Yesterday, ABC News reported that “Defense contractor Lockheed Martin heeded a request from the White House . . . one with political overtones – and announced it will not issue layoff notices to thousands of employees just days before the November presidential election. Lockheed, one of the biggest employers in the key battleground state of Virginia, previously warned it would have to issue notices to employees, required by law, due to looming defense cuts set to begin to take effect after Jan. 2” as part of last year’s bipartisan deal to lift the national debt ceiling, in automatic cuts known as “sequestration.”
As Ed Morrisey notes, the WARN Act “requires any company with 100 or more employees to provide a 60-day warning ahead of planned layoffs. However, both the Department of Labor and OMB insisted that it didn’t apply to the sequestration issue, because no one really believes that Congress will allow the automatic cuts to go through. . .The kicker for Lockheed came when the Obama administration indemnified corporations for keeping workers in the dark:
So the Office of Management and Budget went a step further in guidance issued late Friday afternoon. If an agency terminates or modifies a contract, and the contractor must close a plant or lay off workers en masse, the company could treat employee compensation costs for WARN Act liability, attorneys’ fees and other litigation costs as allowable costs to be covered by the contracting agency—so long as the contractor has followed a course of action consistent with the Labor Department’s guidance. The legal fees would be covered regardless of the outcome of the litigation, according to the OMB guidance issued by Daniel Werfel, controller of the Office of Federal Financial Management, and Joseph Jordan, the Administrator for Federal Procurement Policy.”
In essence, Morrissey notes, the administration is “paying companies to violate” the WARN Act. (The administration’s position conflicts with the Labor Department’s own WARN Act guide for employers.) This indemnification of companies that violate the WARN Act defeats the whole purpose of the automatic budget cuts, which was to save taxpayers money. Even as the Obama administration claims the cuts will never occur, Obama is taking credit for those very same cuts in misleading TV ads criticized even by liberal fact-checkers, in order to make the ridiculous claim that he is a budget cutter. (In reality, Obama is the biggest spending president in history, and his budgets have caused explosive growth in the national debt. In TV ads, Obama falsely claims he has cut a trillion dollars in spending, including the automatic budget cuts that he now claims will never happen in that figure. Obama belatedly agreed to the budget cuts contained in the sequestration in exchange for the lifting of the national debt ceiling. We previously explained why those cuts were long overdue, including cuts at the Pentagon.)
Ed Morrissey sees this as purely politically motivated, saying that the Obama administration pressured contractors to
hold off on issuing layoff notices in October in anticipation of the sequestration cuts, afraid of the political backlash that will ensue. the Obama administration is offering to indemnify government contractors for losses and fines for delaying those notices . . . In other words, taxpayers will cover the costs of these layoffs through more spending, even though the point of sequestration was to force cuts in government spending. Instead of paying contractors — mainly defense workers — to work, we’ll start paying them not to work. And why? Because the White House doesn’t want massive numbers of layoff notices coming in the last few days ahead of the election. And make no mistake — with overall durable goods orders dropping 13.2% in a month and defense orders dropping 40%, those layoff notices would otherwise be coming, and sooner rather than later. In other words, the White House wants taxpayers to pay to cover up the inevitable outcome of sequestration to keep Barack Obama from suffering the political consequences of his own deal.
The Obama administration is also spending billions in taxpayer money to temporarily mask the harm that Obamacare will inflict on Medicare Advantage plans until after the election. Its politically motivated pressure on defense contractors not to disclose impending layoffs echoes its earlier demand that health insurers not reveal how Obamacare increases healthcare costs. The administration flouted the First Amendment by trying to prevent insurers from disclosing how Obamacare was driving up health insurance premiums. Prior to that, it attempted to gag insurers from disclosing how Obamacare harms Medicare Advantage participants, drawing criticism from First Amendment experts like UCLA law professor Eugene Volokh. Obamacare has already caused sizeable hikes in insurance premiums for some policyholders.