The so-called fiscal cliff is like showtime for Pete Peterson.
The 86-year-old deficit hawk and long-time New York financier has been harping on the perils of the country’s deficit for years. Now, he hopes that politicians and the public will finally pay attention and agree with him, given the fiscal cliff’s more than $500 billion in automatic spending cuts and tax hikes slated to effect in January 2013.
“It’s a pivotal moment, there is no question, not only in our economic history but in our political history,” Peterson recently said. “There are many more voices now being raised. There is awareness of the problem at levels that are much higher than there have been.”
Much of the awareness surrounding the deficit has stemmed from Peterson’s own efforts and from his financial largesse. Following the sale of his company, Peterson committed $1 billion to deficit reduction and has played both the inside and outside advocacy game.
He opened a foundation bearing his name in 2008 that has funded, among a litany of items, a curriculum for public school classrooms about the debt; a documentary called I.O.U.S.A. about, you guessed it, the country’s fiscal challenges; and a “fiscal wake-up tour” to encourage normal Americans to pressure lawmakers to find solutions to the deficit.
Inside Washington, particularly over the last two years, Peterson has waged a far savvier strategy by giving more than $9 million to think tanks and not-for-profits at both ends of the political spectrum. He funded two staffers for the failed congressional super committee, and the foundation’s annual springtime fiscal summit is now a must-attend event. In May 2012, it featured big names such as former President Clinton; Treasury Secretary Timothy Geithner; Reps. Paul Ryan, R-Wis., and Chris Van Hollen, D-Md.; and House Speaker John Boehner, R-Ohio.
Singlehandedly, Peterson has also created a loose network of deficit-hawk organizations that seem independent but that all spout the Peterson-sanctioned messages of the need for “grand bargain” in the vein of the Simpson-Bowles plan.
“I think they do promote the notion that anything serious means that benefits have to be cut,” says Lawrence Mishel, president of the Economic Policy Institute, a progressive think tank that has received funding from Peterson’s foundation. “I don’t know why they’re not laughed at when they say there’s going to be a crisis at any minute.”
All of this makes Peterson — indirectly, at least — a major player in the end-of-the-year fiscal negotiations, on par with the labor unions, pro-business groups, and the hordes of K Street tax and corporate lobbyists.
“He has empowered those working on the issue because he has funded them,” says Michael Ettlinger, vice president for economic policy at the Center for American Progress, which received more than half a million dollars from the Peterson Foundation in 2011. “That has an effect because those voices get amplified, and it affects the atmospherics.”
Calls for a deficit-reduction deal may seem new to voters just tuning into the fiscal cliff saga, but Peterson has been sounding alarm bells for years — ever since the 1980s, when he a wrote of a series of treatises for The New York Review of Books about the perils of Social Security.
Peterson grew up in Nebraska in a working-class family, the son of immigrant parents who owned a Greek diner that he says they operated nonstop for 25 years. They gave him the best education they could afford, and he applied those lessons to making piles of money for an advertising firm, an audio-visual manufacturing company, and Lehman Brothers. His real financial resources come from founding and selling the Blackstone Group, a New York-based financial firm.
With the sale of the company, Peterson thought about his next step and hoped to tackle something in the realm of public service. It was an area that always interested him, as Commerce secretary under President Richard Nixon. Plus, he added: “The idea of playing 18 holes of golf every day didn’t strike me as something I wanted to do.”
He thought back to his articles on Social Security, along with his interest in tax expenditures, defense spending, tax policy, and entitlement programs. Even in the 1980s, he says that he viewed the deficit as a black mark on individuals’ economic futures. “I saw a critical relationship between the American Dream and the country’s projected debt. Debt is about the past, not the future, and interest payments crowd out the investments the economy desperately needs in a competitive, global world,” he said.
So, Peterson decided to commit a chunk of his Blackstone fortune to deficit reduction: a move that has helped to fund many of the brand-name debt groups in town, including the Committee for a Responsible Federal Budget; the Concord Coalition; Comeback America Initiative; Fix the Debt; and, of course, the Peter G. Peterson Foundation.