A reclusive billionaire, anti-tax crusader and major financial backer of Donald Trump has been named as the anonymous private donor who gave $130m to the government to help pay US troops during the federal shutdown that is now in its fourth week, according to the New York Times.
The donation, which equates to about $100 per service member, appears to be a potential violation of the Antideficiency Act, which prohibits federal agencies from spending funds in advance or in excess of congressional appropriations – and from accepting voluntary services “except in the case of emergency involving the safety of human life or the protection of property”.
Potential penalties for violations include both administrative and criminal sanctions such as suspension or removal from duty, fines and imprisonment.
As far as I understand, all the money/asset value that goes into funding an organization is owed back to the investors, whether it’s as services bck to taxpayers, or dividends back to stock investors. Any start to an organization involves people/ other organizations seeding it with money
Taking on a loan gives you both money (pretty liquid assets) and debt (liabilities). If you just use that money to pay back the debt, you’re back to no liquidity - no leverage to do the things that cost money to get kickstarted or keep maintaining.
So the idea is that, if an organization uses too much in funds/all the assets to pay back the debt, they may not have enough left over to maintain/grow operations.
Source: I’m taking accounting, am struggling, and hate how evrything seems absolutely bonkers at first. But also, it all makes sense. Because real accounting accounts for goddamn evrything.
Just FYI, accounting for a business or household is a whole different beast than high finance of a nation. You or I going into debt is potentially a bad thing. It’s almost never a bad thing for a country.
Debt is less risky to a country than a person in the sense of “if you owe the bank a million dollars, you have a problem; if you owe the bank a billion dollars, the bank has a problem”. Smaller countries with less attractive debt definitely have problems associated with excessive national debt. US debt is especially resilient because the next-most-attractive national debt is much less attractive, so it can fall a long ways before switching investments makes sense. But it can’t fall forever - there is competition - and the complexities of the market mean we can’t predict exactly what actions would be the final straw to trigger that shift, so even flirting in that direction is hugely risky.
Even short of the US falling out of most-attractive-debt status, there are bad things that happen as it becomes seen as more risky, tied to the way that risk perception drives up interest rates on Treasury bonds. Higher long-term interest rates make the national debt go up faster, accelerating the risk of full-on loss of most attractive status. They also benchmark all other interest rates in the economy, making all kinds of business investments less viable and thus stifling the innovation needed to keep the economy delivering for its people.