up substantially on the Project 2025 plan, paying between $2700 and $4000 more per year (REF 10).

Eliminating the interest rate subsidies currently in place may also bring back the problem of ballooning balances even for borrowers who make on-time monthly payments.

“The Public Service Loan Forgiveness program, which prioritizes government and public sector work over private sector employment, should be terminated” (Ref 1, page 354)

Project 2025 would eliminate the program that allows teachers, firefighters, social workers and other public service workers to have their student loan debt forgiven after 10 years of public service and 120 qualifying payments on their Direct Loans.

Medical Insurance

Access to affordable and comprehensive Medical Insurance is a vital component of financial health for most families. Many cannot afford medical care at all without insurance, and a shocking number of underinsured Americans end up with significant medical debt. (Ref 2)

“Separate the subsidized ACA exchange market from the non-subsidized insurance market, giving the non-subsidized market regulatory relief from the costly ACA regulatory mandates.” (Ref 1, page 469)

“Project 2025 calls for removing the historic consumer protection provisions of the Affordable Care Act (ACA) for nonsubsidized marketplace plans. Before the ACA, insurers could deny or charge people with preexisting conditions—as many as 1 in 2 Americans—more for coverage, set stringent annual and lifetime coverage limits, and even deny or increase the costs of coverage for women based on their gender.

Under Project 2025, these protections would be stripped away for nonsubsidized ACA marketplace plans—in other words, for people who buy ACA marketplace insurance without federal subsidies. Those plans would also have no limits set on how much of people’s premiums have to be spent on actual health care, enabling insurers to once again reap profits at the expense of patients”. (Ref 3)

The change also makes it easier to sell high profit “junk” insurance plans that leave enrollees vulnerable to high out-of-pocket costs or gaps in coverage. (Ref 3)

Restrictions on Medical Care

Project 2025 will require the FDA to reverse the approval of long-approved, safe, cheap, and effective drugs which can enable a non-surgical abortion. (Ref 1, page 458)

The Biden administration in 2022 ordered Health and Human Services (HHS) to provide funds to assist patients in traveling out of state for abortions when needed. Project 2025 will prohibit abortion travel funding. (Ref 1, page 471)

Project 2025 calls on the HHS to defund any training programs that include abortion care. There are multiple references in the HHS section to ways that HHS should deny abortion care and gender-affirming care, even in states where it is otherwise legal, by: (Ref 1, chapter 14)

Defunding or preventing training for care by medical providers
Preventing HHS from providing or spending funds on this type of care
Allowing medical & insurance providers to deny services even though the services are legal

Defunding of training programs will make these services harder for patients to obtain. These restrictions will most likely cause great financial hardship to patients and parents who must fund these services or travel to find these services themselves.

Medicaid and Long-Term Care

“Project 2025 proposes capping Medicaid payments to states with no regard for their actual needs. It also gives states the power to deny coverage of particular services, including long-term services and supports such as home- and community-based care. …more than 21 million seniors and nonelderly adults with disabilities were enrolled in Medicaid in 2021; … Alternatively, Medicaid funding caps could force states to outright deny coverage of particular benefits, especially costly services such as long-term care.” (Ref 4)

Note that millions of children get their health care via Medicaid, and they may lose that health care with these cuts (Ref 8)

“Prohibit Planned Parenthood from receiving Medicaid funds.” (Ref 1, page 471) Planned parenthood provides other women’s health services besides abortions, including birth control and cancer screenings. Women on Medicaid have limited options already for getting healthcare services, and may not be able to afford travel to find the care they need.

“Add targeted time limits or lifetime caps on benefits to disincentivize permanent dependence.” (Ref 1, page 467)

Obviously, patients already on Medicaid are in no position to pay for more of their medical care. Families who cannot get long-term care support for an aging or disabled loved one may also be severely impacted, and family members (especially women) sometimes have to leave the work force to provide care at home. This affects the earning potential and financial security of the family for a lifetime.

Medicare

“Repeal harmful health policies enacted under the Obama and Biden Administrations such as the Medicare Shared Savings Program and Inflation Reduction Act.” (Ref 1, page 465)

The repeal of the Inflation Reduction Act (IRA) would have huge impacts on Medicare drug costs. One of the benefits of the IRA was to make many vaccines free for Medicare enrollees. According to HHS.GOV, in 2023 the free vaccines saved enrollees more than $400 million in out-of-pocket costs. (Ref 5)

The Inflation Reduction Act also instituted a limit of $2000 on out-of-pocket prescription costs and eliminated the “doughnut hole” of prescription coverage. It also limited the cost of insulin to $35/month.

The IRA also enabled Medicare to negotiate with drug providers for lower prescription drug prices.

The Center for American Progress evaluates the possible results of rolling back the IRA drug provisions here: (Ref 7).

“ Make Medicare Advantage the default enrollment option.

Give beneficiaries direct control of how they spend Medicare dollars.” (Ref 1, page 465)

Medicare Advantage (MA) is private insurance, not Traditional Medicare, which is run by the government.

Medicare Advantage was originally expected to cost less than traditional Medicare, but it hasn’t worked out that way. The Center for American Progress reports that in 2024 alone, Medicare will pay MA plans at least $83 billion more than what it would cost the government for these same enrollees in traditional Medicare. And, long term, if a higher percentage of enrollees move to Medicare Advantage, it will bankrupt the program. (Ref 6)

Another eye-opener is that Medicare Advantage does the opposite of “giving beneficiaries direct control”. Once people are in Medicare Advantage plans, they are often restricted to a specific network of providers and have limited choices, the same way that HMO’s work.

