Incentivize Savings Act

Bill Number

H.R. 5438

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Economics and Public Finance

Status

Introduced

Latest Action

2026-02-04: Ordered to be Reported (Amended) by the Yeas and Nays: 25 - 19.

Last Updated

2026-03-26T18:43:33Z

AI-Generated Summary

Purpose of the Legislation

The "Incentivize Savings Act" (H.R. 5438) aims to encourage federal agencies to spend their budgets more efficiently by redirecting unspent (unexpended) funds in ways that benefit the public, such as reducing the national debt, while rewarding employees for helping achieve savings. It promotes fiscal responsibility without allowing agencies to carry over or request larger budgets unchecked.

Key Provisions

• Handling Unexpended Funds: If a federal agency does not fully use its appropriated funds (money allocated by Congress for a specific time period) within the available timeframe:
• 49% of the unspent amount remains available for the agency to use in the next fiscal year.
• 49% is redirected to pay principal and interest on the U.S. public debt (the national debt owed by the government).
• 2% is set aside for retention bonuses for agency employees, to be paid no later than 30 days after the funds expire. These bonuses are capped at 10% of an employee's basic annual salary (regular pay excluding extras like overtime). Any unused portion of this 2% also goes toward public debt payments.
• Budget Request Limits: For the fiscal year after unspent funds occur, the agency's budget proposal to the Office of Management and Budget (OMB) and the President's annual budget submission to Congress cannot exceed the prior year's request, adjusted only for inflation using the Consumer Price Index (CPI, a measure of average price changes for goods and services in U.S. cities).
• Scope and Definitions: Applies to "federal agencies," defined as executive branch agencies (including the U.S. Postal Service and Postal Regulatory Commission) but excludes the American National Red Cross. The law amends existing U.S. Code (title 31, subchapter I of chapter 13) by adding a new section (1311) and updating the table of contents.

Significant Changes to Existing Law

• New Rules for Unspent Appropriations: Previously, unspent funds typically expired and returned to the Treasury without specific reallocations like debt payments or employee bonuses. This bill introduces a fixed split (49%-49%-2%) for such funds, creating incentives not present before.
• Bonus Authority Expansion: It modifies rules under title 5, section 5754 (which governs federal employee retention incentives) by allowing bonuses from unspent funds, with a new cap and a requirement to redirect leftovers to debt reduction.
• Budget Constraints: Adds a novel limit on future budget requests tied to prior underspending, adjusted only for CPI, which differs from standard budgeting practices that allow broader increases based on needs or policy priorities.

Potential Impacts

• On Government Agencies: Agencies may face pressure to spend funds more fully to avoid losing nearly half to debt payments and to secure employee bonuses, potentially improving efficiency but risking rushed or unnecessary spending. Budget growth could be slowed, affecting operations if inflation outpaces CPI adjustments.
• On Citizens: Redirecting funds to public debt could help reduce the national debt over time, potentially lowering interest costs and benefiting taxpayers through long-term fiscal stability. However, it might limit agency services if budgets are constrained.
• On International Relations: No direct impacts mentioned; the bill focuses on domestic budgeting and debt management.

Main Stakeholders Affected

• Federal Agencies and Employees: Executive branch agencies (e.g., departments like Defense or Health) must adapt spending practices; employees could receive bonuses for contributing to savings.
• Taxpayers and the Public: Benefit from debt reduction but may see indirect effects on government services if agency budgets are limited.
• Congress and the Executive Branch: Congress retains appropriation authority, but the bill influences how agencies propose and justify budgets; OMB and the President must incorporate the new rules in submissions.

