>> business news from the capital region. this is "washington business report" with abc7 national correspondent rebecca cooper. welcome to a fresh look at business and finance in the washinington region. we have a great show coming up,, including how military cuts could hurt wasngton wallets. what a newax bill means f for you. d an author who argues the u.s. has taken the wro lessons from 9/11, and that is hurting our economy and mucmore. first, it was a busy week in business. let's take a look at the week in review. >> this week, the market again proved investors are in the mood to find good moves just about anywhere.

take target. thanks to the data bridge over the holidays and what has been called a dud rollout in canada, target announced fourth-quarter profits dipped a full 46% your debt losses were less than expected, so shoppers on wall street celebrated, snatching up target stock and more. the dow on thursdays all the s&p 500 hit another record high. but will it last? with so many in the washington area counting on the pentagon for a paycheck, from contractors to those who serve, is week started with a jolt of reality for our regio ononday, chuck hagel blasted cuts mandated by congress but says if he has to make them, cuts will come. he says the manpower, and necessary weapons systems, more base closures, and cututs to benefits rather than readiness. >> given the reality, we must now adapt, innovate, and make difficult incisions -- decisions to ensure our mitary is ready and capable, maintaining the

technological edge. >> president obama towoward a construction site in minnesota, calling on congress to boost spending on infrastructure. warning there will be major coequences if a transportation bill is not passed by this summer. >> we can see construction projects stop in their tracks, machines sitting idle, and people off of jobs. next week i will send congress a budget that funds rebuilding our transportation infrastructure in a more respoponsible way, by dog it over four years which gives cities and states and private invevestors the certainty they need to o plan major projects. >> in arlington, governors got together wednesday at the virginia tech research center to annonounce a new infusion of $75 mimillion to metro's goal, it easing congestion with higher capacity trains and talking about top priorities. >> corroboration is the new competition when it comes to creating jobs, spurring

innovation, and developing in emerging sectors. >> as a region, i do not think anybody can compete with us. >> we had to ask, with d.c. having governor o'malley pushing for minimum wage raises, any concerns about competition now thatat virginia has rejected a minimum wage boost? nope. at least that is what they say on camera. >> stutudy after stutudy showswe is no job displacement when it comes to one jurisdiction on one side of the border appeared w are all concerned about jobs. in terms of phobias and fears aboutt people packing up and moving because of minimum wage, i do not have that fear. >> i would echo what governor o'malley has said. we are excited to be able to offer a high wage to the people of district of columbia. i do not worry about his placement. we are all about jurisdictions growing. >> we asked evernham mcauliffe

about metrostrated delays on the silver lines again? >> i asked the secreta o of a trans-petition to work with them. -- secretary of transportation to work with them. it is important that it is done right. itare not going to accept until a contract is called for. i am hoping thawill happen very soooon. >>e also weighed in on his meeting with hospitals and care providers this week. he is donning the regina chamber of commerce and business leaders, urgining republicans in the general a simile to reverse course and ask a's of dollars in medicaid funding they rejected. virginia taxpayer dollars. it does not make any sense. we have forfeited $270 million that we could have brought into the economy.

this done.to get there arere 400,000 virginia families that ha waid long enough. >> here to talk about the highs anlows o of the week is ececonomist per morici and politico white house reporteter reid epstein. jill aitoro is here. you wrote e about who will be e winnnners and who will be the losers in the washington reg when it comes to mitary pending cuts give us names. and a loss, as they usually are. , it is stillakaking the darling of the pentagon. butas not really certainty, they are stutuck wh it.. there were a cple members of cocongress that said t the othey at it is not going anywhere. it is moving forwaward. he could see, if sequestration stays inlace, there could be delays.

they got hit a little bit with the fleet. reportnly did the p pentagon they will buy y fewer thanhey theinally planned, but program was slantand the navy for relying too heavily on that particular ship. primarily lockheed in terms of the local region. they split it with another contractor. the other some of players? >> general dynamic and bae systems. nonot a huge surprise for both. in terms of the ground vecle program, tt is kind of a no go. instead, thehey will get modernization of the current fleets, the tas, those sorts of t things. >> peter, in addddition to weaps they're going to eliminate, possibly even an aircraft carrier, they are talking about touchingng salars, benefs, significantl downsizing the army. as an econost, you know, california took a bigit after

the reagan yeaears when they lot a lot of the defense spending money that they werere used to. arare we going to see a recessin in the wasashington area and defense spending cuts continue? >> the washington onomy y is much more diversifieied than it used to be. last m month -- this month, february, car sales were rather robu, i am m hearing from folks i talk to at dealerships. even though in detroit they said february is noa good month, that is because of the snow. there is resiliencyere. i think pele are simply gog to find other things to dodo. >> ok,ther things to do. reid, i want to talk about minimuwageith yoyou. u heard the governors saying that they are not too worried about his crib of these in the minimum wawage in this a area. but you have been saying the president continues to push for minimum wage. where does that stanand? >> essentially, not quite dead in the wer. but there is no reaeal cooperatn

