Republican senators have lined up to blast the White House over the guidance issued to the defense industry over sequestration and the requirement to issue layoff notices to their work forces four days before the presidential election.
Sen. Jim Inhofe, R-Okla., a member of the Senate Armed Services Committee, said the president has "bribed" defense companies to not send out the notices by offering to pay for any expenses incurred for not following the Worker Adjustment and Retraining Notification (WARN) Act.
"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," Inhofe said.
Defense executives said the WARN Act would have mandated they issue layoff notices on Nov. 2 because of the potential of massive layoffs should sequestration occur on Jan. 2. Sequestration would trigger a $500 billion cut to planned defense spending over the next ten years and put plenty of defense contracts at risk.
The Office of Management and Budget issued a memo Friday to companies specifying that the WARN Act would not require them to issue layoff notices Nov. 2 due to sequestration. The Pentagon also confirmed that they do not plan to modify or cancel contracts on Jan. 2.
The OMB promised to pay for companies' litigation costs should the courts rule in favor of employees because of WARN Act violations.
Lockheed Martin and other defense companies thus backed off their promises to issued the notices in November.
Republican Sens. Charles Grassley, Iowa, and Kelly Ayotte, N.H, wrote a letter to Jeffrey Zients, the acting director of the Office of Management and Budget, questioning how the White House had the authority to promise to pay court fees associated with employee layoffs caused by sequestration.
“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,” the two Senators wrote to Zients.
Grassley and Ayotte estimated the fees could cost taxpayers millions, if not billions, of dollars.
Companies have to issue layoff notices at least 60 days ahead of planned, large-scale layoffs. Sequestration will go into affect Jan. 2 unless Congress can come to a compromise. Sixty days prior to Jan. 2 is Nov. 2, four days prior to the presidential election.
Republican legislators have suggested that President Obama is focused more on skirting the rules of the WARN Act rather than working with Republicans to avoid sequestration all together. Obama's campaign stands to lose ground if the defense contractors issued the layoff notices, especially in Virginia, a major battleground state with plenty of defense contractors.
"Rather than providing leadership to address looming sequestration cuts, Obama’s Office of Management and Budget is now offering what amounts to a bailout for the Obama presidency," Inhofe said.