>> business news from the capital region. this is "washington business report with abc-7 national correspopondent, rebecca cooper. >> thank you for joining us for a lookt business and finance here in the washington region where budget battles threaten our wallets contacting jobs and the area economy. we w will tackle those topics cong up iour routable, but first, a company thahat isis expanding around the world and here in the w washington gion. from modest binnings the company has grown to becomee a cosmetic andkin-care powerhouse. itas continued to grow

ththroughout the recession despite the dip manyther high h and cosmetic retailers experienced. they have just ded a new stand-alone store in addition to thee wisconsin avenue store that has long been in the georgetown. helping fuel ththe growth is the president of kiehl's usa chrisis salgagardo. welcome to washington business report. you are the first business executives that has ever comome to town for businesand crashed in yourmotorcycle on the way. what happened? >>t just happened. i t took a turn a a little too quickly. i have been writing for 30 years. luckily, i pulled myself right back up and got back ony bike >> it was f for a good event.

you all have long been associateded with amfar but i want to talk about kiehl's which managed to grow during the recession. wh was it about the company that made people keep buying? quite to be around for 161 years, you have to be doing a lot of things right. there were three key factors. first of all, we have always hung our hats on customer service. when people are watching their pocketbooks more closely, you have to make sure you are delivering on that. number two, we have been made in america and created in america the entire time. lastly pricing. whether you have a lot of dollars in your pocketbook or e barely getting by,ou wan to make decisions that are cost fective. those ththree factors reall way and our adadvaage. >> any of our audience who deal

with their budgets struggle th as. kiehl's is known for having expensive agreements its products but selng at the low- end of -- ingredientsts iits products but selling at the low end d of the high yen level. has there been any pressure to raise the prices? >> 0 pressure. because we have alwaysteered away from classical approaches like advertisi which you have to pass on n to yourustotomer -- we do not even have carton's ununless they are necessary and it has alloweded us to give the consumer the lowest price possssible. when the ingredients prices were raisised, i did not take our prices upp because they american public is really concernrned about this and as an american brand we have to be careful. >> as people slolowdown tir

purchasing oluxury skin-care items during the recession, and then increase their r purchasing.. >> thank you, guys.. >> they said thehe growth within two demographics, men under 30 who want tlook good and men over 50 who want to buy better skin-care to look better to keep their jobs. that is an intereing trend. >> it has been growing exponentially. for us, i was not surprised that the trend continued. we saw a sine digit growth all the way through the r recession. millnial or early -- melanie walzmillennials were early adopters. but baby boomers a generation x are focused on beingg competitivand looking good. >> i can see this being a big seller in new york or los angeles, but washingngton, d.c.?

i just do not see the d.c. conser as a guy out there buying skin-care. am i wrong? >> uma >> really? now ii know what to get my bosses for christmas. >> we opened in georgetownn 2004. the reason we did was because there was such a signifificant demand here that it was easy for us to find is great location. >> four men and women. l's talk about how you rose through the ranks. you were not even looking to go into the industry but you became a makeup artist at chanel. you're snapp up by estee lauder and became a marketing group. you were snapped up by kiehl's and became president. what is it about you that helps you go from the low end of the latter -- although makeup artist an impressive profession -- all the way to president >> i tnkt is the fact that i have seen the business at every

level. i think the most successful marketers are the ones who know their customers theest. because i w was very focused -- i have only wororked for three companies.s. i hahave been using kiehl's for 255 years even though i have only been president for sex. i could look everybody in the eye and say -- i have only been president for six years. i could look everybody in the eye and d say this is the best product you can buy. >> some people in our a audience may think it is not that unusual that you arere an openly gay exutive given the industry that you serve but you a and i both know that there are many in this indusustry, male ecutives, whoo many believe are still living in the clososet why did you feel safe embracing your sexuality as he rosose through ththe rankto become an executive? >> i think it is critical tha

if you are in a positionn that is visible and you have the opportunityo influence and inspire others --eople ask me all the time if i w want to inspire the kids of today, ablutely. but there is alslso a 55-year-old man stilill in n the closet that i want to inspire. when you look at the homeless situation for kids, 60% of them are e gay. >> any problems in the boardrdroom? >> n not one. i think you have to be really comfortable about it. i w was lucky to be raised by two fantasti parents and i am a pretty fearless guybviously because i rode a motorcycle for charity. >> c chris salgardo fascinating to myou. thank you for joining us. stay tuned, we will be back with the round table right after this.

