- The Washington Times - Tuesday, July 31, 2012

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.

The president hasn’t signed the bill, but if he does, he will have 30 days to submit the plan, and it will immediately become campaign fodder on both sides.

On Tuesday, George Allen, a Virginia Republican seeking to recapture the Senate seat he lost six years ago, visited First Line Technologies in Fairfax County and called for Congress to cancel the spending cuts.

Amit Kapoor, president of the company, said it likely will lose employees if the cuts take effect — though he said the company is small enough to be exempt from the Warn Act, so it won’t send out notices.

He pleaded with Congress to give businesses some certainty.

“Our biggest problem is that we’re looking to hire. We’re in a growth period. This uncertainty is preventing any further growth,” he said.

Republican Sens. John McCain, Lindsey Graham and Kelly Ayotte are making stops around the county to highlight the potential devastation of the cuts.

Senate Majority Leader Harry Reid, Nevada Democrat, said most Republicans voted for the budget deal that called for the automatic spending cuts. He said they will have to be willing to raise taxes if they want to head off the cuts.

“We did this because we knew it would be hard,” Mr. Reid said.

On Wednesday, two top administration officials will testify to the House Armed Services Committee about the defense cuts and how they could affect national security.

Kristina Wong contributed to this report.