From the archive, originally posted by: [ spectre ]




“Beginning in September 2005, former Comptroller General David M.
Walker, along with representatives from groups across the ideological
spectrum, began participating in a series of nationwide town hall-
style forums to bring attention to the mounting federal debt as well
the challenges posed by emerging demographic and economic trends.
Utilizing in part long-term fiscal projections and other materials
from the GAO, the goal of the Tour is to state the facts about
America’s finances, encourage citizen involvement, and promote
legislative and other reforms by federal, state, and local officials.
This effort is scheduled to continue through the 2008 presidential

Former Comptroller Walker will continue to be a part of the tour in
his new capacity with the Peter G. Peterson Foundation and the GAO
will continue to address the nation’s long-term fiscal sustainability
challenges through its reports and testimonies providing analysis and
recommendations to Congress.”

Walker Resigning GAO Post To Lead New Public Policy Foundation
BY David Clarke  /   Feb. 15, 2008

David M. Walker, the U.S. comptroller general and head of the
Government Accountability Office, announced Friday that he will resign
in March to lead a new foundation focused on long-term public policy

GAO serves as Congress’ chief investigative and audit arm, probing
waste and fraud in government programs and detailing the long-term
budget problems facing the government. Walker has headed the agency,
which has more than 3,100 employees and a budget of nearly $500
million, since November 1998. His 15 year-term was not set to end
until 2013.

Walker, 56, has repeatedly warned that the government faces a long-
term fiscal crisis as the baby-boom generation retires, driving up
spending on Medicare, Medicaid and Social Security. He will continue
to raise the alarm as president and chief executive of the newly
established Peter G. Peterson Foundation, set up by the co-founder and
senior chairman of The Blackstone Group, who served as Commerce
secretary in the Nixon administration. Peterson has pledged to
contribute at least $1 billion to the foundation. “I have been around
a very long time, and I have never seen so many simultaneous
challenges that I would describe as undeniable, unsustainable and
virtually untouchable politically,” Peterson, 81, said in a release
announcing the foundation.

Walker said in a news release that he could better address the long-
range public policy issues that deeply concern him in his new role
than as head of GAO. “As Comptroller General of the United States and
head of the GAO, there are real limitations on what I can do and say
in connection with key public policy issues, especially issues that
directly relate to GAO’s client — the Congress,” Walker said. “My new
position will provide me with the ability and resources to more
aggressively address a range of current and emerging challenges facing
our country, including advocating specific policy solutions and
courses of action.” The foundation will focus on budget issues such as
the growing cost of major entitlement programs, health care, energy
and education, as well as the proliferation of “nuclear warfare
materials,” according to the group’s release.

As GAO chief, Walker has warned that the government is ignoring
threats to the nation’s long-term fiscal security. “We’re headed for
unprecedented rough seas that could swamp the ship of state if we
don’t get serious soon,” he told the Senate Budget Committee on Jan.
29. Walker has been praised by lawmakers from both parties for his
efforts to bring attention to the issue of long-term fiscal woes.
“David Walker has proven that one person can make a difference,”
Senate Budget Committee Chairman Kent Conrad , D-N.D., said in a
release. “As Comptroller General for the last decade, he has been a
tireless and effective advocate for the need to make our nation’s long-
term fiscal situation a priority.”

Walker has been a regular on “The Fiscal Wake-Up Tour,” organized by
budget watchdog groups, which travels across the country in an attempt
to bring attention to the government’s budget woes. The Concord
Coalition will receive one of the foundation’s first two grants for
helping organize the tour. The other grant will go to the Nuclear
Threat Initiative, founded by former Sen. Sam Nunn, D-Ga. (1972-97),
which works to prevent the spread of nuclear, biological and chemical
weapons. Walker also is set to make his big-screen debut. Patrick
Creadon, who was behind “Wordplay,” the popular documentary on a
crossword puzzle competition, has completed work on a documentary —
titled I.O.U.S.A. — on debt and the government’s long-term fiscal
problems. Walker and the tour are featured in the documentary, which
was screened last month at the Sundance Film Festival. Walker is an
accountant by training and was an executive at Arthur Andersen LLP
before coming to GAO.