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>> most of the media has been focused on the presidential cacampaign this wee members of congress and many in the investment community are focusing on an issue whout a a sexy name but thatacks a major puncnch, sequestration. it willl go into effect in jajanuar unless lmakers come up with another solution to the budget on capitol hill. budget cuts are expected to hit hard here. >> we feel we will be unable to provide the equipment support needed by our mililitary force and we are unable to reliaiably

estimate how many employees are going to lose their jobs and how ny families are going to be disrupupted. it might be flattering to believe that our industry is so robust and durable that it could absorb the impact of sequestration w without breaking striride, but that is a fiction. >> we will use those wordsrom robertrt stevens as a staing point. our roundtable today peter morici ecoconomi professor the unersi of maryland and josh boak with the fiscal times, a publication created by pete petererson to independely take on issues that affect our financial future. gentlememen, welcome to you both. we could not put off this wonderful bromance we ha been brewing for months.

let's sta with sequestration. it is not sexy enough to makake the evening news, but i it is going to have an impact. what are your thoughts? >> i do not thinkt is goingo be hpening to be honestst. depending on who wins the election, , will d dependndn how much compromisise we see. >> what do y see is th alternative? >> that they actually do someththingbout the deficit right new legislation or what have you. i do not think they'rere goingo let us have this si of budget cuts if they do, it will be cataclysmi >> but to do something about the deficit, you have to either have budget cuts or a an increase in the taxes. >> going back to paramenand british commonaw, one congress cannot fd another. they can always pasass anher law.w. -- finind another. they can always pass another law. should be able to come up with some sort of legislation to

geget us through this. wi there be defense cututs? yes. will it the e end of the w world? no. >> i agree that the end of the world will not happen even if there arere these cuts.. ople are beginning to acknowledg that these cuts go beyond the defense industry they have discovered d the most attention. josh,hat do you see as some of e most viable alternatives? there are members of congress trying to talk about compromisise. >> all of the choices are unappetizing. is choosing between turnips and beets and nothingng else. >> i like beets. >> have you ever had turnips and be together?r? we should dohat on the next show. but that is the issue. if you do not want to cut defense by that much, you have to raisese taxes. what we saw witith the democrats this week is tt theyey are willing to cross the fiscacal clef if republicans do not raise taxes on people making more than a quarter millilion dollars. > you reaead aut this thing be

hardrdball could create a new recession. -- he wre about this, sayg hahardball could create a new recessio >> past strategies have not worked out as they wanted. democrats had to extendd a tax cut back i2010. we saw with the debt ceiling debate last sumummer that beining on the side of responsibility was not necessarily favorableor the barargaining potion now we have both sides being willing to go to theat at the moment. all that could cnge after the election, but at e moment, they're playing hardball because they do no h have a good negotiating strtrategy. >> ty do have a good negotiating stragy. they have alreadyaid and paid bstantially. ifif this thing goes through, half of the cuts come out of dedefense. defense e is harardlyhat size in ththe budget. the democrats see a golden opportunity to blame the

republicans whilele they have the pentagon. they do not really believe the national defence. the only time they believe thehe nation defence is when they have the predent. >> obamaoes believe in jobs. if he has the thrt of lockheed martin coming out and saying we willave to lay off this manany people b becausese of sequestration that is gogoing to be a negotiating strategy that could blow up in his face. >> i want to swiwitch for a moment and talkbout president obama d jobs. your forormer colleague at popolitico wrote an article thahat is now being widely circulated by the romney campaign pointing out that it was with much fanfarthat the psident led unveiled his jobs councilut it has been months since he has actually met with them. j kearney says this comes dn to the president being too busy to meet with his jobs council. >> to put the chairman and ceo of general elelectric in charge,

