GOP: White House pressuring defense industry not to warn of layoffs

Companies dazed by political headache

Republicans on Tuesday accused the White House of trying to “intimidate” defense companies into keeping silent about major job losses if automatic military spending cuts take effect early next year, after the administration said Monday that it would be “inappropriate” for employers to warn workers of layoffs.

Defense industry officials were caught in the middle, trying to weigh the requirements of a federal law that says they must give employees 60 days’ notice before major layoffs versus the Labor Department, which said Monday that it doesn’t believe the law applies in this case.

“The stakes are very high and there are still questions on everyone’s minds. Is this [Labor Department guidance] definitive? Is this something we can now take without fear of judicial contradiction? I don’t think the answer to that is yes. There are still too many questions,” one industry official said on the condition of anonymity.

The automatic defense cuts, which are looming because a deficit supercommittee failed last year to strike a deal, have become a major political headache for President Obama and Congress.

In an effort to head off at least some of the pain, the White House said Tuesday that military personnel will be spared from the cuts — but that means trims will have to be deeper for military weapons systems and infrastructure.

Those cuts could jeopardize tens of thousands of private-sector jobs, and the 60 days’ notice requirement means companies would be alerting their employees of potential layoffs just days before voters go to the polls in November.

Republicans are eager for the warnings, saying it will put pressure on Democrats to cancel the cuts. They urged businesses to stay the course.

“I think they should follow the law and do their duty and not yield to the intimidation,” Sen. John Cornyn, Texas Republican and a member of the Senate Armed Services Committee, told reporters.

Democrats said the cuts will affect defense and nondefense companies, though Republicans have spotlighted the military cuts.

The Labor Department said this week that the cuts are still too speculative and that it would be wrong for businesses to act too quickly while there’s a chance that the cuts can be averted.

“In the absence of any additional information, potential plant closings or layoffs resulting from such contract terminations or cutbacks are speculative and unforeseeable,” Assistant Labor Secretary Jane Oates wrote in a memo.

The White House didn’t respond to a message seeking comment on the flap Tuesday, but its budget office issued guidance to federal agencies telling them to continue spending normally for now.

Before the Labor Department memo, defense giants EADS and Lockheed Martin seemed inclined to issue warnings. But after Monday, spokesmen for both companies said they were grappling with what to do.

Companies want more assurances from the Defense Department and the Office of Management and Budget that failing to send the layoff notices won’t hurt them down the road if an employee files suit against them, and that it won’t prevent them from being able to write off certain tax deductions if they are later found in violation of the Warn Act, which requires the 60 days’ notice.

Congress last week passed a bill demanding that Mr. Obama reveal exactly where he would cut the $110 billion due to be slashed Jan. 2, evenly split between defense and domestic spending.

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