Reversing Biden Executive Actions Could Save up to $1.4 Trillion

As the national debt approaches record levels and interest costs surge, the next Administration and Congress will need to find options to reduce deficits and cover the costs of any new initiatives. We recently outlined $700 billion of “easy” and relatively bipartisan deficit reduction as a good place to start and will publish many more options in the coming weeks. One possible source of deficit reduction could come from reversing some of the executive actions from the Biden Administration. 

Through either legislation or new executive action, we find the incoming Administration and Congress could save up to $1.4 trillion, or up to $830 billion if certain rules are withdrawn and/or the courts rule various executive actions cancelling student debt to be illegal. 

Savings from Reversing President Biden's Executive Actions

+The SAVE plan was recently stayed in federal court, which will rule on its legality. The high number assumes SAVE is ruled legal and it is reversed both prospectively and retroactively. The middle number assumes it is ruled legal and reversed only prospectively (so those already enrolled are grandfathered). The low number assumes it is ruled illegal by the courts.
*These rules from the Biden Administration have not been finalized and some may be ruled illegal by the courts. The highest savings figure assumes the rules are finalized and ruled fully legal, the middle savings represents savings if enacted today given the Congressional Budget Office (CBO)’s “50% rule” for preliminary rules, and the $0 represents savings if these changes are withdrawn or struck down by the courts.
‘This is based on estimates from the Department of Education. CRFB estimates costs, and thus savings, would be much larger.
^These options appeared in an earlier CRFB analysis on easy deficit reduction options.
 

To be sure, the next Administration may not want to reverse all of these executive actions. We’ve identified some of these actions as clearly problematic and brazen executive overreach, but others may represent sensible policies well within the executive branch’s authority (though concerningly, none abided by Administrative PAYGO, which was restored in July 2023). Nonetheless, a new Administration and Congress offer an opportunity to review regulations and decide which are worth keeping, which should be reversed, and which should be modified.

Policymakers could theoretically save up to $385 billion by reversing various health care related executive actions put forward by the Biden Administration. This includes roughly $140 billion from reversing a Medicaid rule that allows states to use “directed payments" to boost payments to providers and managed care plans. We’ve written before about how these schemes drive up federal Medicaid costs and help facilitate gaming of the Medicaid match. 

It also includes $75 billion in savings that could come from reversing a rule mandating states to make changes to its eligibility determination and redetermination processes that is expected to result in more enrollment that some have expressed concern could reduce program integrity. In addition, there are $65 billion of potential savings from reversing a drug rebate rule that changed the definition of “negotiated prices” used to calculate direct and low-income subsidies at the point of sale given to Medicare Part D insurers or pharmacy benefit managers. And policymakers could save about $40 billion by reversing an administrative fix to the Affordable Care Act’s “family glitch” that changed the definition of affordability for employer-sponsored health plans to adjust based on number of family members. Reversing a new preliminary rule to cover obesity drugs under Medicare could save up to $40 billion (if the rule is finalized). And removing new minimum staffing requirements for nursing homes funded by Medicaid could save $25 billion.

Policymakers could save up to $550 billion more by reversing and preventing implementation of various student debt cancellation rules put forward by the Biden Administration – although those savings could be much lower if preliminary rules are not finalized and/or if some of these rules are deemed illegal by the courts. Most significantly, repealing the new SAVE Income-Driven-Repayment plan would save about $150 billion if done prospectively and $275 billion if reversed for those already in SAVE as well. Policymakers could also reverse preliminary rules to cancel interest and principal for select borrowers (especially those facing growing loan balances) and allow the Secretary of Education to cancel debt for those facing hardship, along with other rules. Importantly, most of these rules are facing legal challenges, and it will not be possible to save money from reversing them if they are already ruled illegal or if they are withdrawn.

Another $370 billion of deficit reduction could be generated from reversing other Biden Administration actions. For example, reversing the 2021 change to the Thrifty Food Plan (TFP) – which substantially boosted Supplemental Nutrition Assistance Program (SNAP) benefits – would save about $180 billion over the next decade (phasing in this change by freezing benefits until they revert to prior law levels would save about $110 billion). And reversing proposed limits on vehicle carbon dioxide emissions would reduce deficits by an additional $150 billion, by reducing the cost of the Electric Vehicle (EV) tax credit created by the Inflation Reduction Act and boosting gas tax revenue. Reversing various changes to Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) could save another $40 billion, and removing restrictions on the use of Internal Revenue Service (IRS) enforcement funding for those making less than $400,000 could raise about $20 billion.

Finally, lawmakers could restrict future presidential authority to unilaterally increase spending by cancelling student debt, increasing SNAP benefits, or distributing certain farm subsidies. As we’ve previously shown, this would reduce spending by about $80 billion relative to CBO’s baseline – which assumes some probability of future Administrative action – and could prevent significantly more in future spending increases.

Importantly, not all executive action repeals would save money. For example, the Biden Administration used its executive authority to modestly reduce fraud and overpayments in the Medicare Advantage programs. Reversing this change would add to the deficit, and instead the next Congress and Administration should build on it by more aggressively reducing Medicare Advantage overpayments.

Unlike most deficit reduction measures, reversing costly executive actions from the Biden Administrative would not require Congressional action, and could be done through the rulemaking process – although Congress could also act to reverse these costs and prevent future administrations from reimplementing them. Along with other changes, this could help to put the country on a more sustainable fiscal path.