By JOHN T. BENNETT
Republican lawmakers are accusing the Obama administration of “bribing” defense firms in order to avoid massive layoff notices before the election.
The White House on Sept. 28 issued guidance stating the Labor Department has determined a possible $500 billion, 10-year reduction to planned defense spending fails to create the conditions that would trigger a law requiring defense firms to issue layoff notices. The guidance also said federal agencies will pick up the legal tab and employee compensation costs stemming from the potential cuts, which would be done under a process known as sequestration.
Lockheed Martin reacted by announcing Oct. 1 that it will not send layoff notices to workers this year related to sequestration.
In an Oct. 2 letter obtained by Defense News, Republican Sens. Charles Grassley, Iowa, and Kelly Ayotte, N.H., told acting White House budget chief Jeffrey Zients they are “seriously concerned” about the direction to contractors and the determination that the government would pay costs related to sequestration cuts.
“In particular, we are concerned about the authority of the executive branch to instruct private employers not to comply with federal law and to promise to pay the monetary judgments and litigation costs that arise out of the lawsuits that may follow,” Grassley and Ayotte wrote.
At issue is the Worker Adjustment and Retraining Notification (WARN) Act. The law requires most companies with 100 or more employees to let workers know 60 calendar days in advance of mass layoffs. Major U.S. defense contractors have been warning for months they would send out layoff notifications this month, just weeks before Election Day.
It is unclear how large the bills from sequestration — legal and compensation — might be. But the senators are worried those tabs could “potentially reach tens or hundreds of millions of dollars, if not billions of dollars,” they wrote Zients, “all of which would be paid for with taxpayers’ dollars.”
Republicans are responding to the announcement that federal funds could be used to help pay for the results of sequestration with outrage, alleging the White House is playing politics because massive layoff warnings on the eve of the Nov. 6 election might hurt President Barack Obama’s chance at winning key states that could shed defense jobs such as Ohio, Virginia and North Carolina.
“Rather than providing leadership to address looming sequestration cuts, Obama’s Office of Management and Budget [OMB] is now offering what amounts to a bailout for the Obama presidency,” Sen. James Inhofe, R-Okla., said Oct. 1. “Bribing companies to not send out layoff notices just days before this year’s election by promising to pay for any litigation costs that result from their failure to follow the WARN Act is both irresponsible and puts the taxpayers on the hook to pay for billions of dollars in payouts and lawyer fees.
“Obama is only trying to save his own job,” Inhofe said. “Instead, the president should be working with Congress to find a real solution to sequestration.”
Grassley and Ayotte want the acting OMB chief to send them reams of information about the Sept. 28 finding and instruction, including an explanation of “the legal authority” of OMB and the Labor Department to issue such instructions to contractors. They also want an explanation of the legal power of OMB to promise to pick up any sequestration-related legal charges.
Grassley and Ayotte also want the budget office to spell out the kinds of costs the executive branch plans to cover, if lawmakers fail to pass either a $1.2 trillion debt-paring deal or a bill that would void or delay the defense cuts. The duo also asks several questions about how those funds will be paid.
“What will be the source of the funds used to pay the monetary judgments and litigation costs that arise out of the lawsuits that follow from employers’ failure to comply with the WARN Act?” they ask. “Does the administration maintain that these funds have already been appropriated by Congress?”