Human Events Blog

Administration tells defense contractors to ignore federal law on sequestration layoffs, promises taxpayers will cover their legal bills

As reported by The Hill, the Administration is once again telling defense contractors to hold off on sending out layoff notices, as a result of the massive sequestration cuts, until after Obama has been safely re-elected.

This is a violation of the WARN Act, which mandates 60-day advance notice of mass layoffs.  In this case, that would put thousands of layoff notices in mailboxes just a few days before the November election.  Obviously, the Obama re-election team doesn’t want that to happen, and they’re not about to let a few pesky federal laws – or the well-being of all those people about to lose their jobs – stand in their way.

The previous Obama effort to skirt the WARN Act emanated from the Labor Department, which has no authority to issue waivers or exemptions from the law.  Now it’s coming from the Office of Management and Budget, with a new wrinkle that should elevate the blood pressure of every American taxpayer:

But the Friday guidance from the Office of Management and Budget raised the stakes in the dispute, telling contractors that they would be compensated for legal costs if layoffs occur due to contract cancellations under sequestration – but only if the contractors follow the Labor guidance.

The guidance said that if plant closings or mass layoffs occur under sequestration, then “employee compensation costs for [Worker Adjustment and Retraining Notification] WARN act liability as determined by a court” would be paid for covered by the contracting federal agency.

“The contracting federal agency?”  That would be you, dear taxpaying sucker.  The previous Labor Department memo pretended that contractors foolish enough to sit on those layoff notices wouldn’t find themselves in legal jeopardy.  Now the Administration is telling contractors to ignore the law, knowing that they will be sued for tens of millions of dollars, and promising taxpayers will cover their losses.

We’re talking about over $100 billion in cuts.  That’s going to put tens of thousands of people out of work – perhaps up to a million people, according to some estimates – and virtually all of them will be able to sue over violation of the WARN Act.  That could saddle taxpayers with an extra $4 billion in costs.

In addition to everything else infuriating about this naked re-election ploy, these expenses would go a long way toward defeating the cost-cutting purpose of sequestration.  We’ll be taking millions of dollars away from the military, and giving it to lawyers instead.  This whole rotten scheme amounts to a massive wealth transfer from taxpayers to law firms.  And the many people who lose their jobs due to sequestration will be deprived of the advance warning mandated by the WARN Act, which isn’t going to make their holiday season any more cheerful.

Senators John McCain (R-AZ), Lindsay Graham (R-SC), and Kelly Ayotte (R-NH) issued a joint statement in response to this outrage, noting that “apparently, President Obama puts politics ahead of American workers by denying them adequate time to plan their finances and take care of their families.”

Facing intense lobbying by defense companies and other government contractors for financial protection if they agreed not to issue WARN notices, the Obama Administration is giving contractors a free pass and will have potentially stuck the taxpayers with a multi-billion dollar campaign contribution.

We also have questions regarding the legal authority of OMB to interpret the WARN Act as it has, and to obligate the Federal government to pay billions of dollars of potential claims from private contractors arising as a result of this interpretation.

The Obama Administration is cynically trying to skirt the WARN Act to keep the American people in the dark about this looming national security and fiscal crisis.  The president should insist that companies act in accordance with the clearly stated law and move forward with the layoff notices. Republicans and Democrats in Congress, as recently as three days ago, called on the president to work with us to avert the looming threat of sequestration to our national security.

Mitt Romney had better be prepared hit Obama with this, hard, during the upcoming presidential debate.  The sequestration cuts were certain to be a topic.  The way Obama has been handling them deserves as much criticism as the fact that they’re happening at all.

Update: It looks like Obama’s tactics have worked on Lockheed-Martin, which announced on Monday that it “will not issue employee layoff notices this year, ending an election-year showdown with the Obama administration,” according to The Hill.

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