Sen. Bob Bennett, R-Utah, said Friday that the recent recession was the first of the Information Age and likely will serve as the template for recessions to come.
The keynote speaker at his annual Business and Economic Summit in Salt Lake City, Bennett also downplayed the gravity of the federal deficit, traced the dissolution of the late-1990s budget surplus and reaffirmed that the American economy is strong.
The recession of 2001-2003 was different from major recessions of the 20th century, Bennett said, largely due to steady consumer spending that kept recessionary levels comparatively shallow, moderate unemployment and the anemic recovery rate.
"I believe that the recession we've gone through and the recovery we're in now is different from the others we've been in," Bennett said. "This is the first recession of the Information Age. . . . If I'm right, this will be the pattern of future recessions."
The recent past has proven that the American economy is not invulnerable. Corporate scandals, acts of terrorism, war and the bursting of the dot-com bubble all struck their blows.
The deficit, at more than $520 billion, is "the biggest deficit in history, by a fairly wide margin" when measured nominally, he said. But, Bennett said, taken as a percentage of the total economy, the deficit "is within historic norms."
"Compare that (the current deficit) to where it's been, and it is within historic norms, even though in dollar terms it's the biggest we've ever had. In comparative terms, it's about in line, indeed a little better than the last three (recessions) we have been in."
Kelly Matthews, executive vice president and economist at Wells Fargo Bank, said during a separate press conference Friday that though that may be true, there is still cause for concern.
"The size of the deficit is not huge relative to the historical size of the economy, but politically, given the nature of what's causing the deficit, i.e., the war and still disagreement over the nature of the tax cut, politically, the size of the deficit is probably as large as anyone wants it to get."
Competing priorities — to cut the deficit in half, keep tax cuts permanent, fund the newly passed Medicare bill and the ongoing military conflicts in the Middle East — considerably complicate the equation, Matthews said.
"While I haven't changed my mind as to whether the aggressive fiscal policy in 2003 was good," Matthews said, "it's also an important goal to cut that deficit in half over a period of years, and it's not at all observable how that can happen if we're going to make the tax cuts permanent, if there are additional appropriations needed in Iraq and if the economy grows at something less than an astounding rate."
Bennett did not deny that there will be challenges in the near and distant future. But he said the American economy will persevere.
"The American economy is an incredibly strong, incredibly resilient, rapidly growing economy without equal, anywhere in the world," he said. "As we prepare to deal with the problems of the future, we are dealing from an incredibly strong base."
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