H.R. 5438: Incentivize Savings Act

H.R. 5438, the Incentivize Savings Act, sets a new rule for what happens to time-limited money a federal agency doesn't spend before its deadline. Today most of it goes back to the Treasury. Under the bill, it splits three ways: 49% stays with the agency for one more year, 49% goes to principal and interest on the national debt, and 2% funds retention bonuses for employees.

The math is easy to picture. For every $100 million an agency leaves on the table, $49 million carries over, $49 million pays down debt, and up to $2 million goes to staff bonuses — and no single bonus can top 10% of an employee's basic pay. Any bonus money not paid out also goes to the debt.

The bill pairs that carryover with a leash. An agency that uses these savings rules can't turn around and ask for a bigger budget the next year — its request to the Office of Management and Budget and in the President's budget to Congress can't exceed the prior year's request, except for an inflation adjustment tied to the Consumer Price Index. Sponsors frame this as keeping agencies from banking savings and still padding future asks.

It reaches broadly: every executive-branch agency, plus the U.S. Postal Service and the Postal Regulatory Commission, though not the American Red Cross. Supporters say it rewards finding savings instead of rushing to spend. Critics counter that paying agencies and staff out of unspent funds could push offices to delay hiring, contracts, or services just to show a surplus — and the savings only materialize if agencies actually leave more money unspent.