Update 796 — RNC Platform/Project 2025:
Focus: Financial, Education, Industrial Policy
The Republican Party, meeting this week at its convention in Milwaukee, has big policy plans for the American people. The GOP and think tanks supporting it have proposed “a second American Revolution” that will be bloodless “if the left allows it to be.” From mass deportation to the elimination of the Department of Education, the radical, often deeply unpopular, plans constitute a serious threat that would overhaul successful current policy and gratuitously imperil the national economy.
Today, we examine the main economic regulatory aspects of the plans laid out in the GOP platform and the Heritage Foundation’s “Project 2025.” We focus on proposals for consumer protection and the Fed, education, industrial policy, and immigration. On Friday, we will refocus on taxes, spending, and tariff policy. See below…
Best,
Dana
On Monday, the Republican Party formally nominated former President Trump and his newly-announced running mate Senator J.D. Vance (R-OH) at the Republican National Convention in Wisconsin. With Trump confirmed as the party’s presidential nominee, this week, we spotlight a series of dangerous GOP economic policy proposals endorsed by the party and right-wing think tank allies that could become a reality under a second Trump presidency.
Trump and his conservative allies have laid out their economic agenda in a series of proposals that would reshape America’s economy, undermining the Biden administration’s significant progress toward improving the lives of student borrowers, consumers, and workers across the country. These include Project 2025, the Heritage Foundation’s far-ranging guide for a second Trump administration to reorganize the American government and economy, and the 2024 GOP platform, which was formally adopted by the National Republican Party this week.
Today, we focus on a few specific proposals relating to the Federal Reserve, consumer protection, education, industrial policy, and immigration. On Friday, we will highlight several proposed changes to tax, tariffs, Social Security, and Medicare.
Financial Policy
The Federal Reserve
The Federal Reserve has long been responsible for fulfilling its dual mandate: promoting maximum employment and stable prices. The Fed regularly adjusts monetary policy in pursuit of these goals.
Project 2025 proposes eliminating the Fed’s dual mandate by eliminating any duty it has to keep the labor market strong. Additionally, Project 2025 proposes restricting the Fed’s “lender-of-last-resort” (LOLR) function which allows it to provide liquidity to banks during periods of stress. The Fed’s LOLR function has allowed it to mitigate the spread of instability throughout the financial system, protecting the American economy from crashing into recession numerous times over the past decades. Restricting access to the Fed’s discount window through which it provides this crucial service would limit banks’ access to liquidity and make the U.S. financial system systematically more prone to collapse.
Project 2025 also recommends several other broad changes that appear rooted in an ideological push to reduce the Fed’s scope and operations, including winding down the Fed’s balance sheet and limiting future expansions of the Fed’s balance sheet to U.S. treasuries. These could have wide-ranging implications and weaken the Fed’s ability to fulfill its mandate.
A second term of Trump in the Oval Office could also lead to a less independent Fed. The Fed has consistently been clear that its monetary policy decisions are independent of partisan politics and election cycles. While in office, Trump disagreed with the Fed’s interest-rate-setting committee’s interest decisions and said that he had the right to fire Fed Chair Jerome Powell, even tweeting “…who is our bigger enemy, Jay Powel (sic) or Chairman Xi?” In April, the Wall Street Journal reported on plans drafted by Trump allies that would reduce the Fed’s independence, arguing that as president, Trump would have the authority to oust Chair Powell before the end of his term in 2026 and that the president should be consulted on interest rate decisions moving forward. Last month, Trump said he would “let” Powell serve the remainder of his term as Chair “especially if I thought he was doing the right thing.”
Consumer Protection
The Consumer Financial Protection Bureau (CFPB) was formed as a watchdog focused on protecting American consumers from unfair and abusive practices at the hands of financial institutions. Since the Bureau opened its doors in 2011, it has provided over $20.7 billion in financial relief to over 205 million consumers.
Project 2025 makes clear that “Congress should abolish the CFPB…” but resolves that until a complete dissolution of the agency is possible, Congress should repeal Section 1071 of the Dodd-Frank Act. The CFPB recently finalized a rule implementing Section 1071, which would require lenders to report data annually on credit applications to help the Bureau better understand the financing needs of small businesses owned by women and minorities and identify possible discrimination in an effort to facilitate the enforcement of fair lending laws.
Project 2025 also proposes redefining terms like “deceptive, unfair, and abusive” to likely narrow the scope of the CFPB’s work, and by extension its ability to bring justice to consumers who have been wronged by corporations.
Education Finance and Policy
Donald Trump’s agenda for his second term would have far-reaching consequences for education in America. The GOP platform and Project 2025 push for decades-old conservative priorities that would drastically reduce the federal government’s role in education, hamper public schools, and inject religion and conservative values into the classroom.