Confirmation Process

Until a replacement is found for Walker, Gene Dodaro, GAO’s chief
operating officer, will head the agency. The position of comptroller
general, Walker’s formal title, is subject to Senate confirmation. The
selection process is somewhat unusual. A commission made up of
congressional leaders presents the president with at least three
candidates for the job. The commission is made up of: the Speaker of
the Houses, president pro tempore of the Senate, the Senate majority
and minority leaders, the House majority and minority leaders, and the
chairmen and ranking minority members of the Senate Homeland Security
and Governmental Affairs and the House Oversight and Government Reform

The president chooses one of the three candidates for the job. His
nominee must be approved by the Homeland Security and Governmental
Affairs panel and then confirmed by the Senate. Walker’s confirmation
process for the GAO post was not easy. In 1998, the commission
recommended him and two others for the position but that March
President Clinton rejected the choices and asked the GOP-controlled
Congress to send him more names. Democrats claimed at the time that
Republicans did not allow for a bipartisan selection process. Walker,
for instance, had served as assistant secretary of Labor in the Reagan
administration. Republicans rejected this assertion, noting they
followed the process outlined by the law. The standoff ended that
fall, allowing Walker to take over the agency in November 1998.

BY Bill Donoghue  /  Feb. 25, 2008

SEATTLE — The resignation of America’s unheeded and under-funded
chief accountant and watchdog, along with the billion-dollar bullhorn
he’s been given, are the ultimate sell signals for America’s stock

David Walker, comptroller general of the Government Accountability
Office (GAO) has since 1998 been the objectively informed and
outspoken critic of America’s balance sheet. He has criticized
supporting Iraq’s dysfunctional government, pork barrel spending by
Congress, unrealistic “universal health care plans” we can ill-afford
or support, the escalating risks of huge deficits, fiscal
vulnerability to hostile foreign governments, and a lack of will to
reform our government. “David Walker has proven that one person can
make a difference,” Senate Budget Committee Chairman Kent Conrad, D-
N.D., said in a release. “As Comptroller General for the last decade,
he has been a tireless and effective advocate for the need to make our
nation’s long-term fiscal situation a priority.”

Facing indifference on the Hill and unrealistic spending promises,
Walker is resigning with five years still remaining in his term to
head the newly formed Peter G. Peterson Foundation. Peterson, senior
chairman of The Blackstone Group and Commerce secretary in the Nixon
administration, has pledged an astounding startup budget for the
foundation of $1 billion. That money will attack what the foundation
considers “the most substantial economic, fiscal and other
sustainability challenges of our current age” — including federal
entitlement programs, health care, unprecedented trade and budget
deficits, low savings rates, mounting foreign debt, soaring energy
consumption, an uncompetitive educational system, and the
proliferation of nuclear warfare materials. Maybe Congress will listen
this time. “I have been around a very long time, and I have never seen
so many simultaneous challenges that I would describe as undeniable,
unsustainable and virtually untouchable politically,” Peterson said in
a prepared statement.

What does this mean for investors?

This sounds to me like the ultimate sell signal on America. As the
next president is just under a year away from having the operational
authority and consensus to take any definitive action, the Bush
administration will have to act. In a highly charged election year
such as this, controversial new economic proposals are unlikely to
even be discussed.
When the nation’s best-informed watchdog resigns and few are acting on
his recommendations on his “Fiscal Wake-Up Tour,” it’s time to
reconsider over-optimistic domestic stock investments and look
elsewhere, or bet against the U.S. market.


David Walker Resigns as U.S. Comptroller General
“As comptroller general of the United States, there are real
limitations on what I can do and say in connection with key public
policy issues, especially issues that directly relate to GAO’s client
— the Congress.” – David Walker, GAO

You may recall, we’ve been traveling with David for more than a year
documenting his efforts to educate the public on the fiscal issues
challenging the country. Our film, I.O.U.S.A., featuring Mr. Walker
among other luminaries, premiered at the Sundance Film Festival on
January 19, 2008. Despite the “very difficult” nature of Walker’s
decision, he has chosen to leave his post at the GAO to become the
president and CEO of the newly founded Peter G. Peterson Foundation.
He made the announcement to Congress today. “While I love both my job
as comptroller general and the GAO,” said Walker, “I love my country
more. And I believe that leading this foundation represents a unique
opportunity and will be good for my country. My new position will
provide me with the ability and resources to more aggressively address
a range of current and emerging challenges facing our country,
including advocating specific policy solutions and courses of action.”

