Washington Business Report - March 2, 2014

Cybersecurity boom not enough to fill job gaps

With $50 billion in opportunities in the Washington D.C.region and way beyond, cybersecurity is undoubtedly a hot market to get in to, and yet, Jill Aitoro, who covers federal contracting for Washington Business Journal, can't help but shake her head as the drama unfolds.

While the numbers may be impressive, that $50 billion is still far less then the cuts to defense hitting the region, she calculates. There is not enough in fresh cybersecurity investment to make up for defense losses, yet many companies are running towards that possible activity.

"All these cybersecurity companies are getting bought for valuations that are sky high and in the end, there is not going to be enough work to actually maintain those companies," she told Washington Business Report.

In a column this week, Aitoro quoted Jeremy Bash, founder and managing director of Beacon Global Strategies. "If you work for Boeing or Lockheed and say you want to invest in cyber, it's a good strategy because an acquisition can replace your R&D," said the head of the Washington-based advisory firm. "The problem is, you're going against venture capital and private equity, and valuations are sky high."

Proposed military cuts

This week, Defense Secretary Chuck Hagel proposed a scaled back, modern military that would cut the Army to its pre-World War II size, retire the A-10 Warthog attack jet and trim benefits for fighting forces.

"This is a budget that recognizes the reality of the magnitude of our fiscal challenges, the dangerous world we live in, and the American military's unique and indispensable role in the security of this country and in today's volatile world," Hagel announced as part of the Defense Department's spending plan for 2015 onward.

Of course, the proposed cuts immediately sparked reaction from lawmakers across the country scrambling to keep their communities safe from economic impact should the streamlining actually come to pass.

Peter Morici of the R.H. Smith School of Business says the DC region's strong reliance on lucrative defense contracts, there wouldn't be a localized recession if defense spending cuts continue.

"The Washington economy is much more diversified than it once was," he told Washington Business Report. "For the people who work in these industries, yes, there's an issue."

Minimum wage consensus

Meanwhile, proposed increases to the minimum wage is still in the headlines, with no real cooperation from Congressional Republicans on the issue.

Maryland Gov. Martin O'Malley has been urging state lawmakers to raise his state's minimum wage from $7.25 to $10.10 by 2016, insisting the increase would not have the negative repercussions. Virginia Gov. Terry McAuliffe was another of several democratic governors from around the country invited to the White House this week as President Obama made a pitch for raising the federal minimum wage.

"The President and Congressional Democrats are going to use it as a campaign hitch through the year and through the fall," POLITICO's Reid Epstein told Washington Business Report on Sunday.

One of the reasons all three Democrats -- DC Mayor Vincent Gray, O'Malley and McAuliffe -- are singing the same tune is because they "certainly aren't going to cross the President on what the national Democratic messaging is on the minimum wage. They are all going to…essentially take the White House line that it won't make any difference as far as jobs when neighboring jurisdictions have different minimum wages," Epstein says.

Many opponents of minimum wage hikes say the cost to employers could discourage hiring, or force additional cost onto consumers.

Weak psychological recovery after 9/11 still costing U.S.: author

A Washington, DC author says our economy is still reeling because of fiscal and psychological damage created by terrorist attacks on September 11, 2001.

"When the bottom fell out in 2008, there were people who were tracing it back to the monetary policy that we instituted shortly after 9/11 in terms of the 'tsunami' of free money that banks and other financial institutions were…given," says Ximena Ortiz, author of The Shock and Awing of America. "It was a gift. And these institutions had a party with it."

Ortiz says to this day, there are still mistakes the U.S. is making because of what she calls the country's weakened psychological mindset. She says some CEOs are still reticent to move forward, working on their recovery at a dangerously slow pace.

We, as a country, are ignoring domestic infrastructure because we are still so focused on foreign threats, she told Washington Business Report. We have misspent our military dollars, and that has a "cascade of consequences," says the former executive editor of The National Interest, editorial columnist for The Washington Times and Bureau Chief for AP-Dow Jones in Santiago, Chile.

The proportion of the U.S.'s spending devoted to military is askew, she maintains.

"We spend money on the military like a third world country when you look at it in terms of percentage of GDP, and when you look at it …proportionally, we are not going to be going back to pre-9/11 levels until 2018 according to the administration's own estimates."