Peter Peterson

Pete Peterson at National Press Club July 17, 2012 (Source: Lingjing Bao, Talk Radio News)

Peter G. Peterson, born June 5, 1926, is a controversial Wall Street billionaire who uses his wealth to underwrite numerous organizations and PR campaigns to generate public support for slashing Social Security, Medicare, and Medicaid, citing concerns over "unsustainable" federal budget deficits. In 2007, he made a fortune from the public offering of the private equity firm he co-founded, Blackstone Group, and pledged to spend $1 billion of this money to "fix America's key fiscal-sustainability problems." He endowed this money to the Peter G. Peterson Foundation, which he launched in 2008 (see below for more). His son, Michael A. Peterson, is the President and Chief Operating Officer of the foundation.

Move over, George Soros and the Koch brothers. The Los Angeles Times has dubbed Peterson "the most influential billionaire business figure in national politics. . . . He isn't content merely to express concern about the federal deficit. His particular targets are Social Security, Medicare and Medicaid, which he calls 'entitlement' programs and which he wants to cut back in a manner that would strike deeply at the middle class."

From 1963 to 1971, Peterson was the Chairman and CEO of Bell and Howell Corporation. He also worked briefly in the administration of President Richard M. Nixon as Assistant to the President for International Economic Affairs (1971) and as Secretary of Commerce (1972). He also served as a chairman of Nixon's National Commission on Productivity and as the U.S. chairman of the "U.S.-Soviet Commercial Commission."

Peterson was later the Chairman and CEO of the now bankrupt Lehman Brothers (1973-1977) and its successor firm, Lehman Brothers, Kuhn, Loeb (1977-1984). He is also the former Chairman and co-founder of the private equity firm, Blackstone Group, and former chairman of the Federal Reserve Bank of New York. He was also Chairman for the Council on Foreign Relations (CFR), the founding Chairman of the Institute for International Economics (IIE), and the co-founder of the Concord Coalition.

Reinhart-Rogoff Error Pulls Explodes Important Argument for Austerity

In 2010, Harvard economists Carmen Reinhart and Kenneth Rogoff released a study (“Growth in a Time of Debt”) that presented empirical evidence from 44 nations over a 200 year time span to demonstrate that countries with a public debt over 90 percent of GDP have average growth rates much lower than other nations. The study has been cited repeatedly by Erskine Bowles and the Simpson-Bowles Commission to justify a push for austerity during an economic downturn.

When a team of economists at UMass Amherst got a hold of the data used by Reinhart and Rogoff, they uncovered numerous errors. In 2013, they released their own report which found that "coding errors, selective exclusion of available data, and unconventional weighting of summary statistics lead to serious errors that inaccurately represent the relationship between public debt and GDP growth." Adjusting for these errors, the Amherst team contends that "the average real GDP growth rate for countries carrying a public debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0.1 percent." Time and time again, economists tried to replicate the Reinhart-Rogoff results, but to no avail. Now, Thomas Herndon, Michael Ash, and Robert Pollin at UMass Amherst show us why. One mistake, admitted by the authors and gaining the most attention, is an Excel spreadsheet error. Check out the screen shot of the year. As the authors put it: "A coding error in the RR working spreadsheet entirely excludes five countries, Australia, Austria, Belgium, Canada, and Denmark, from the analysis. [Reinhart-Rogoff] averaged cells in lines 30 to 44 instead of lines 30 to 49... This spreadsheet error... is responsible for a -0.3 percentage-point error in RR's published average real GDP growth in the highest public debt/GDP category." Belgium, in particular, has 26 years with debt-to-GDP above 90 percent, with an average growth rate of 2.6 percent (though this is only counted as one total point due to the weighting above).

Mother Jones dubbed it "the Excel Error Heard Round the World.” But there are multiple errors in the study detailed here by financial writer Mike Konczal of the Roosevelt Institute.

Study Used to Justify Harmful Cuts and High Unemployment

It is hard to understate the importance of the flawed Reinhart-Rogoff study. It has been cited around the globe by academics, politicians, and the mainstream media. In the United States, it is one of Paul Ryan's favorite justifications for his draconian Path to Prosperity budget, for GOP rejection of further stimulus, and the Fix the Debt crowd's frenzied calls for urgent action. Simpson-Bowles, Pete Peterson and "Fix the Debt" have all cited this study to justify harmful cuts and a stalemate on stimulus currently condemning millions to mass unemployment. In Europe, "R&R's work and its derivatives have been used to justify austerity policies that have pushed the unemployment rate over 10 percent for the euro zone as a whole and above 20 percent in Greece and Spain. In other words, this is a mistake that has had enormous consequences" for real people, says economist Dean Baker in a piece called "How Much Unemployment Did Reinhart and Rogoff's Arithmetic Mistake Cause?"