As the head of the Peterson Foundation, Walker will oversee the
billion-dollar endowment of Pete Peterson – former Commerce Secretary,
the founder of the Blackstone group, The Concord Coalition, and
legendary advocate for government fiscal responsibility. Chief among
Walker’s duties at the Peterson Foundation will be the funding and
advocating of projects that will enhance public awareness of fiscal
imbalance, government deficits, and nuclear proliferation. “We are at
a make-or-break point in American history,” Mr. Peterson said of his
new foundation. “The entitlement monster is unfunded. We are
dangerously dependent on foreign capital, our health care costs per
capita are twice the level of the developed world. The goal is to
integrate public policy and charitable giving and to answer this
question: How do you educate a public that has become largely inert?”

It’s now up to David Walker to answer that question. Walker’s
resignation, coupled with the launch of Peterson’s fund, has broad
implications for the future of fiscal responsibility in the United
States, and more specifically, the development of our documentary,
I.O.U.S.A. “The foundation is also going to end up funding other
related efforts,” Walker told the Federal News Network in and
interview this morning, “including potentially supporting one or more
documentaries designed to get the message to millions of Americas…
because they need to know in order to make more informed choices at
the ballot box.”



“And I want you to contemplate that – because it’s not my future. It’s
yours. I’m 81years old. Lord knows I don’t need anything more – and
ask you, “What are the best ways to do something about it?” And should
we have an American Association of Young People and Their Parents, for
example? Because until this democracy gets educated and gets informed
– which is the first requirement – and then get active and motivated,
not much is gonna happen on these problems unless there’s a huge
crisis. Then it will be a very costly crisis when it hits. So that’s a
long-winded answer how I feel about the economy. I’m much more
concerned about the long-term picture than I am about the next year,
or two, or three.”

Blackstone’s Peterson Creates $1 Billion Fund for U.S. `Issues’
BY Patrick Cole and Alison Fitzgerald  /  Feb. 15 2008

Blackstone Group LP co-founder Peter G. Peterson said today he’s
creating a foundation to address the U.S.’s most critical
environmental, economic and social problems. The Peter G. Peterson
Foundation will be funded initially with $1 billion in cash of his own
money, he said in a phone interview. That amount could go higher over
the next several years “depending on what its needs are,” he said.
The Blackstone Group senior chairman said the foundation will fund
initiatives to address problems such as reducing budget deficits,
curtailing Federal entitlement programs, reducing dependency on oil
and conserving energy. “There are a series of issues here that
threaten the future of this great country,” Peterson, 81, said.
“I’ve decided after being in this field for a long time, I don’t want
to give up the American dream. It’s going to be a question of how do
we narrow the gap between what we aren’t doing and what we should be

David Walker, the U.S. Comptroller General, resigned from his post
today to become the foundation’s president and chief executive officer
beginning in March. Walker, 56, has led the U.S. Government
Accountability Office since 1998 and has been a critic of the
government’s deficit spending. The foundation’s first grants will go
to the Concord Coalition for its “Fiscal Wake-Up Tour” and to the
Nuclear Threat Initiative, a charity founded by former U.S. Senator
Sam Nunn and Cable News Network founder Ted Turner.

`Wake-Up Tour’

The “Fiscal Wake-Up Tour” has sent economists and think- tank
executives to more than 30 cities across the country since September
2005 to speak about the nation’s fiscal outlook. The Nuclear Threat
Initiative seeks to curtail the spread of nuclear weapons. Walker has
participated in the tour as a speaker. Peterson and Berkshire Hathaway
Inc. Chairman Warren Buffett have committed $5 million each to the
initiative for the next two years. Peterson co-founded the Blackstone
Group, the world’s largest buyout firm, with Stephen Schwarzman in
1985 with $400,000 after they left Lehman Brothers Holdings Inc.

