Possible defense cuts, layoff notice dispute set off tiff

WASHINGTON -- Republicans accused President Barack Obama of trying to keep middle-class Americans in the dark about whether they'll lose their jobs from impending defense cuts as a Labor Department memo cautioning contractors about layoff notices set off political recriminations.

"The president doesn't want people reading about pink slips in the weeks before his election, so the White House is telling people to keep the effects of these cuts a secret until after the election," Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday in a speech on the Senate floor.

The memo advised federal contractors -- major defense firms among them -- that they do not have to warn their employees about potential layoffs from the automatic, across-the-board budget cuts that kick in Jan. 2. A law, known as the WARN Act, says those notices would have to go out 60 days in advance, arriving in mailboxes four days before the Nov. 6 election.

The guidance letter said it would be "inappropriate" for employers to send such warnings because it is still speculative if and where the $110 billion in automatic cuts might occur. About half the cuts would be in defense.

The White House did make clear Tuesday that Obama would exercise his authority under last year's budget law and exempt military personnel from any automatic defense cuts.

Pressed on the issue Tuesday, Labor Department spokeswoman Elizabeth Alexander said "there is an insufficient factual basis for employers to form a business judgment about whether or not their contracts will be affected."

Democrats insist the cuts could be averted if Republicans were willing to consider tax increases on high-wage earners as part of a budget compromise.

"By refusing to replace cuts with revenue, Republicans are putting millionaires ahead of the middle class and the military," Senate Majority Leader Harry Reid, D-Nev., told reporters.

In the midst of the tiff, the White House told agency officials Tuesday to "continue normal spending and operations" since more than five months remain for Congress to act to avert the automatic across-the-board cuts known as "sequestration."

Acting White House budget chief Jeffrey Zients said Obama remains confident that lawmakers will act to address the automatic spending cuts, which he described as "highly destructive." Zients said in a memo to agency heads that the budget office will be consulting with agencies on how the spending cuts would have to be implemented if Congress and Obama together fail to stop them.

Separately, Zients sent a letter to Speaker John Boehner, R-Ohio, saying that the president would spare military personnel from the automatic reductions.

"This is considered to be in the national interest to safeguard the resources necessary to compensate the men and women serving to defend our nation and to maintain the force levels required for national security," Zients wrote. "It is recognized that this action would increase the sequester in other defense programs."

Republicans are using the looming reductions in military spending as an election-year cudgel against Obama, arguing that the commander in chief is willing to risk the nation's security as he uses the leverage in the budget showdown with Congress. Republican presidential candidate Mitt Romney has echoed GOP lawmakers' criticism.

Democrats counter that Republicans who voted for the cuts are trying to wriggle out of last August's deficit-cutting agreement and they must consider tax increases to stave off reductions. McConnell voted for those cuts, so did Sen. John McCain, R-Ariz., who was on a two-day tour of presidential battleground states warning about the impact of the reductions along with Sens. Kelly Ayotte, R-N.H., and Lindsey Graham, R-S.C.

"While I'm all for tightening our belts, we shouldn't add a national security crisis to our fiscal crisis -- and that's what these reductions would do," Ayotte said at a stop at BAE Systems facility in Merrimack, N.H.

Ayotte and McCain warned that the cuts could cost the company 3,600 jobs.

Zients faces questioning by the House Armed Services Committee on Wednesday about the looming cuts and the government planning. Deputy Defense Secretary Ashton Carter also will testify as the panel seeks answers on how the Pentagon would implement the reductions.

The committee chairman, Rep. Howard "Buck" McKeon, R-Calif., sent letters last week to Zients and Carter with a series of questions on how the cuts will be made, what accounts would be affected and how it would affect contractors.

Congress proceeded to draw up a defense spending bill for next year.

A Senate panel approved a $604 billion defense spending bill that reverses proposed Pentagon cuts in Air Force personnel and equipment. The Appropriations defense subcommittee approved the bill by voice vote Tuesday. The measure would provide $511 billion for the base budget and $93.3 billion for the war in Afghanistan in the fiscal year beginning Oct. 1 as the committee moved money to war funding to meet the budget caps.

The bill is nearly $29 billion less than current spending.

The legislation provides $800 million to halt the Air Force's planned cuts. In its budget proposal, the Pentagon called for a cut of 5,100 from the Air National Guard, 3,900 from active duty and 900 reservists as well as 134 aircraft. That proposal met stiff resistance from the nation's governors and members of Congress.

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Associated Press writer Sam Hananel contributed to this report.