Obama to Agencies: Cut Spending, Keep Half

It's an annual ritual at federal agencies: Spend as much of your budget as you can (without going over, of course), because the rest goes right back to the Treasury -- and may be withheld from you the following year on the grounds you didn't really need it.

The Obama administration has a different idea. According to the Wall Street Journal (full article behind paywall) the administration is readying a proposal that would allow agencies who underspend their budgets to redirect half of the savings to other programs. It's a modest effort, covering only about $25 billion in spending. And it's likely to be met with a great degree of skepticism on Capitol Hill, where lawmakers like exercising full control over agencies' purse strings.

In a sense, the program is designed to take the Pentagon's effort to identify $100 billion in overhead savings to pay for weapons systems and force structure and implement it governmentwide. Under that initiative, each of the military services must come up with $2 billion in savings for the Pentagon's fiscal 2012 budget request. But they get to keep the money to pay for weapons modernization and maintaining the force.