one of the key job sources in the united states, ty come back with a a list of recommendations. the first o one anoth r&d tax credit for general election. the present is not serious. the jobs council is strictly a politicall thing. he thinks can create jobs with high-h-speed r rail and prograrams to createlternative ener and things like that. >> if t president wants to get reelected, o course he is rious about creating jobs. is it that this job c council is not t working? >> they tend to have an eye not only toward the bottom linine of their comompanies but also for the distant future. one of the big initiatives was to get more engineers. you cannot grow engineers overnight. one of the lasast things the did was host a let''s get more gineers t that was initiallyy supposed to be hted by monteteux williams. >>t tells you how substantive this a minute -- this

administration and jobs council is. the growth rate the recovery has been 2.4%. ronald reagan inherited a recessssion as well. u know what his growth rate was? 6%. >> but not all m messages are the same size and have the same compososition. >> listeten to mr. obama. the only person who had a bigger challenge than him was bought at the time of creatioion. >> all presidential councils do things like this. they are stylistiand have a showow business s value. >> we have e to goo to break. i have to play devil's advocatete. a lot of economistsill sasay there is a reasoson theyey call it the grgreatecession. it was a big job that faced the present and many say thathe things he did help. not eveveryone agrees, but i do have to point ththat o. when we come bac we obviously have more topics to discuss, but first, l let's go to our federal

hot minute. >> government business can be lucrative but expensive to pursue. like all industries, the investment community plays a vital role in this market. investment firms provide guidance to investors finance mergers and acquisisitions, and help fundpe operarationsns as contractors patiely await the outcome of their bid. a recent article in the washington post about investors turning bearish is noteworthy. budgetut cuts are cited as a cause for the 15% decline of the blue burned index of federal contractors. -- bloomberg index of federal contractors. to be sure, a budget cuts will hit industries different. contractors will apply more focus to their financial strategy as theyhoose w which oprtunities to pursusue. for links t

laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] get the leleage card with special perks on united, like a free checked bag, united club passes and priority boarding. thanks. ♪ ♪ okay. what's your secret? [ ma a announcer ] the united mileageplus explorer card.er get it and you're in.

>> we're back with our roundtable. we kept talking rht through thbreak. peteter moricici and josh boak lcome e back. a surprise in conongress this week when repubublica daryl ice that turned to eleanor holmes norton duduring a a hearing on d.c. oversight an suggested maybet is time to talk about a commute tax for those who work in.c. but live outside the city. pete you think it will never happen. >> i seehe delegations for

maryland and virginia successfsfully blocking that. >> but as an economist is it a good idea? as a long time resident, i have always found it supremely unfai for pple to utilize the services of this city and then go home and not pay taxes. >> they do pay taxes in thehe form of sales taxes >> not the same period.. >> they do not educate their children here. >> there are roads that only th can use. >> i came to washington shortly after the discovery o of fire and before thenventition of the wheel anand they were talking about commuter taxes then. you will be able to read d after funeral aut a proposed commuter taxax. >> people are fed up with trfic. if you look at the underlying trend, you had roughly 5 50,000

people move in d.c. proper in the last decad that is a trend that does not seem to be abating with or without a tax and that is a direct response to to t difficulty of getting around the area. >> lots off reasons to live in the district, but it does not look like a commuter tax is coming anynytimeoon. peter, you wrote a column lambasting both campaigigns for not really getetting a and speaking truthfully about outsourcing. >> absolutely. the president is outsourcing in chief.f. the tre decit in chi is responsible for the loss of jobs same with oil. hehe shut down drilling on oi he promised he would fix those ings as a candidate. he shohould be held accountable. on thehe other hand, to say the private equity does not contriribute to outsourcing is to say that bunny r rabbits will feed the unicorns.

short-term thinking causes them not to get involve >> if f you are a cocountry that consnsumes and believes s in internatiol tre, outsourcining is ayproduct of that. >> the problem is peter is having an economic debate an popolitians are having a political debate. the polical debate about outsourcingg is a totally different realm than the economic debebate that peterer is dealing with. there are unicorns, bunnies and carrotots. >> we will be right back after the break.

>> welcome back. our number of the week is 660,000. that amounts to the seal of approval for what is considered the cool kids corridor. it is the amamount of money the supreme court jusustice spentnt to live there. the with breath -- the address witeld for security. we a glad youou spent your sunday hanging out with us and we hope to see you again next week. thank you for joining us. i'm rebecca oper.

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