Why does the United States not have a capital budget Provide

Why does the United States not have a capital budget? Provide at least three reasons with two sentences each. Some developing countries still have separate capital budgets, while advanced countries tend to have a single unified budget. 1. Provide three reasons why a unified budget is preferable in terms of improved PFM performance 2. Elaborate on each of the three reasons in a short paragraph of 2-3 sentences.

Solution

ANSWER-1)

United States does not have a capital budget due to below mentioned reasons:

--A capital budget would be inclusive of the depreciation of outlays on past investment as an operating expense and thus an increase in volume of public investment would lead to counter pressures because the accumulating depreciation charges had to be covered out of current revenues. Thus the moving to a budget which is more reliant on accrual-based accounting may result to diminishing the transparency, increasing in complexity, and making the federal budget process more sensitive to small changes in assumed parameters, such as the rates of depreciation.

--Adopting an accrual approach to only one aspect of the budget could increase concerns on whether the budgeting system would give a fair basis for allocating the resources of government among competing priorities.

--Furthermore, the provision of special treatment to specified areas of the budget, such as capital spending, could make the process more prone to manipulation