In June 2007, Blackstone raised $4.1 billion in one of the largest
initial public offerings in the last five years. The IPO’s proceeds
initially paid Schwarzman $684 million and Peterson, $1.9 billion.
Peterson said he and his wife believed it was time to give back to
society and set up a foundation after he had accumulated tremendous
wealth on Wall Street. “We said we have enough,” he said. The
foundation’s offices will be located in Midtown Manhattan and in
Washington, Peterson said. Walker, who will shuttle between both
offices, said in a phone interview that the foundation will be “more
proactive” than most nonprofits that dispense reports and grants.
“Our objective is to achieve reasonable change in a reasonably short
period of time,” he said.

Blackstone founder backs apocalyptic warning with $1bn
BY Andrew Clark  /  February 18 2008

One of the billionaire founders of the Blackstone private equity
empire has set up a charitable foundation to warn Americans of a
looming economic apocalypse if the nation persists with a culture of
“entitlement”. Peter Peterson, a former US commerce secretary who
established Blackstone in 1985 with Stephen Schwarzman, is devoting
$1bn (£510m) of his estimated $2.5bn fortune to the new foundation,
which paints a gloomy picture of the country’s financial future. The
fund will be run by the US comptroller general David Walker, who is
resigning from the Bush administration to take up the job. “We’re
going to be working very hard to keep America great and to make sure
that America’s future is better than its past, because America is at
risk today,” Walker said.

Among the fund’s core aims is to spread a message propounded by 81-
year-old Peterson for decades – that healthcare, social security and
pension costs are unsustainable as the US’s population ages. Together
with “abysmally low” savings and a soaring budget deficit, Peterson
argues that this will lead to a financial crisis. The approach has
been criticised by the American Association of Retired Persons, which
fears that it could be a thinly veiled argument for the privatisation
of welfare. “He has a right to spend his money however he wants –
there’s a free marketplace of ideas,” said John Rother, director of
public policy at the AARP. “My fear is by characterising the problem
as entitlement it will focus only on the federal budget and will only
shift costs onto families and individuals rather than getting costs

Peterson is a lower-profile figure than his business partner and has
reportedly taken a dim view of the star-studded parties and luxurious
indulgences for which Schwarzman has become renowned since Blackstone
went public last year. The firm owns businesses ranging from Hilton
Hotels and United Biscuits to Orangina, the London Eye and Madame
Tussauds. He told the New York Times last week that he was in favour
of higher taxes for the wealthy. But Peterson also argues for an
abolition of “middle-class welfare” and for an end to budget deficits,
saying they are storing up chronic problems. “We’re arguing for the
government to get back to basics, redefine what it should be doing and
refocus on its core mission,” said Walker. “It’s not necessarily about
smaller government today but certainly smaller government than what
we’re heading towards.” Big charitable gestures are on the increase.
According to the Chronicle of Philanthropy, the top 15 philanthropic
donations in 2006 amounted to $35bn and there were a record 14 gifts
of more than $100m.

Peterson Launches Foundation to Target ‘Undeniable, Unsustainable and
Threats to the Nation’s Future and to future Generations of Americans;
U.S. Comptroller General David M. Walker to Serve as President and
Chief Executive

NEW YORK, Feb. 15 /PRNewswire-USNewswire/ — In a move to address
the most critical sustainability challenges that threaten America’s
future, Peter G. Peterson today announced the formation of the Peter
G. Peterson Foundation, and his commitment to fund at least $1 billion
over the next several years toward addressing these challenges.

