The latest durable-goods orders report must have the Obama administration — and the Obama campaign — more worried than they publicly let on. According to the National Journal, the White House will press government contractors to hold off on issuing layoff notices in October in anticipation of the sequestration cuts, afraid of the political backlash that will ensue. In fact, the Obama administration is offering to indemnify government contractors for losses and fines for delaying those notices:
The White House moved to prevent defense and other government contractors from issuing mass layoff notices in anticipation of sequestration, even going so far to say that the contracting agencies would cover any potential litigation costs or employee compensation costs that could follow.
Some defense companies—including Lockheed Martin, BAE Systems and EADS North America—have said they expect to send notices to their employees 60 days before sequestration takes effect to comply with the Worker Adjustment and Retraining Notification Act, which requires companies to give advance warning to workers deemed reasonably likely to lose their jobs. Companies appeared undeterred by a July 30 guidance from the Labor Department, which said issuing such notices would be inappropriate, due to the possibility that sequestration may be averted. The Labor Department also said companies do not have enough information about how the cuts might be implemented to determine which workers or specific programs could be affected should Congress fail to reach a compromise to reduce the deficit, triggering $1.2 trillion in spending cuts, half from defense, half non-defense. For 2013, that would amount to $109 billion in spending cuts.
Yesterday, the OMB went a little farther in wheedling contractors into playing ball:
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 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. Unless those funds are coming from Team Obama, this looks pretty corrupt — which is undoubtedly why Obama chose to have this OMB edict issued late on Friday afternoon, when few would be paying attention.