AIUI, it isn't exactly that it is enshrined into law that if you don't use it, you won't get it next year. It's just that there's never enough money to give everybody what they want, and not using all your money is a primo-grade signal that you don't need it, so of course you lose it. I believe you'll find this isn't an "American" phenomenon at all.

With some kind of award for not using all your money, it's hard to justify it for the people spending it... and "rewards for not spending all the money" are also really easy to cut out of next year's budget...

Certain patterns just naturally emerge with budgeting at scale, and if you've got some brilliant idea about how to fix it I can assure you that with just some minimum business acumen you can become a very rich person.