Question

Please define the following tool for changing the budget: deferrals.

A) The executive delays spending money that has been appropriated for a specific project or program.
B) Withdrawals of previously granted legal authorization to spend money. (The reason why an elected official may refuse to spend allocated money in the budget is to reduce expenditures in order to have an excuse to cut taxes. If expenditures are kept low, then revenues can be low also.
C) A budget law that adds money to some existing function or new purpose during the year.
D) A fixed and small percentage of the approved budget of all or nearly all agencies.
E) Take money from one appropriation account for a designated purpose and spend it in a different fund or appropriation account.
F) Transfers that occur between projects or programs, typically within the same administrative unit, department, or agency.

Answer 1

Deferrals in the context of changing a budget refers to the executive's delay in spending allocated funds. This strategy is used for various financial management goals, including reducing expenditures. Significant budget disagreements between Congress and the president can lead to government shutdowns.

Step-by-step explanation:

Understanding Budget Deferrals

When dealing with the question, 'Please define the following tool for changing the budget: deferrals', the correct answer is: A) The executive delays spending money that has been appropriated for a specific project or program. This means that even though funds have been allocated, their use is postponed for a certain period. Deferrals can be a strategic financial management tool and part of fiscal policy adjustments.

Government shutdowns, such as the ones in 2013 and 1995-1996, occur when Congress and the president fail to agree on a budget or a continuing resolution, leading to a halt in funding for government operations. Congress holds significant power, known as the power of the purse, which allows it to influence federal spending and policy priorities through the budgetary process. However, budgeting done responsibly considers the potential impact of spending and borrowing to avoid large deficits and financial crises.

With tools like the PAYGO Act, Congress has mechanisms in place to prevent legislation from increasing the deficit without being offset by corresponding savings elsewhere. When elected officials choose to delay spending, it is often as a strategy to reduce expenditures or maintain low revenue requirements, potentially allowing for tax reductions.