Department of Education
Both the GOP platform and Project 2025 promise to abolish the Department of Education (DOE), a priority for the GOP since the department was founded in 1979. What exactly that would look like is not entirely clear, as the DOE has a long list of important responsibilities that would either need to be taken up by another agency or eliminated entirely. These responsibilities include handling federal student loans, handling programs for high-poverty schools such as Title I, investigating complaints against schools, and many more. The GOP platform promises to “send it back to the states,” implying that at least some of these responsibilities would be handed over to state-level agencies. Project 2025 delineates where some of the existing responsibilities of the DOE would fall within other government agencies but many questions would remain.
In a similar vein, Project 2025 would seek to reorganize programs run by the DOE such as Title I that support low-income schools, with the goal of having the states take over the funding within 10 years and the federal government giving the states block grants in the meantime. This could potentially have the effect of dismantling Title I, as Project 2025 would not create requirements for how these block grants are spent, giving states little incentive to spend the money for the purpose for which it is allocated. In the event that states do not backfill the lost federal funding provided by Title I, states would suffer a massive loss of teaching positions and negatively affect millions of students.
Privatize Federal Student Loans
Project 2025 would seek to dismantle federal student loan programs, with the ultimate goal of re-privatizing them. The plan would include phasing out existing income-driven repayment programs and replacing them with a one-size-fits-all repayment plan that would massively increase borrowers’ student loan payments by thousands of dollars every year relative to what borrowers are eligible for under President Biden’s SAVE plan.
Additionally, Project 2025 proposes moving responsibility for federal student loans over to the Department of Treasury and ultimately implementing a plan to hand student loans over to private companies. It should not come as a surprise that Project 2025 also includes plans to make it impossible for loan cancellation to occur under the federal government, serving as red meat for conservatives outraged by President Biden’s student debt relief efforts.
While conservatives have long argued that letting the free market handle student loans makes the most sense, privatizing federal student loans would entail several drawbacks:
- Students would no longer have access to federal income-driven repayment plans, or Public Service Loan Forgiveness, which Project 2025 would repeal altogether.
- Interest rates would be based on creditworthiness, meaning students from low-income families would likely end up with higher interest rates.
- Subsidized federal student loans would no longer be available to students in need of financial aid
In short, privatizing federal student loans would likely benefit private lenders to the tune of several billion dollars a year at the expense of students in most need of financial relief.
School Choice
The GOP platform promises “universal school choice,” another decades-old conservative priority. Over 80 percent of American students attend public schools, which have long been the target of conservative ire. To undermine the “monopoly” that public schools hold over American K-12 education, conservatives have long championed “school choice,” meaning giving parents the ability to decide whether their child goes to a public school or an alternative, such as private schools, charter schools, or homeschooling. School choice is often accompanied by a public funding mechanism that allows taxpayer dollars to follow a student to whichever school their parents choose for them, such as school vouchers. Critics of school choice have referred to it as a Trojan horse to defund public schools and privatize America’s education system under the guise of giving power to parents. According to one study, America’s K-12 public schools are underfunded by nearly $150 billion annually, and funneling taxpayer dollars from traditional public schools to, for example, private schools that are already self-funded would exacerbate the problem.
Eliminating Head Start
Project 2025 calls for eliminating Head Start, which provides access to no-cost child care, among other services, for families living in poverty. In FY23, 833,000 families benefited from the program. Under Project 2025, they could see their childcare programs vanish entirely or have to spend nearly $12,000 a year (the average annual cost for toddlers) for a child to maintain enrollment in an early learning program. That figure is an underestimate given the fact that eliminating Head Start, which accounts for a substantial portion of America’s overall childcare supply, would reduce the number of available childcare spots – particularly in rural and Latino communities. Assuming a continuation of current demand levels, a reduction in the number of available childcare slots would cause the cost of tuition to skyrocket. Given the unlikelihood that families living in poverty would be able to afford such costs, it is reasonable to anticipate that many parents of students benefiting from Head Start would struggle to maintain employment without access to an affordable childcare option.
Conservative Values in Schools
Both the GOP platform and Project 2025 include measures to push conservative values onto American students, both overtly and covertly. The GOP platform proposes reinforcing the “right to pray” and read the Bible in schools, eroding the separation of church and state in public education at a time when injecting Christian values into the education system is gaining steam in many red states. The GOP platform would also defund schools that teach “Critical Race Theory” and gender “indoctrination,” frequent canards used to scare conservative parents about “liberal indoctrination” in public schools. Project 2025 would also pass laws against using a student’s preferred pronouns without parental consent, potentially undermining the rights of trans and nonbinary students.
Both the GOP platform and Project 2025 call for laws to reinforce “parental rights in education.” On the surface, “parental rights” mean that parents have sway over what their children are taught in school. Beneath the surface, “parental rights” are used as a way to push conservative values into schools. In the past, “parental rights” have been a vehicle to limit sex education and limit the rights of LGBTQ+ students. During the COVID pandemic, parental rights activists railed against remote learning and mask mandates in schools. Critics will point out that parents continue to have the ability to meet with teachers and administrators, speak out at school board meetings and vote for their composition, and offer official and unofficial feedback on what their children are taught and that those who campaign for parental rights are often trying to make schools less inclusive and welcoming to LGBTQ+ students and students of color, whose own parents’ opinions are absent from the “parental rights” movement.
