Independent Study Confirms GOP Budget Cuts Would Kill 700,000 Jobs

The GOP is totally screwed on employment: they've been foaming at the mouth talking about job creation, but spent the entirety of their time in Congress thus far attacking women and social programs. And we already knew their budget plan was problematic, but the writing's fully on the wall: the Plum Line reports that the second independent study thus far has confirmed that their proposed budget plan would not create jobs, but would in face decimate 700,000 of them. In a new report echoing a confidential Goldman Sachs missive to its clients, Moody's Analytics chief economist Mark Zandi warns that the GOP numbers will undermine stimulus and even further weaken the economy. Greg Sargent:

Now, Zandi will of course be dismissed in some quarters because he has aggressively defended the stimulus. But this is the second outside analysis to reach this conclusion. Last week Goldman Sachs, in a confidential report to clients, concluded that House GOP budget cuts would be a drag on the economy and cut economic growth by rougly two percent of GDP.

Reacting to the Goldman Sachs report, Senator Chuck Schumer remarked that it "puts a dagger through the heart" of the GOP's "cut and grow fantasy." Expect more along these lines today.

Even if you disagree with these analyses, you'd think the fact that there are now two of them reaching similar conclusions would newsworthy enough to break through the din of Beltway deficit-reduction fetishizing. The argument about budet cuts is too often framed solely as an argument between so-called deficit "hawks" and "doves," as a dispute between those who say steep cuts are necessary and those who say they're cruel and extreme. The fact that outside analysts think that budget cuts could actively hamper the recovery deserves to be part of the discussion.

[Sources : AltarNet]

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Analysis: U.S. immigration probe fears weigh on Chipotle

(Reuters) - An investigation by U.S. immigration officials into illegal unemployment at Chipotle Mexican Grill Inc (CMG.N) is making some investors nervous and could have implications for the fast-food industry as a whole.

Chipotle, based in Denver, is one of the highest-profile employers to come under the scrutiny of Immigration and Customs Enforcement (ICE) in recent years. And the investigation into its hiring practices has served as a wake-up call for the nation's nearly 580,000 restaurants.

The rapidly expanding burrito chain -- famous for keeping a tight grip on labor costs and coming off a two-year stock gain of 350 percent -- far exceeded Wall Street's profit expectations when it reported quarterly results on February 10.

But the shares have since fallen 4.5 percent. A handful of analysts have downgraded Chipotle shares due in part to uncertainty about the liabilities and costs related to immigration audits, which have expanded from about 50 restaurants in Minnesota to Chipotle's 60 restaurants in Virginia and Washington, D.C.

Some industry watchers downplay the risk because the audits are not happening in the usual hot spots such as California, New York or Chipotle's home state of Colorado. But others are not so quick to dismiss the extent to which labor costs may rise if Chipotle were forced to replace illegal workers.

"My gut tells me this is a real issue, especially for fast-food restaurant chains leveraging cheap labor in high immigration states," said Richard Fearon, founder and chief investment officer at Accretive Capital, a hedge fund based in Madison, Connecticut.

"There is a large, vote-yielding bull's-eye painted on its back and sitting in the cross-hairs of the politicians," said Fearon, who invests in restaurant operators, but does not hold Chipotle shares.

Chipotle fired 450 people, or nearly 40 percent of its workers in Minnesota, following the ICE probe.

So far, the affected restaurants represent just a fraction of the 1,084 Chipotle locations nationwide, but analysts and fund managers that follow the stock market darling are now asking how many other states and how many of its roughly 25,000 employees could be ensnared.

Probes in additional markets "would create downward pressure for the stock. I think it's a risk," said Miller Tabak analyst Stephen Anderson, who downgraded Chipotle last month to "hold" from "buy."

Anderson told Reuters that a federal immigration probe in California -- home to 165, or about 15 percent, of the company's total restaurants -- would be "very significant" in terms of incremental costs for Chipotle, which owns and operates its restaurants, if it resulted in mass firings.

Investors also are worried about the impact on the $300 billion U.S. restaurant industry, which historically is heavily dependent on immigrant labor and is now getting squeezed by higher costs for everything from beef to produce.

While some experts estimate that legal and illegal immigrant workers account for around one-fourth of the restaurant industry work force, 40 percent of workers surveyed by Restaurant Opportunities Center for a 2005 report said they did not have legal status to work in the United States.

WORKING ON TIPS

ICE fines are not the primary worry because they totaled a paltry $7 million last year.

[sources : Lisa Baertlein and Mary Milliken]

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