Defense Companies Hold Off On Pink Slips, For Now

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Major defense companies said this week they will not send out layoff notices to warn of big job cuts in January, taking away the prospect of embarrassing layoff notices right before the November elections.

That's led to charges that the White House overstepped when it told the industry the notices are not needed.

EADS, the aerospace giant that includes Airbus, says it remains very worried about automatic cuts that could wipe out around 10 percent of the defense budget on Jan. 2, 2013. But spokesman Guy Hicks says the company now believes it will have some time to trim its workforce.

"We assume because it's the law that it will occur," Hicks says. "But the implementation of it is not necessarily going to take place on the second of January. It's likely to unfold over a longer period of time, which gives us the latitude to wait." Lockheed Martin has come to the same conclusion.

Layoffs Look Bad In Politics

The decisions followed reassurances from the Obama administration that these cuts are not unavoidable. After all, Congress can decide at any time to come to a budget agreement, and toss out those automatic cuts known as sequestration. In addition, some defense jobs rely on ongoing contracts that won't be affected — not right away, at least.

For those reasons, the White House said, the defense industry doesn't have to send out notices under a law called the WARN Act, which is supposed to help workers prepare for layoffs.

"Even if it begins on Jan. 2 ... there will be no plants closed, there will be no massive layoffs on Jan. 4th or Jan. 5th or Jan. 6th," says Dan Gordon, who used to work in the Obama White House and now teaches at George Washington University.

But Republicans say the White House is just trying to head off embarrassing layoff announcements right before the election. Republican Sen. Lindsey Graham of South Carolina told Fox News the White House is dodging the law.

"It is a mini-coup," Graham said. "You're having the executive branch unilaterally telling the private sector to ignore a congressional statute."

The White House went a step further, promising to cover any legal costs the industry might face because workers can sue if they're fired without proper notice. Republican Sen. John McCain said he will block the use of government funds for that purpose. Of course, that only comes into play after the election. In the meantime, workers are caught in the middle.

Jobs Are Still On The Chopping Block

"Nobody has talked to workers or their unions about the impact of this," says Thomas Buffenbarger, president of the International Association of Machinists and Aerospace Workers.

Buffenbarger says the White House took care of management's concerns, but ignored workers, who still might lose their jobs next year. He says the White House is trying to manipulate his members.

"With a pink slip in one hand and their ballot in the other, how do you think they're gonna vote?" Buffenbarger says. "Well, I would suspect they would vote against whoever the incumbent is, Republican or Democrat."

The truth is that defense workers know full well that next year may be a rough one. Many have attended rallies urging Congress to stop the automatic cuts from happening. The question is who will get the blame for the whole budget mess. As GWU's Gordon says, this battle is not about some obscure law that requires layoff notices.

"The WARN Act is, in my humble opinion, a red herring," he says. "The real issue is reaching budget agreements so that we don't have sequestration."

Both parties still appear very far from any agreement to avoid those automatic budget cuts, so the issue will return during what promises to be a raucous lame duck session. That return, however, won't come until after the election.

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