Industrial Policy
The GOP’s agenda for a second Trump term would reverse much of the progress made by the Biden Administration to encourage the green transition and fight climate change. The GOP platform proposes canceling President Biden’s electric vehicle mandates, while Project 2025 proposes repealing President Biden’s clean energy subsidies. Both of these are key provisions of President Biden’s Inflation Reduction Act and other spending bills, and without them, it is unlikely that America will meet Biden’s goal of reducing greenhouse gas emissions to half of their 2005 levels by 2030. Estimates suggest that President Biden’s investment in clean energy has created over 300,000 jobs and spurred $361 billion in private investments, all of which would be jeopardized by a second Trump term that would hit the breaks on the green transition.
Instead, Trump and the GOP plan to double down on fossil fuels. The GOP platform proposes to “unleash American energy” by making the US “the number one producer of oil and natural gas in the world.” This is despite the fact that the US is already the world’s top producer of both oil and natural gas. The GOP platform also calls for “terminating the socialist Green New Deal,” despite the fact that the Green New Deal never became law. Taken as a whole, Trump and the GOP’s plan is to “drill, baby, drill” regardless of the consequences that might have for the planet.
Housing
Neither the GOP platform nor Project 2025 has much to say about housing. Project 2025 suggests a “reset” at HUD, with a broad reversal of the Biden Administration’s “corrosive progressive agenda” and “reversing HUD’s mission creep.” Project 2025 proposes making it more expensive for first-time home buyers by increasing mortgage insurance premiums on FHA loans with terms longer than 20 years, including the most popular mortgage product, the 30-year fixed loan.
The GOP platform provides scant few genuine policy details. It calls for a reduction of mortgage rates by slashing inflation, ignoring the fact that inflation is already edging close to the Fed’s goal of 2 percent. The platform also calls for the opening of ”limited portions” of federal lands for new home construction, mirroring proposals by Senator Mike Lee (R-UT) and other Republican lawmakers to open up federal lands especially in the West to combat the housing supply shortage. The GOP platform would cut “unnecessary” regulation, though it does not include details or examples of what that would mean. Finally, the proposal would promote homeownership through tax incentives and support for first-time buyers, ironically not too dissimilar to proposals made by President Biden in his budget proposal and State of the Union address which Republicans were none too keen to embrace.
Immigration
Trump and the GOP have made their hardline stance on immigration a focal point of their 2024 platform, promising draconian measures to prevent more immigrants from entering the country and contributing to the economy, making life harder for those who do. Some highlights on immigration from the GOP platform and Project 2025 include the following:
- The largest deportation program in American history, with Trump on many occasions promising the deportation of millions of immigrants.
- Strict vetting, which the GOP platform promises would prevent “Christian-hating” individuals as well as “jihadists and jihadist sympathizers” from entering the country. In light of Trump’s first term, this likely means a renewed Muslim ban.
- Stop sanctuary cities by cutting federal funding to jurisdictions that provide sanctuary to undocumented immigrants.
- Ban non-citizens from living in federally-assisted housing, even if they live with a US citizen.
- Deny loan access to students at “schools that provide in-state tuition to illegal aliens.”
It is important to remember how beneficial immigration is for the US economy. Immigrants fill important jobs in critical fields, like construction and farming, that are suffering from labor shortages. They aid in the growth of the US labor force at a time when that growth is needed to support an aging population. Immigrants drive entrepreneurship, with immigrants 80 percent more likely to start a business than native-born Americans. Far from being a detriment to the economic well-being of US citizens, immigration is expected to bolster the US economy by about $7 trillion over the next decade, according to the CBO. Stifling immigration as Trump and the GOP plan to do would create labor shortages, hurt many key industries, and reduce economic growth in a way that hurts all Americans.
Conclusion
Our analysis above is a partial look at the full scope of the GOP and Trump’s economic policy plans — we will look at fiscal and other policies on Friday— but the issues above show that a second Trump term would have drastic consequences for America and the national economy. When combined with Project 2025’s plan to fire potentially up to a million civil servants and replace them with handpicked supporters loyal to Trump and a far-right Supreme Court majority that appears willing to give even more authority and immunity to presidents, there can be no doubt that Trump and his conservative allies would consolidate more power to the presidency while pushing the federal government in an extreme direction.
The designs outlined by Project 2025 and the party platform would have dire consequences for America as a whole – economically and otherwise – especially for those who are most vulnerable, such as low-income and middle otherwise economically disadvantaged workers and families. Knowledge and forewarning of what Trump and the GOP have in mind raise the already-high stakes in this election for all Americans, and make it clearer: staying home is not an option.