comingrom congressional republicans on t the minimum wa. the president and congressional democrats are gog to u use it as a a campaign hitch through the year and throughgh the falall. partly why y see all three democrats there, that certainly will not cross the national messaging onin minimum wage.. they will esseially take the whithouse line that it does not make anyny difference as far asobs a when ighboring jurisdictionons have different minimum wages. >> pet morici, no matter what happens with federal minum wage, washington, d.c., losses it has to be one dollar higher than whatever the e federaral minimum wage is. buness -- governrnor o'malley says he not worried if he raises the statewide mimum-wage. do you agree with the stues that were alludedo, that it makes no difference? >> governor'malley likes to be on the p party line. he echoes with the o obama administration says and j just about everyy policy ise.

ththe studies on minimum wage ek at small changes in mimum wage or looooking at aa cap on e rket. peopople will still go to radio city music hall. it is not clear tt you can raisise the minimum wage substatantialllly in mtgomery county and not have some l leake to fairfax county. we cacan count on aum alleley o hold his line and count on you to hold your linine. more when we come ck. stay with us for more.

we're back with peter mori and reid epstein and jill aiaito

.. jill, i want to turn tyou onon somemething g interesting you we this week heard many times on this show when we a ask people where they shohould be looki to the future in terms o grorowth, they say cybyber security, c cyr security, cyber security. you wrote -- th these cutss coming in mimilitary spendndingo not expect cybyber sececurity bo be the cure for all spending ills. >> i hasas beethe t market to get into. anytime there is a hot market to geget into, e everybody runs to. someone said everybody i runnnning for the ball. not everybody is goiong to b be able to get there. basically, what is happening is a believe someone gave an estimate of about $50 billion in cyber security opporortunity, depending hoyou describe ththat. >> that is how muchh spending to exct it >> yes, and thats far less than the cucuts that ae happening. it is not enough in pvate securirity to make up for defene

losses. what we e are seeing in the shot term is s this run tthe ball, so to speak too your doll these cyber security companies are getttting bought for valuations ththat are skyhigh. in the end, there will note enough w work toto actually maintain. >> you are warning now t that an economic b bubble could be forming. to get you on something that alslso we flex everyone in this region, taxes. we saw the b big masass of almot 100000-page tax land rolled outy the ways and means cmittee chairman. evererybody knows it inot going to pass, but it has som interesting ideas. take apart the tax plan.n. whatat is the good, the bad, and e ugly? >> the good thing isis a trieso streamline the code by eliminating a lot of elections and exemptions. consolidatinsome m more people can file be short form and not worry about keeping -- >> 95% would be able to. >> i am wary on e 95%..

we will ave it on that. not same time, does change the progressive nature. it is about as progrgressive as before. however, within groups of people, income groups, there wille winners and losers. a lot of people are screaming year does they lose their benefit, they get back k and edt the action is not ththere. the ugly, senator schumer quite frankly said deaead on arrival. itit will lead to a lot of ranc. we cannot hieve tax reform with this president and this house. it is not ssible. >> i will weigh in withy views on it. i thinink the good is that it ds try to lower rates to help all businesses. the retail federatiolikes this bill. we have talked about how wall street hated it. i like that it tries tond some of the special deductions that should not be there. i do not think anyone thinks oil companies are hurting right now. then again, i think there ar

some tax breaks and a good to the from clean energy earned income tax credit that encourages lower income americans to work. >> what w really interesting was that we saw big banks and wall street come out against ththis tax bil tax bill that everyonenows is going nowher they wanto make it clear that they are defending their turf and nonliving a t toretical ground on this, making sure republicans know that they need to heed what wall street wants oror else there will be cut off from donations. >> end of this session on tax reform. was a nice effort. and one still worth h discussin. when we come bacack, our next gut saysys the u.s. is made serious mistakes post-9/11 and it is impacting the economy. stay tuned for her prescription on what needs to happen.