Notable Legal, Constitutional, or Political Implications

• Legal Implications: The bill integrates into existing federal budgeting laws (U.S. Code titles 5 and 31), but the mandatory redirection of funds to debt could invite challenges if seen as infringing on Congress's exclusive power over appropriations (under Article I of the Constitution). The bonus provisions expand employee incentive rules without requiring new appropriations, which might streamline administration but raise questions about equitable distribution.
• Constitutional Implications: Aligns with Congress's spending authority but introduces executive-branch incentives that could be viewed as an indirect check on agency autonomy, potentially testing separation of powers if agencies argue it hampers their constitutional duties.
• Political Implications: Promotes a conservative fiscal approach by penalizing underspending through debt allocation and budget caps, which could appeal to advocates of government efficiency. It may spark debate on whether it truly incentivizes savings or discourages prudent reserve-keeping, influencing future budget negotiations in Congress.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. McCormick, Richard [R-GA-7]

Cosponsors (69)

Rep. Brecheen, Josh [R-OK-2], Rep. Edwards, Chuck [R-NC-11], Rep. Baird, James R. [R-IN-4], Rep. Cline, Ben [R-VA-6], Rep. Stutzman, Marlin A. [R-IN-3], Rep. Burlison, Eric [R-MO-7], Rep. Fallon, Pat [R-TX-4], Rep. Van Duyne, Beth [R-TX-24], Rep. Jackson, Ronny [R-TX-13], Rep. Self, Keith [R-TX-3], Rep. Webster, Daniel [R-FL-11], Rep. Grothman, Glenn [R-WI-6], Rep. Harrigan, Pat [R-NC-10], Rep. Cloud, Michael [R-TX-27], Rep. Shreve, Jefferson [R-IN-6], Rep. Higgins, Clay [R-LA-3], Rep. Bergman, Jack [R-MI-1], Rep. Biggs, Sheri [R-SC-3], Rep. Donalds, Byron [R-FL-19], Rep. Miller-Meeks, Mariannette [R-IA-1], Rep. Salazar, Maria Elvira [R-FL-27], Rep. Fedorchak, Julie [R-ND-At Large], Rep. Harshbarger, Diana [R-TN-1], Rep. Perry, Scott [R-PA-10], Rep. Palmer, Gary J. [R-AL-6], Rep. Sessions, Pete [R-TX-17], Rep. Hamadeh, Abraham J. [R-AZ-8], Rep. Johnson, Dusty [R-SD-At Large], Rep. Smith, Adrian [R-NE-3], Rep. Gooden, Lance [R-TX-5], Rep. Hudson, Richard [R-NC-9], Rep. McGuire, John J. [R-VA-5], Rep. Fine, Randy [R-FL-6], Rep. Lee, Laurel M. [R-FL-15], Rep. Smith, Adam [D-WA-9], Rep. Barr, Andy [R-KY-6], Rep. Subramanyam, Suhas [D-VA-10], Rep. Burchett, Tim [R-TN-2], Rep. Pfluger, August [R-TX-11], Rep. Gosar, Paul A. [R-AZ-9], Rep. Turner, Michael R. [R-OH-10], Rep. Owens, Burgess [R-UT-4], Rep. Carter, Earl L. "Buddy" [R-GA-1], Rep. Gill, Brandon [R-TX-26], Rep. Moore, Blake D. [R-UT-1], Rep. Crane, Elijah [R-AZ-2], Rep. Mills, Cory [R-FL-7], Rep. Davis, Donald G. [D-NC-1], Rep. Lawler, Michael [R-NY-17], Rep. Moskowitz, Jared [D-FL-23] and 19 more

Recent Actions

• 2026-02-04: Ordered to be Reported (Amended) by the Yeas and Nays: 25 - 19.
• 2026-02-04: Committee Consideration and Mark-up Session Held
• 2025-09-17: Referred to the Committee on Oversight and Government Reform, and in addition to the Committee on the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-09-17: Referred to the Committee on Oversight and Government Reform, and in addition to the Committee on the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-09-17: Introduced in House
• 2025-09-17: Introduced in House

Bill Versions

• Incentivize Savings Act — issued 2025-09-17 — PDF (4 pages)