Debt Debate: Did Pete Peterson Waste His Fortune?

Debt Debate: Did Pete Peterson Waste His Fortune?
Pete Peterson, co-founder of Blackstone Group and founder and chairman of the Peter G. Peterson Foundation, at the 2012 Clinton Global Initiative
Photograph by Jin Lee/Bloomberg

My story on Alan Simpson and Erskine Bowles in the current issue of Bloomberg Businessweek included a piece of news about Peter G. Peterson, the stalwart deficit hawk who for many years has funded various efforts to persuade politicians to tackle the debt. During our interview, Peterson told me he has already spent half his $1 billion fortune pursuing this goal. The revelation occasioned plenty of feedback, much of it critical, since the grand bargain Peterson hopes to bring about now looks unlikely to happen. I’ll get to that in a moment. But first, a clarifying note from Peterson’s spokesperson, Myra Sung, about how and where that money was spent:

“Since establishing the Foundation in 2008, Pete Peterson has contributed $458 million to the Peter G. Peterson Foundation. From fiscal years 2008 to 2011, the Foundation’s total programmatic expenditures have been over $54M, which includes $32M in grants. Since then we continue to dedicate funds to programs and grants focused on addressing the nation’s long-term debt.”

That’s the bulk of the $500 million right there. But of course Peterson also founded the Concord Coalition in 1993 and has supported many, if not most, of the anti-deficit efforts that have cropped up since then.

Reacting to the piece, New York magazine’s Kevin Roose declared that Peterson has spent all that money “without really mattering” and “has gotten shockingly few results.” While Roose conceded that there are worse ways for a billionaire to spend his money (bankrolling long-shot GOP presidential candidates, for instance), “I’m torn on whether Peterson’s $500 million amounts to wasted money on a lost cause, or a high-minded and patriotic attempt to bring the rest of the country around on an issue he cares deeply about.”

At Slate, Matt Yglesias locates the problem not in how Peterson has spent his money, but in how he has chosen to apportion blame for the political impasse equally between both parties: “I would say that beyond Simpson and Bowles the particular problem here lies with Pete Peterson and unwillingness to ever reconsider his strategic commitment to BipartisanThink.”

My own view is that Peterson has been a bit more effective over the decades than most people give him credit for. Ed Lorenzen, a long-time Democratic congressional staffer who now works for the Campaign to Fix the Debt, mentioned to me that in the 1980s and ’90s, deficit hawks of the Peterson persuasion approached all the big charitable foundations to try to enlist them in the cause of long-term debt reduction. Initially, Lorenzen said, many seemed interested—until they came to understand that the cuts proposed to reduce the deficit would affect many of the people whom the charitable organizations were otherwise working to support. They all passed. In the end, Peterson was the one who bankrolled their efforts and kept the fire going.

Over the last few years, deficit reduction has been central to the national debate to a degree that, from an economic standpoint, really doesn’t make much sense. (Joe Weisenthal at Business Insider, who also weighed in on the piece, is a committed exponent of this view.) Whether or not you share his priorities, Peterson, I think, has had a good deal to do with that.

Was he effective? If success is defined as winning a grand bargain, I’d guess he’ll wind up disappointed. But keeping the flame going and shaping the debate isn’t nothing. And although I agree with Yglesias that deficit hawks ought to point out the real obstacle to a grand bargain—Republicans’ refusal to entertain additional tax revenue—I’m skeptical, for reasons laid out in the piece, that Peterson’s (or Simpson’s or Bowles’s) doing so would make much difference.

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