welcome back k to our next andt isuthor xime ortiz editorial writer for the "washingto tim." she has writitten a ovococative book called "shock and awing of america." welcome to "washington business report." i think this book is really an interesting read on so many levels. would yoargue is we took the wrong lessons from 9/11, when we tried to shock and awe a rock in 2003, it was byverwhelming em, but we became overwhelmed post-9/11. >> when you look at the actu military theory of shock and

awe, you realize tha i it isis about terrorizing. you think about our psychological closure was targeted after 9/11. >> that was part of the intention. >> that has been the case. it is important for us to exame what our psychological reaction has been. see when we overrrreacted and wheree terranova and fear has clclouded our thinking. hashere paranoia and fear clouded our thinking. >> let's get to those pretty ha great examples. you have minutes from 2008 thatt show big mistake made e by the federal reserve. you went back to the meetings immediately post-9/11, and you point out that people e like the new york fed president literally seven the fed meeti, we need to base monetary policy on our patriotic duty to america. >> it is so interesting because

in the bottom fell out in 2008, there were people tracing it back to the monetary policy that wainstituted shortly after 9/11. in terms of the synonymy of money that banks and otherr financial instititutions were really given. it was a gift. these institutions had a party with it. i thought that was interesting. i wanted to look back and see - >> what caused that. >> i thohought, why not look at the minutes? i found some things that surprised me. these are tetechnocrats. theyre aupposed to be getting together andalking abobout technicacal -- and what isis best for the economy, even if it is not the most psychological uplifting at that mont. that is whahat i thought was structive. lexie yeah, that point, y you would think that we would want to rse the ground for a sustainable recovery. becauseas interesting he literally said that we'd need

to wave e flag at this moment. what you are talking about is a triotic monetary policy. >> you argue that it did not work. it flooded the markets with to much money. you say fast-forward to today where we paid the pricice with e rececession in 2008 fromeing a wash and out this easy money. but nonow we' getting mononey bk into the system. yo argue that there are still miakes we are making because of the psychological mindsetet, from ceoeo's being too retint to move forwardrdcontinng to sit it out, stuck in a recovy. you argue we are a knowing and dodomestic infrastructure becece we're still so focused on foreign threats. you touched on the big topic this week, sing we have misspent on military dollars. >> it is so interesting how you really have a cascade of consequences. when you overreact or whenen you is notoorly -- it character assassination.

it is reallynderstandable how these mistakes are made, but yet they wermiststakes. we have to see theas such. yes, you had thatnitial over greasing of the monetary engine. then you had institutions that overerplayed their hands with tt free mononey. of thisdimensions financial catastphe were such that the administration blanked. that is what was being talked about my book. has dealt withdd very disastrouous financial cris in the third world. argentina, to be exact he pointedut something interesting. what is fasciting is at the obama administration, even though they seem to be prepared to make the tough choic, they allowed these financncial institutions to kind of f sugar

coat the numbers. theyey did not do traditional accounting. what happened is that there was no transnsparency. the lack of transparency. howre we supposeded to recover? nobody knows the dimensions of the problelem. >> that leads me to myast queson before we run out of time. we do have prescriptions for what we e need to change, some prprovocativive once saying le's decriminalize drugs, but others from scaling bk our foreign intervention to endiding overspending and rethinking military spending, including, you argue, private contractors. yes, your show doublet military spending, and ihink that that is important. daers show d dealt with militaty spending. were a wealthy count, so of course we spe a lot of money on the mililitary. not a lot of money to spend. we do not think abt the proportion of money that goes there. we spend money on military like

a third world country when you look at it in terms of percentage of p. when you look at it proportionately, we are not ing to be going back to pre-9/1111 levels until 2018, accordinto the administration. >> ty say it is time. a lot more in this book "shohock and awing of america "shock and awawing of america." thank you fojoining us stay with us. a revolution in technology, next. i was going to the library to do my homework.

it took a lot of juggling to keep it all together. for some low-income families, having broadband internet is a faraway dream. so we created internet essentials, america's largest low-cost internet adoption program. having the internet at home means she has to go no further than the kitchen table to do her homework. now, more than one million americans have been connected at home. it makes it so much better to do homework, when you're at home. welcome to what's next. comcastnbcuniversal.

>>n this show, we're always watching out for innovators. this week and an american have an event in app is getting credit worldwide for helping make globabal protest possible. it turns your smartphone i intoa two-way radio, useful on a number of fronts, p particularly for p protesters tryingng to eve governrnme monitors pretty begin e numb one app in egypt and turkey b before that. now it is credid withelping ukrainian protesters keep fightiting. it is being blocked by the government in venezuela. it keeps coming back here the ceo declaring g this week -- technology always s wins. fors for helping -- kudos helping start those revolutions. what story caught your e eyehis week westernerer do no forget,e ways wt to hear from you. you can go to us any time on facebook at washingtonusiness

report. we a are on twitter. or go to our websitete w

>>hey have made so significant changes to it and taken some things which the ministry found object humble. how will this fare in the sentence? is arnment matters" this budget that recognizes the reality of the magnitude. chuck hagel makes the case for a smaller, more tech savvy military. a look ahis 2015 budget reququest. >> wt we know is that it will not be very sweeping. we a still in tight budgetary circumstances. >> another week year