[Query Concerning DOD Response to Funding Crisis]

GAO was asked a number of questions about the response of the Department of Defense (DOD) to its recent funding crisis and the response of other agencies in the same predicament. As a result of a Presidential veto of a supplemental appropriations bill, funds remaining in the military pay appropriation accounts were not sufficient to meet a net payroll or to transfer to the Treasury the amounts necessary for Federal income and Federal Insurance Contributions Act tax withholdings. The due date for payment of the taxes was changed, freeing sufficient funds to meet the net military payroll. GAO was asked if a conclusion by the Acting Attorney General that there was no legal barrier to the keeping of military personnel on the job and paying them full salary with funds which, but for the postponement of the due date, would otherwise have been payable to the Internal Revenue Service was valid. GAO agreed that obligations may be incurred for the salaries of at least those military personnel assigned to emergency work, notwithstanding the funding shortfall. GAO also agreed that salary obligations may be paid to the extent that funds remain available for appropriation and that it is permissible to pay the take-home salaries of personnel first, while postponing transfer of funds to pay withholding obligations. However, with certain exceptions, the administrative strategem of stretching available funds by deferring payment for some obligations to make it possible to pay others, does not in itself serve to make continued operation of an agency legally permissible. GAO questioned the blanket assumption by DOD that all military personnel fit within the Antideficiency Act exemption for Federal employees engaged in emergency duty. No agency whose appropriations are exhausted or insufficient may continue to incur obligations by doing business as usual unless otherwise authorized by law, or the agency is operating on a very limited basis for the sole purpose of effecting an orderly shutdown of its operations.