White House offers to pay — at taxpayer expense — legal costs for defense contractors as incentive for them delaying layoffs in advance of looming gov’t cuts

October 2, 2012

If a $16 trillion debt wasn't enough for taxpayers to lose sleep over, the Obama administration has offered to pick up the check -- at taxpayer expense -- for legal costs associated with defense industry layoffs should automatic Pentagon cuts be triggered.

Republicans are now crying foul over the move, accusing the White House of playing politics over the possibility of mass layoffs. At issue are the crush of Pentagon budget cuts set to go into effect starting in January should Congress fail to avert them. Under federal law, many employers are supposed to give 60-day notice of "mass layoffs" if they are considered likely, but the Obama administration for months now has urged companies not to do so. 

Last week, the administration doubled down on that plea by offering to cover legal fees in compensation challenges. 

Rep. Buck McKeon, R-Calif., chairman of the House Armed Services Committee, said the notice amounted to a "threat" to contractors. 

"It appears companies will bow to the threat implicit in last week's OMB guidance; withhold notices today or the government might not cover your court costs down the road," he said. 

Further, McKeon warned that the administration was using tax dollars to win over companies to follow the "dubious" and "politically motivated" guidance to ignore the federal law known as the WARN Act. 

"Even though the (White House budget office) directive purports to protect the defense industry against the costs of not complying with the WARN Act, they cannot guarantee how the courts would rule in such an action. Thus the president has pledged to compound the impact of sequestration by dedicating already scarce resources to cover needless court costs," McKeon said. 



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