John McCain liked the idea of sequestration when he voted for it.
Three of the nation's largest military contractors say they will definitely send tens of thousands of layoff notices to employees right before the election because of the threat that billions of defense dollars will be sequestered come January as part of a year-old budget deal. Ten other companies say they
might send notices or that they won't unless their Pentagon contracts are canceled, according to correspondence released by Sen. John McCain's office, Philip Ewing
reports.
McCain’s office released letters from the CEOs of thirteen major defense vendors, of which three said they already know they’ll send the warnings: Lockheed Martin, the world’s biggest defense contractor; EADS North America and BAE Systems. Several others left open the possibility, including Raytheon, General Dynamics, SAIC and Northrop Grumman. Other CEOs said they didn’t expect they would need to issue layoff warnings, or that they wouldn’t issue them unless the Defense Department specifically terminated or restructured their existing contracts.
The Arizona senator said in a statement, “The looming threat of sequestration cuts is forcing companies to delay hiring and capital investments, which, in turn, contributes to the sluggishness of the economy and continuing high unemployment rates.”
The layoff notices are at issue because of sequestration. That's the offspring of the August 2011 budget deal. As part of the Budget Control Act, negotiators established a bipartisan Super Committee to cut $1.5 trillion from the budget over nine years. The penalty for failure was to be sequestration. That is, the budget authority would be automatically cut by $1.2 trillion, half of those dollars from defense, half from non-defense spending.
Critics said this would never work, that what couldn't happen in congressional standing committees would not happen in this ad hoc group, sequestration threat or not. They proved correct. The Super Committee couldn't agree on balanced cuts, and sequestration will take effect Jan. 2 unless Congress intervenes with some new deal. That's something Republicans have sought to achieve by getting rid of the defense cuts and cutting past the flesh and into the bone of domestic programs. Fewer food stamps, more aerial drones. To this end, led by House Budget Committee Chairman Paul Ryan, Republicans wrote the Sequester Replacement Act of 2012. It was approved in the House but has not cleared the Senate.
So Lockheed-Martin and a couple of other big military contractors decided to put some pressure on by taking advantage of a federal law—the Worker Adjustment and Retraining Notification Act—that requires notification of employees when layoffs are coming. Lockheed-Martin said it had no choice.
But that is not the way the Labor Department views the law. In its July 30 memo, the department stated that blanket notices like those Lockheed says it will send are out of line. Such notices, the department says, must include very specific information, including the plant(s) that will be closed, the expected date of the first separation, and "the job titles of positions to be affected, and the number of affected employees in each job classification" and an indication of whether "bumping rights" will be allowed. None of that could be included in layoff notices issued now because it's not known which contracts with which companies and which employees would be affected if sequestration was imposed. There is no reason to alarm workers about something that may not happen, the memo stated.
But, by ignoring the memo, as House Armed Services Committee Chairman Buck McKeon (R) has urged them to do, the contractors get to play politics less than 60 days before the election.
Many Democrats who went along with it knew from the start that the sequestration deal was dumb:
As if a bipartisan committee would operate as some latter-day deus ex machina to get them out of the bind they put themselves into. Experience ought to have taught them that Republicans would never agree to defense cuts, sequester or no sequester, and that the threat of such cuts would be used as an electioneering cudgel.
The possibility of sequestration has raised uncertainty, to be sure. But the chances of it actually happening are quite small. The layoff notices are business as usual for some giant companies that have it all too easy getting their way for all too long.