Most typically middle managers are not allowed to significantly alter budget for bigger raises that retain important people, yet are then punished or admonished over the comparatively worse budget loss taken through recruiting and onboarding to hire a backfill, as well as getting a reputation for being a bad manager if you can’t work miracles and retain people who deserve raises without giving them raises.

The economics don’t work out the way you describe at all, and few parties in the situation act rationally.