The targets of the effort will be the most substantial economic,
fiscal and other sustainability challenges of our current age,
including: the explosive growth of Federal entitlement programs;
unaffordable healthcare costs; unprecedented trade and budget deficits
along with abysmally low savings rates, and the associated
skyrocketing foreign debt; unsustainable and gluttonous energy
consumption; an uncompetitive educational system; and the threat to
our collective future from the proliferation of nuclear warfare

“I have been around a very long time, and I have never seen so
many simultaneous challenges that I would describe as undeniable,
unsustainable and virtually untouchable politically,” said Mr.
Peterson, Senior Chairman of The Blackstone Group and former U.S.
Commerce Secretary. “We’ve reached the make or break point in American
history. These problems have reached tidal proportions and festered
for more than two decades due to political irresponsibility — now is
the time to put politics aside and put the country first, and begin to
solve these problems with courage and clarity. This is the moment in
our history when we do what is necessary to remain a first class

Leading the new foundation as President and CEO will be David M.
Walker, 56, who has served as Comptroller General of the United States
for the last nine plus years, during which he has headed the U.S.
Government Accountability Office (GAO) and has been in effect the
USA’s chief accountability officer. Mr. Walker will work directly with
Mr. Peterson and the Directors of the Foundation in setting the
Foundation’s goals and priorities as well as running the
organization’s day-to-day activities.

“Dave Walker is an ideal choice to lead this foundation because he
has tremendous focus, credibility and insight. He has a track record
of commitment to these issues and is leaving a front row seat at the
center of our government, where he acquired an insider’s knowledge of
and perspective on America’s long-term fiscal and other challenges and
the factors that influence them,” said Peterson. “Dave fully
understands the stakes for our
future, and I am confident he will serve as a powerful, credible, non-
partisan and no-nonsense voice of reason on behalf of the Foundation
and our mission.”

The Peterson Foundation will focus on drawing attention to and
solving the most critical social, economic and environmental problems
that threaten the nation’s economy and imperil the American way of
life for future generations. The Foundation will seek innovative means
to advance its agenda, relying on both traditional and non-traditional
platforms to spread its message and call Americans to action. When
fully staffed, the Foundation will engage or employ policy advocates,
field educators, and digital media professionals in order to mobilize
key constituencies and develop programs to support its agenda.
Critical to the Foundation’s efforts will be engaging and activating
young Americans and their parents, the business community and the

The Foundation will finance efforts to raise public awareness and
understanding, as well as develop and implement sensible policy
solutions. The Foundation today announced the first two recipients of
grants will be: The Concord Coalition for the Fiscal Wake-up Tour and
Sam Nunn’s Nuclear Threat Initiative (in partnership with Warren
Buffett). A number of other grant possibilities are currently being

Peterson believes the nation’s political leadership has fallen
prey to short-term thinking and lacks the courage to clearly spell out
the difficulties, contributing to a state of denial. “If Americans are
told the truth, and if they feel the required sacrifices for our
common future are fairly shared, I have enormous faith that they will
respond with a commitment to identify and implement the right
solutions,” Mr. Peterson said.

The Peter G. Peterson Foundation

The mission of The Peterson Foundation is to enhance the public
understanding of the nature and urgency of selected key sustainability
challenges that threaten America’s future, to propose sensible and
workable solutions to address these challenges and to build public
will to do something about them.


The Blackstone co-founder discusses the populist backlash against
wealth, John McCain, and the need for an Inconvenient Truth-like
effort on behalf of fiscal responsibility. Peter G. Peterson is a man
of parts: leveraged-buyout billionaire, policy wonk, social lion, and–
most recently–the patron of an ambitious new foundation (named, like
the Washington think tank he chairs, after himself) that aims to alert
Americans to the dangers of mushrooming deficits, exploding
entitlements, and gluttonous oil addiction.

At 81–rich, privileged, and well-connected beyond his dreams–Pete
Peterson is an unlikely Paul Revere. He’s the Nebraska-born son of
striving Greek immigrants, who studied hard, excelled in business
(rising through the ranks of the McCann Erickson advertising agency
and then running Bell & Howell), and impressed the likes of
philanthropist John D. Rockefeller III and former Treasury secretary
Douglas Dillon with his public-spirited bent. They sponsored his
induction into the American Establishment, and Peterson ended up
serving as Richard Nixon’s international economics expert, and then
Commerce secretary, before running Lehman Brothers for more than a
decade. In 1985, Peterson was nearly 60–and ripe for a rewarding
retirement–when he and a young financial whiz named Stephen Schwarzman
decided to start a small private equity firm, the Blackstone Group,
whose name was an amalgam of theirs (schwarz meaning black in German
and petros meaning stone in Greek). Now the senior chairman of the
hugely successful firm, Peterson received $1.8 billion as a result of
Blackstone’s initial public offering and plans to pump as much as a
billion dollars of his own money into his new foundation. Three weeks
ago, he sat down with Portfolio.com for an exclusive interview.

