I think you can say that you think it would be inappropriate to spend a lot of the company's money on the Christmas party given the current financial situation and it will send the wrong message to employees. I'd then see what they say. If they disagree, then you are kind of stuck. If they agree or say, but we'd like to do something, then you can brainstorm other ideas. If they say it was to be financed by the employees, then you can say that with all the uncertainty and bounced checks, you think people would rather save their money.