Defense Vendors Threatening Layoff Warnings

September 9, 2012

Dismayed at a returning Congress still struggling to avert automatic budget cuts, defense contractors could soon alert thousands of employees their jobs are at risk.

The defense industry is gambling that neither Congress nor the White House wants headlines about potential layoffs so close to Election Day — and that the threat of layoff warnings could push lawmakers and President Barack Obama into resolving a budget standoff that has dragged on for more than a year.

Under the terms of last year’s agreement to raise the debt ceiling, Congress passed, and Obama signed into law, legislation that would automatically “sequester” nearly $500 billion in defense spending over the next decade.

The Pentagon and its vendors have warned that would be catastrophic, but the problem is tied up with the larger deadlock over taxes and spending cuts. And with time running out before the Jan. 2 onset of the sequester, the defense industry is eager to jump-start action by Congress.

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