Lloyd Grove: You have launched this foundation that is hugely
ambitious. It’s going to tackle everything from the federal deficit to
the insolvency of our health-care system to our energy policy or lack
thereof, and any number of other issues. Why should we believe that
this one will go beyond its good intentions and bright ideas and
actually have some impact on public policy and the way we live?

Pete Peterson: I think that is truly the central question. I was
presumably educated at the University of Chicago. One of my professors
used to say if you have no alternative, you have no problem. And I
would agree that taking on some of these challenges that I call
undeniable, unsustainable, and yet untouchable politically up to now,
is a very daunting task. But I’ve thought about the alternative. The
alternative is to do nothing essentially and to say that this is just
the nature of things in America. But I think of what could possibly
happen to this wonderful country that’s been so good to me. I think
we’re at a make-or-break point in America, and if we continue to deny
these challenges, which I do think are unsustainable, then in not too
many years, we’ll become a very different country. And since I’m the
lucky, lucky recipient of the American dream–the son of poor Greek
immigrant parents who came over here without a penny or without a word
of English, with very little education. I had a father who emphasized
giving back. I’ve had a big windfall from the Blackstone public
offering. I’ve got more than enough financially, and I think it’s
worth a very serious try.

Tax Break Helps a Crusader for Deficit Discipline
BY Landon Thomas Jr.  /  February 15, 2008

“Where is it ordained that private equity pays only a 15 percent tax?”
The ballroom at the Mandarin Oriental in Manhattan is loud with the
cocktail chatter of Blackstone investment bankers and pension fund
managers so Peter G. Peterson, 81, leans closer to hear the shouted
question from Michael D. McCurry, the former White House spokesman for
President Bill Clinton. “When is Pete Peterson going to stand up and
say taxes must go up?” Mr. McCurry asks, pressing his point.

In the past, Mr. Peterson — the billionaire co-founder of the
Blackstone Group and public scold of costly entitlement programs,
ballooning government deficits and cozy tax arrangements — would rise
to such a debating challenge. But this is more than an arcane policy
question: Mr. Peterson has just reaped a $1.8 billion profit from
Blackstone’s public offering — a payout that was a direct result of
just such an amenable rate. He feels terrible, too. His shoulder aches
from a recent fall and his blood pressure is up, all of which has left
him short of sleep. Finally, he gathers himself. “Any package will
have to include tax increases,” he conceded.

On Friday, Mr. Peterson will unveil the Peter G. Peterson Foundation
and announce his plan to allocate his newfound billions to projects
that will increase public awareness of fiscal imbalances, Social
Security deficits and nuclear proliferation. But the larger question
that was posed by Mr. McCurry is unavoidable: Can a man who has scored
riches from an industry that has benefited from a generous,
controversial tax break emerge as a credible voice in favor of broad
fiscal constraint in Washington?

It is a quandary that has plagued Mr. Peterson for years. And while he
supports increased taxes on the wealthy (along with broad-based
benefit reductions), he remains firm in his defense of the special
provision for private equity partnerships despite the view of many on
Wall Street, including the billionaire investor Warren E. Buffett,
that the rate is too low. “This is a fairness argument,” said Mr.
Peterson, who says that increasing the 15 percent rate for so-called
carried interest, compared with ordinary tax rates of roughly double
that, would force private equity companies overseas. “There are so
many other partnerships, why pick on this high-growth sector?”

At a time when hedge fund and private equity magnates have garnered
billion-dollar fortunes from the fading alternative asset boom, how
they put such riches to use has become a matter of increased public
concern. To many a hardened capitalist, philanthropy has long been a
nice way to enhance their social status and show a softer side by
financing museum wings, medical centers and concert halls. But that is
not Mr. Peterson’s goal. For Mr. Peterson, a former commerce secretary
under President Richard M. Nixon, his giving reveals who he really is
— less a Wall Street titan than a persistent Jeremiah who for 26 years
now has prophesied that fiscal and trade deficits will lead to a
financial Armageddon.