Family Planning, Child Care, Child Support

Women’s ability to control when and how they have families is a major determinant of their future earning power. The section above on Restrictions on Medical Care lists ways that Project 2025 attempts to restrict abortion even in states where it is legal.

The plan also makes it more difficult to prevent pregnancies by eliminating some emergency contraception medications from free preventive care requirements. (Ref 8)

“Prohibit Planned Parenthood from receiving Medicaid funds.” (Ref 1, page 471) This includes any non-abortion services that Planned Parenthood provides.

There are multiple references in the Health and Human Services to ways that HHS should promote religiously directed ideas of birth control, promoting “fertility awareness–based methods of family planning” and eliminating programs that “undermine family formation”. (Ref 1, chapter 14)

“Instead of providing universal day care, funding should go to parents either to offset the cost of staying home with a child or to pay for familial, in-home childcare.” (Ref 1, page 486)

“Eliminate the Head Start Program” (Ref 1, page 482) Head start does not just provide pre-school education for children. It provides free child care in rural and low-income communities that have few child-care resources, for women who can’t afford paid childcare. It enables young women with children to pursue education or job training, to combat generational poverty.

Project 2025 proposes a modification to federal and state Child Support through tax policy. (Ref 1, page 479) The non-resident father of a family with an outstanding child support order where the mother has custody of children will be given a “child support tax credit”. The stated purpose: “This way, the non-resident father’s role as financial provider and relational figure is affirmed, and much-needed financial resources are given to the children”. There is NO tax credit for working mothers.

Food Assistance

Reduce the flexibility states have for waiving work requirements for SNAP benefits. (Ref 1, page 299)

Ban states from providing free/reduced school lunches to middle class kids, restrict to only the neediest kids. Cut back food provided during the summer months. (Ref 1, page 303)

Eliminate the Dept of Agriculture initiative to encourage farmers to grow organic crops. (Ref 1, page 293)

Housing

The Project 2025 document recommends “Statutorily restricting eligibility for first-time homebuyers and abandoning the affirmative obligation authorities erected for the single-family housing programs across federal agencies and government-sponsored enterprises.” (Ref 1, page 510)

“Immediately end the Biden Administration’s Property Appraisal and Valuation Equity (PAVE) policies” (Ref 1, page 508) PAVE is a task force established to combat discrimination in home sale appraisals.

Privatization & Deregulation

The Federal Flood Insurance program will be privatized. (Ref 1, page 135)

“Break Up NOAA” (Ref 1, page 674) The National Oceanic and Atmospheric Administration is the umbrella agency for the National Weather Service. The Project 2025 document says NOAA “has become one of the main drivers of the climate change alarm industry and, as such, is harmful to future U.S. prosperity…It should be broken up and downsized.”

And:

“Focus the NWS on Commercial Operations” (Ref 1, page 675) As part of the break up of NOAA,the National Weather Service will become a commercial-only operation. Information that was free to everyone before will become a commercial product.

Fannie Mae and Freddie Mac, government agencies that help provide liquidity in the home mortgage market, will be privatized. (Ref 1, page 706)

Finance and Bank Regulations

Project 2025 calls for merging the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation(FDIC), the National Credit Union Administration, and the Federal Reserve’s non-monetary supervisory and regulatory functions. The FDIC currently provides the insurance that makes bank customers whole if banks fail. It does not say whether the consumer insurance will still be available. (Ref 1, page 705) This is important because of the later directive on the same page:

“Policymakers should create new charters for financial firms that eliminate activity restrictions and reduce regulations in return for straightforward higher equity or risk-retention standards. Ultimately, these charters would replace government regulation with competition and market discipline.”

This essentially says that financial institutions get to take more risk with less supervision.

Veterans Benefits

Project 2025 seeks to limit benefits for current and future veterans for religious and financial goals:

“Rescind all departmental clinical policy directives that are contrary to principles of conservative governance starting with abortion services and gender reassignment surgery.” (Ref 1, page 644)

“..explore how VASRD reviews could be accelerated with clearance from OMB to target significant cost savings from revising disability rating awards for future claimants.” (Ref 1, page 650)

VASRD is VA’s Schedule for Rating Disabilities. In other words, Project 2025 seeks to make fewer Veterans eligible for disability benefits to reduce costs to the VA.

“End Housing First Policies” (Ref 1, page 509)

In 2008 the Veterans Affairs department launched a Supportive Housing program that used a Housing First policy to end homelessness for 35000 veterans. (Ref 15). Veterans opportunities to end homelessness will be impacted by eliminating the Housing First policy.

“Congress should abolish the CFPB” (Ref 1, page 839)

The Consumer Finance Protection Board was created out of other agencies by the Dodd-Frank legislation enacted after the mortgage crisis of 2007-1010.

“Since the agency began operating in 2011, CFPB reports service members have submitted more than 400,000 complaints relating to possible violations of consumer protections or military financial rules. ‘In total, the CFPB’s enforcement actions in 42 cases involving harm to servicemembers and veterans has delivered $183 million in redress to victims,’ the agency states. Without this critical protection, those who have served the United States would have little recourse for redressing financial fraud or scams.” (Ref 15)

References: