"Defense Industry Has Its Own October Surprise"
Op-Ed, Boston Globe
September 27, 2012
Author: Juliette Kayyem, Lecturer in Public Policy
Belfer Center Programs or Projects: International Security
As September draws to an end, a familiar parlor game is starting — the speculation about a pre-election "October surprise." The term came into favor in 1972 when President Nixon's then–National Security Advisor Henry Kissinger proclaimed "peace is at hand" in the Vietnam War, lending support for Nixon's campaign against Democrat George McGovern. Since then, the "surprise" has represented some unexpected event that can change the course of an election.
The "October surprise" does not have to happen in October, just near enough to an election that a candidate has little time to regroup. Allegations of a long-lost drunk driving scandal against candidate George W. Bush in 2000 popped up in early November. In 2008, candidates Barack Obama and John McCain were startled by September's financial crisis. But the point is clear: Something, anything, could happen. With momentum turning towards President Obama, the search for a surprise is in earnest.
This year's surprise may be found in a bunch of pink slips.
The issue involves the impending sequestration cuts, that $1 trillion hatchet-chop solution to the debt crisis that would automatically affect nearly $500 billion in defense spending over the next decade. Since the administration has said no military personnel will be at risk, a lot of the potential savings would have to come from contracts with the private sector. There has been little progress in talks aimed at a bipartisan budget deal that would prevent the cuts that would otherwise take effect on Jan. 2, 2013. That's too late to influence many voters, so some in the often hawkish defense industry — fearful of losing money, and suspicious of President Obama — are looking for an earlier date.
And they found it in the rarely invoked Worker Adjustment and Retraining Notification (WARN) Act, which was intended to provide for a 60-day notice to employees when a company plans to close a plant requiring massive layoffs. It's a "we regret to inform you" letter, giving some advance warning. Historically, the business community has tried to find ways around it.
But now it is as if the defense industry is getting counseling from labor advocates. Military contractors can subtract: Jan. 2, 2013 minus two months gets you, helpfully, to Nov. 2, 2012 — just a few days before the election. And the industry is ready to make October the scariest month imaginable for 2.1 million workers, with hand-wringing public announcements about letters being issued and over-the-top concerns by executives for their potentially displaced employees.
The underlying math is bogus. According to a report released last week by the independent Center for Strategic and Budgetary Assessments, fears of massive cuts are unfounded. Most contracts and projects are already obligated. The notion that a sequester that may (emphasis on "may") happen in January would inevitably result in millions of workers getting fired, resulting in a potential 1.5 percent jump in the unemployment rate, is beyond speculative, and closer to outright lying. But that hasn't stopped some executives led by Lockheed Martin CEO Bob Stevens (who claims up to 10,000 of his employees are likely to get the notice), from publicly worrying, and testifying, and generally stirring up all sorts of mayhem. Local behemoth Raytheon has been much more discreet, claiming it will not speculate and risk unnerving its workers.
In an ironic change of roles, the worker-friendly Labor Department responded with a memo about the WARN Act making it clear that the defense industry is not under any obligation to warn workers because the potential cuts are so speculative. It simply is not known now, they wrote, whether the cuts will happen, how the Pentagon would respond, and which companies might lose contracts.
Nonetheless, the impending "pink slips" have been embraced by Senator John McCain, who demands that the president do something to fix things. Obama just doesn't like the military or people who work for it, McCain has been hinting to military audiences on a national tour, a theme reiterated by Mitt Romney.
Desperate for anything that will merge foreign policy and unemployment in one swoop of bad news for the incumbent, and give Romney a chance to prevail despite his history of sending a fair share of pink slips himself, the defense industry can’t help but try to engineer this October surprise.
Some industry leaders have not made clear whether they will defy the Labor Department's analysis. But mark your calendar: They will.
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