	Most Recent Developments

On December 19 the House, and on December 18, the Senate, approved an omnibus FY2008 appropriations bill, H.R. The President signed the bill into law, P.L. 110-161 , on December 26. The bill includes a Senate amendment to provide $70 billion in emergency supplemental appropriations for the Department of Defense for military operations in Iraq, Afghanistan and elsewhere. The Defense Department now projects that the funding provided in the bill will sustain Army military personnel accounts until about the middle of June and Army operation and maintenance accounts until about the end of June or early July at planned rates of obligation. How Long Regular FY2008 Defense Appropriations Will Last

Until supplemental appropriations for FY2008 were enacted, the Department of Defense was financing both day-to-day peacetime operations of U.S. military forces and overseas military operations in Iraq and elsewhere with funds appropriated in the regular FY2008 Defense Appropriations Act, P.L. The measure provided $460 billion for the Defense Department to cover the costs of baseline, non-war-related programs in FY2008. At a press conference on November 15, Secretary of Defense Gates warned that the Army would be out of money by the beginning of February, and the Marine Corps some time in March, and he announced that preliminary steps needed to shut down Army operations, and not merely to slow down spending, would begin almost immediately. "The least undesirable" option, he said, would be to "cease operations at all Army bases by mid-February next year." This would result, he said, in furloughs of 100,000 civilian and another 100,000 contractor personnel. 110-116 , provided $27.4 billion in O&M for the Army and $4.8 billion for the Marine Corps. The requested transfer of $4.1 billion to the Army, would extend the time the Army can operate for another two to three weeks, or until the end of February. Alternatives for Extending Operations Longer

In the absence of FY2008 supplemental appropriations, the Defense Department would have been be able to extend Army and Marine Corps operations for an additional month or so, either by transferring additional amounts to O&M accounts or by slowing the pace at which the services are obligating funds. Alternatives for extending Army and Marine Corps operations include –
Transfer limited additional amounts that may be available from cash balances in working capital funds; Slow the pace of Army and Marine Corps obligations of funds, in part by taking steps the Army had earlier considered in April 2007 and in part by delaying depot maintenance funding; Invoke the Feed and Forage Act, which permits obligations of funds in advance of appropriations, and for which there are extensive precedents in the past 40 years; and finally, Consider using standing authorities for which there do not appear to be precedents to limit Army and Marine Corps costs, such as the authority in 10 USC 165 to assign support operations to other services. While waiting for Congress to act, however, the Defense Department would have little, if any, remaining transfer authority. Defense Department officials said that cuts such as those planned last spring were not sufficient in the present circumstances because of greater uncertainty about supplemental funding. The FY2008 Defense Appropriations Act provided $32.2 billion for Air Force O&M and $33.1 billion for Navy O&M. The Defense Department might have been able to extend military operations further by transferring limited additional amounts to the Army and Marine Corps and by slowing down operations, but each alternative has some disadvantages. Some of these measures, however, may disrupt day-to-day Army operations. It would appear, however, to undermine congressional controls on the use of funds.
On December 18, 2007, the Senate, and on December 19, the House, approved a consolidated FY2008 appropriations bill, H.R. 2764, that includes $70 billion in emergency supplemental appropriations for the Department of Defense for military operations in Iraq, Afghanistan and elsewhere. The President signed the bill into law on December 26. Congress's agreement to provide $70 billion for overseas military operations resolved a dispute over war funding that had led the Defense Department to announce plans to shut down all but essential Army and Marine Corps operations early in 2008. In the absence of supplemental appropriations, officials warned that money for Army operations would run out by the end of February and for the Marine Corps in March, even after a transfer of $4.1 billion to the Army. On November 15, 2007, Secretary of Defense Gates said that the Defense Department would "cease operations at all Army bases by mid-February next year," which would result in furloughs of 100,000 civilian and another 100,000 contractor personnel.
The consolidated appropriations bill averted the need for such steps. It provided $35.2 billion for Army and $4.0 billion for Marine Corps operation and maintenance accounts. These amounts are in addition to $27.4 billion for the Army and $4.8 billion for the Marine Corps in the regular FY2008 Defense Appropriations Act (P.L. 110-116). The supplemental funding, added to regular appropriations, provided enough money to sustain Army operations until the end of June or early July, 2008, and Marine Corps operations until the end of August at planned rates of obligation.
While Congress's agreement to provide funds resolves the debate for the present, it did not settle the underlying controversy. A recurring issue for Congress has been how much flexibility the Defense Department has to delay, if not to avoid entirely, shutting down operations when Congress does not provide full-year defense appropriations. In the absence of supplemental appropriations, the Defense Department relied on funds in the regular FY2008 Defense Appropriations Act to finance both day-to-day peacetime activities and war-related operations abroad. CRS calculated that these funds would be exhausted by February for the Army and by early April for the Marine Corps, which is about what the Defense Department projected. DOD's proposed transfer of $4.1 billion to the Army would have extend its operations for another two to three weeks.
Without supplemental appropriations, the Defense Department could have extended operations for about another month by transferring limited additional amounts to the Army and Marine Corps and by slowing down spending through measures such as those the Army began to implement in April 2007. Such measures would reduce remaining financial flexibility and might disrupt day-to-day operations. The Defense Department might have been able to sustain operations longer by invoking the Feed and Forage Act or by using novel, unprecedented measures, such as assigning the Navy and Air Force to pay costs of Army support operations abroad. Such measures might weaken congressional war powers and erode congressional controls on the use of funds. This report will not be updated.