Besides applying to infinitive clauses, the grammatical rule of extraposition also applies to finite complement clauses, of which there are two types: that-clauses and embedded questions. (The non-finite complement clauses are infinitive clauses and gerund clauses.)
Read this article by John Lawler A linguist and a general practitioner of linguistics from the University of Michigan called The Cliff’s Notes version of Equi vs Raising, from which you will learn more about two important syntactic rules that relate sentence structures. These rules are:
Let’s have a look at the following sentence. Its complement is an embedded question, which is a nominal clause functioning as the subject of the sentence:
As a rule, when a nominal word (or complementizer, i.e., a WH- interrogative) begins a nominal clause, that clause has a function within the sentence. It is also important to note that the nominal word also has a function within the nominal clause itself, but in this analysis, we will be focusing on the function of nominals within sentences. A grammatical function, as you know, relates what the word/nominal does in the syntactic arrangement (colour-coded). For example:
Conversely, take a look at the following sentences:
In comparison to the previous three sentences, the nominal clauses have no grammatical function within these two sentences. Rather, the grammatical function of object is fulfilled by the noun phrase (bolded), and the nominal clause is an appositive (which can be either a noun or a noun phrase) of that noun phrase. Notice that as an appositive, which is a nominal noun phrase in either examples, it merely renames the noun phrase that has come right before it.
It is now important to state that neither of these last two examples could use a WH- interrogative, which by definition has the ability to turn a clause into a subject or object, i.e., a complementizer. Instead, an expletive (that, if, whether) must be used.
Now, in our original example, the nominal clause indeed has a function, which is that of subject, but the structure of the sentence may stymie your parsing to identify the true subject. For at a glance, it appears that the main clause (it’s my prerogative) is replete with subject (it), verb (is), and object (my prerogative). But now recall the rule that when a nominal word begins a nominal clause, that word has a function within the sentence. So you might expect that an expletive rather than how is called for. However, the use of an expletive here would be inaccurate.
Let’s go back to the beginning of this analysis, where I provided a link and mentioned that you will learn from it about the two important syntactic rules that relate to sentence structures. I would also like to mention now that extraposition is also a syntactic rule, similar to Equi and Raising. Extraposition is what has been applied to the my prerogative example to the effect that the main clause has the pronoun it as its subject. However, this pronoun has merely taken the place of the true subject that is the nominal clause. Let’s look at the proposition again:
This indefinite use of the pronoun it is used situationally (to delay the subject, i.e., “Who is it?” “It’s Garie.”, rather than just “Garie.”), which is not covered under the scope of this analysis. This scope covers when it is used expletively, which is when a nominal clause acts as a subject and the indefinite pronoun substitutes for that subject, as illustrated just above. Whether used situationally or expletively, this indefinite use of the pronoun it invariably gives the sentence emphasis.
John Lawler wrote in his article that also talks about extraposition that this pronoun “seems to work to keep subject complement clauses from assuming the normal subject position preceding the verb.” Lawler, John. “Anticipatory ‘It’ Can Also Be a Subject.” Extraposition, plus Selected Short Subjects, www-personal.umich.edu/~jlawler/aue/extrapos.html. And according to the title of that article, “Anticipatory it can also be a subject,” which is exemplified by our expletive example.
It is the subject of the verb clause is my prerogative, but the interesting thing is that for the pronoun to assume a position that does not rightfully belong to itself results in what is called, again according to John Lawler, a dummy it subject. Therefore, the rightful subject is the nominal clause, how I handle my debt.
That fact is now indisputable when the sentence is restructured as follows:
This construction is as a result of the Tough-Movement, which “raises the object of the complement clause to become subject of the main clause.” (Lawler) (NOTE: I handle my debt is an object of the relative pronoun how.)
John Lawler went on to say this in his article (link provided above) on extraposition and anticipatory it:
In an inflected language like Spanish, there’s sufficient freedom in word order to allow subjects to be placed just about anywhere on a stylistic whim; but English is rather fussier about where things go, and it just won’t do to have subjects lying about anywhere at all. You have to have something up there at the beginning, and it is the traditional choice.
SUMMARY/OBSERVATIONS: By applying the Tough-Movement, you can see that a complementizer, not an expletive, is what’s called for when the indefinite pronoun it is used expletively.
However, I agree with professor Lawler: English is rather fussy.