The end of the world has not yet come — and during this time Mr.
Peterson has gone from being a millionaire to a billionaire. But the
dollar’s fall, renewed worries about America’s propensity to consume
rather than save and pressing concerns over the future budgetary
consequences of caring for the elderly has brought newfound currency
to Mr. Peterson’s dire warnings. “We are at a make-or-break point in
American history,” Mr. Peterson said. “The entitlement monster is
unfunded. We are dangerously dependent on foreign capital, our health
care costs per capita are twice the level of the developed world. The
goal is to integrate public policy and charitable giving and to answer
this question: How do you educate a public that has become largely

Philanthropy on the Agenda

Out of the gate, the Peterson foundation will be worth about $100
million and Mr. Peterson expects it to grow to $1 billion, a large
part of his total fortune. He has hired David M. Walker, the respected
head of the Government Accountability Office, to be chief executive
and has already committed $5 million — a grant that will be matched by
Mr. Buffett — to the former Senator Sam Nunn for his work on curbing
nuclear proliferation, as well as funds to the Concord Coalition, a
group he helped found that lobbies for deficit reduction. For a man
who has conspired with Henry Kissinger in the Nixon White House, led
Lehman Brothers away from the brink of bankruptcy and been a co-
founder of the world’s most recognized private equity firm, his final
act is arguably his most ambitious and deeply felt.

And it is one he hopes to be in a position to complete. Since
Blackstone’s public offering in June, Mr. Peterson has battled a
string of mishaps and maladies that has left him in a weakened
physical state. In July, he tripped after giving a speech at a
luncheon in his honor, ripping tendons in his shoulder. In November he
broke his wrist in a fall at his vacation home in Florida. “Aging is
not for sissies,” he jokes, suppressing a round of coughs. Even so,
and despite his diminished role at Blackstone — he is to retire
officially from the firm by the end of this year — he reports to the
office most mornings, formal and precise in his dark suit and gaudy
shirts. His principal indulgence from his newfound wealth has been the
$37 million he recently paid for a Fifth Avenue apartment with the
terrace view of Central Park he has long pined for. “Intellectually
and socially he has not slowed down — it’s a hell of a pace,” said
James F. Hoge Jr., the editor of Foreign Affairs. “Like David
Rockefeller and John McCloy before him, he is using what comes his way
for a purpose larger than his own.”

The son of George Petropoulos, a Greek immigrant restaurateur who
settled in Nebraska (and later changed his name to Peterson), Mr.
Peterson, has strived to daub the gray bureaucratese of his lectures
and books with the reds, whites and blues of his embrace of the
American dream. And with the smarts of an adman — he was a senior
executive of McCann-Erickson in the 1950s — he has gotten his message
out by writing books, sitting on blue-ribbon commissions and
sponsoring research and advocacy groups. But despite the ceaseless
exhortations, there has been scant progress in rectifying these
matters. “It’s one thing to write the books and to create the Concord
Coalition,” said Leslie H. Gelb, the former president of the Council
on Foreign Relations. “It’s quite another to figure out what buttons
to push to get things done.”

Mr. Peterson’s ideas are many. One is organizing a youthful equivalent
to the powerful lobbying group for senior citizens, AARP. Another is
working with HBO on a documentary film adaptation of his book “Running
on Empty,” in the hope that the American public wakes up to the
dangers of deficits and entitlement spending as it did to global
warming after Al Gore’s film “An Inconvenient Truth.” His coup is
snagging Mr. Walker, who for years has been a vocal critic of
entitlement excesses. “I am convinced that Washington is broken,” said
Mr. Walker, who informed his bosses in Congress on Thursday that he
would resign. “We have a closing window of opportunity — maybe five
years — to demonstrate to our foreign lenders that we are serious
about our future.”

