Speaking to Contractors, Baucus Warns of Recession

By Beacon Staff

Speaking to the Montana Contractors Association in Kalispell, Sen. Max Baucus warned Wednesday that when the U.S. Congress reconvenes, among its top priorities would be legislation to grapple with the potential for a recession.

“Are we going to have a recession or not?” Baucus, a Democrat up for re-election in 2008, said. “It’s going to a get a little touch-and-go nationwide.”

Acknowledging that Montana usually manages to avoid the worst of the nation’s economic downturns, Baucus said he was concerned that as interest rates in so-called sub-prime mortgages begin to climb, the national economy could suffer.

Baucus’s remarks came at the end of a speech to the contractors ranging from his time Tuesday spent working at a Kalispell aerospace machining business, to the nation’s crumbling transportation infrastructure. Chairman of the Senate Finance Committee, Baucus also touted the billions of dollars in earmarks for Montana he has managed to tuck into U.S. highway bills in 1998 and again 2005.

“There are good earmarks and bad earmarks,” he joked. “My view is the good ones are Montana earmarks.”

With another highway bill up in 2009, those comments did not fall on deaf ears: The MCA represents members of the commercial construction industry, building everything from roads to bridges to schools. Many of those jobs are paid for with state and federal dollars.

Baucus described traveling to China and other developing areas of the world where governments are investing heavily in transportation infrastructure and the technology far outpaces the United States. Citing one example, the air traffic control systems of many countries are now based on satellites, creating more efficient use of air space and more flights for travelers, Baucus said, while the U.S. radar-based air traffic control system lags behind. Should he be re-elected, heavy investment in infrastructure will be a priority in the next Congress as well, he said.

Speaking after Baucus, economist Paul Polzin, director of the Bureau of Business and Economic Research at the University of Montana, emphasized the strength of the state’s current economic boom, saying he would not be surprised to see Montana’s economy grow annually by 4 percent or more for five or six years in a row – regardless of what happens in the rest of the nation.

“If, in fact, we do have a recession,” Polzin said, “I don’t think it will be nearly as bad in Montana as in the rest of the country.”

Polzin put Montana’s current economic upswing on par with similar surges in the late 1940s and 1970s, chalking the boom up to three factors: steady and high worldwide commodity prices; construction remaining strong; and wheat prices at $8 per bushel or higher.

“The larger these commodity prices remain high,” Polzin said, “the better off we are.”