Seeking a Name for Himself

Given Mr. Peterson’s many accomplishments and extraordinary wealth, he
retains a surprisingly starry-eyed quality. As if he has to pinch
himself that he is not still behind the counter at his father’s diner.
David Rockefeller, Alan Greenspan, Diane Sawyer, Robert Rubin, Warren
Buffett, Margaret Thatcher — these names and more are rolled out with
a metronomic quality. “My father used to say that Pete used Henry
Kissinger’s name like other people use commas,” said Michael M.
Thomas, a former Lehman Brothers executive whose father, Joseph A.
Thomas, was at Lehman with Mr. Peterson. “Pete may have $2 billion,
but in terms of impact on the world relative to the positions he has
held, it’s been small. Philanthropy is his last best shot.”

More deeply, some say, Mr. Peterson carries a visible weight on his
shoulders: despite being seen as a respected cabinet member,
investment banker and public intellectual he cannot point to any
defining moment in his career that can match his vast hunger to be
seen as a great man. Felix G. Rohatyn, the Lazard investment banker,
can boast of his work in the 1970s when he advised the City of New
York as it faced bankruptcy. And a previous generation of
establishment titans like Robert A. Lovett, Cyrus R. Vance and John J.
McCloy effectively straddled Washington and Wall Street by cultivating
reputations as political insiders, always ready to serve in high
office or offer words of wisdom when the White House called. Since his
time in the Nixon administration, Mr. Peterson’s contacts with
presidents have been minimal. He has sat on commissions, spoken some
hard truths to President Bush on entitlements but, perhaps because of
his admonitory ways, has not been called back to Washington.

Mr. Rubin, the former Treasury secretary and chairman of Citigroup,
sees Mr. Peterson as a necessary Paul Revere. “He is a public
citizen,” Mr. Rubin said. “The fact that entitlements are on people’s
minds and in the political and policy arena, even though the political
system does not want to be serious about it, is because of Pete. He
has kept this issue alive and in the domain.” Others, though, view the
proselytizing as mostly self-serving. “Pete Peterson has been writing
books and funding think tanks, calling on people to make sacrifices,”
said Jeffrey Faux, an economist at the Economic Policy Institute. “For
him to have any credibility at all he should be the first one to say
we ought to be paying more taxes on these tremendously profitable

To some degree, that may be asking for the impossible. As a co-founder
of Blackstone, Mr. Peterson has a fiduciary responsibility to the
firm, his partners and its employees, restraining any impulse he may
have had to call for a tax increase that would have halved his
company’s profits, to say nothing of his own wealth. Mr. Peterson
points out that an increase in the tax will not come close to
narrowing big fiscal gaps. Still, his position has provided further
fire to critics who claim that given his wealth, he is in no position
to call for benefit reductions. “Look, I am a genuine fat cat,” Mr.
Peterson said, his voice rising in frustration. “But my response to my
critics is, What do you want to do about the problem? Shared sacrifice
has become politically incorrect and politically terminal in this
country, and we are going to spend a lot money to dramatize these

Holding Court at Lunch

At the Four Seasons restaurant in Manhattan, where Mr. Peterson has
been regularly having lunch for 22 years, he is treated with the
consideration and regard of an aging don. With his broken right wrist
in a cast, he picks vaguely at his tuna burger while a procession of
executives, including the police commissioner, Raymond W. Kelly, come
by to pay their respects. Julian Niccolini, a co-owner of the
restaurant, ribs Mr. Peterson about a spot on his tie and the grand
habits of Stephen A. Schwarzman, his founding partner best known for
his extravagant 60th-birthday party. Mr. Peterson counters with an
unrelated joke so filthy that it sends Mr. Niccolini scurrying.

By 3 o’clock the restaurant is empty, yet Mr. Peterson is in no hurry
to leave. His eyes, watery behind thick-framed glasses, have a faraway
look. He reminisces on the randomness of his journey from being poor
in Nebraska to being among the world’s richest. “I call it dumb luck,”
he laughed, recalling the humiliation he felt in 1983 when he lost a
power struggle to a rival executive at Lehman Brothers and was forced
out. Two years later he started Blackstone with Mr. Schwarzman. “I
thank Lew Glucksman every day of my life,” he said.


Leave a Reply