Ties to Pete Peterson and "Fix the Debt"

The economists both have ties to Wall Street billionaire Pete Peterson. As the Center for Media and Democracy detailed in the online report, "The Peterson Pyramid," the Blackstone billionaire turned philanthropist has spent half a billion dollars to promote this chorus of calamity. Through the Peter G. Peterson Foundation, Peterson has funded practically every think tank and non-profit that works on deficit- and debt-related issues, including his latest 2012 astroturf supergroup, "Fix the Debt.” Reinhart, described glowingly by the New York Times as "the most influential female economist in the world," was a Senior Fellow at the Peterson Institute for International Economics founded, chaired, and funded by Peterson. Reinhart is listed as participating in many Peterson Institute events, such as their 2012 fiscal summit along with Paul Ryan, Alan Simpson, and Tim Geithner, and numerous other Peterson lectures and events available on YouTube. She is married to economist and author Vincent Reinhart, who does similar work for the American Enterprise Institute, also funded by the Peterson Foundation. Kenneth Rogoff is listed on the Advisory Board of the Peterson Institute. The Peterson Institute bankrolled and published a 2011 Rogoff-Reinhart book-length collaboration, "A Decade of Debt," where the authors apparently used the same flawed data to reach many of the same conclusions and warn ominously of a "debt burden" stretching into 2017 that "will weigh heavily on the public policy agenda of numerous advanced economies and global financial markets for some time to come." (Note that not everyone associated with the Institute touts the Peterson party line.)

At the launch of the Simpson-Bowles Commission it was announced that the Commission would be "partnering with outside groups," such as the Peter G. Peterson Foundation's America Speaks initiative.

The Washington Post's Dan Eggen, in a Nov. 10, 2010 story titled "Many deficit commission staffers paid by outside groups," revealed that two members of the Commission worked for Peterson-funded organizations. One of them was Ed Lorezen, who currently serves as the Senior Policy Advisor to the CEO of the Peter G. Peterson Foundation, and formerly served as the Concord Coalition's policy director from 2005-2007. The other was Marc Goldwein, whose salary was paid for by the Peterson-funded Committee for a Responsible Federal Budget. He is a Senior Policy Analyst at the New America Foundation, an organization that also took part of the aforementioned Peterson-Pew Commission, whose conclusions about how to cut the deficit strongly mirrored those of the Commission.

"Peterson launched a massive effort to prop up the Simpson-Bowles Commission and its $4 trillion austerity package, a plan that would “destroy Social Security by stealth,” according to Strengthen Social Security. He bankrolled nineteen “America Speaks” town hall meetings to inform the commission’s deliberations, launched the “Owe No” TV ad campaign weeks before recommendations were released and bankrolled the Concord Coalition’s “Fiscal Solutions” tour to take the message to the heartland. When the commission blew up, Peterson gave Alan Simpson and Erskine Bowles a new perch at the Center for a Responsible Federal Budget."

Pete Peterson’s Crusade: Wall Street Billionaire Decides to Spend His Fortune to "Fix the Debt"

How Pete Peterson Made a Fortune on Wall Street with Blackstone Group

Peterson co-founded the private equity firm Blackstone Group with Steven Schwarzman in 1985. From the beginning, both men profited hugely from a tax break called the "carried interest" loophole that allows fund managers to be taxed at 15 percent rather than the standard 35 percent. (When the Obama administration considered ending this tax break in 2010, Schwarzman compared the proposal to "Hitler invading Poland.")

Like Gordon Gecko in the movie Wall Street, Blackstone was also adept at leveraged buy-outs. As Matt Taibbi documented in Rolling Stone, private equity firms too frequently buy firms to loot them. After a leveraged buy-out, they can leave companies so loaded up with debt that they are often forced to start slashing their workforce or employees' retirement security right away.

In 2006, Blackstone looted Travelport, a travel reservation conglomerate, piling on $4.3 billion in new debt, then pocketing $1.7 billion to pay shareholders and themselves. The firm promptly fired 841 workers to meet its new debt obligations. A great deal for Blackstone, but "a horrible one for Travelport," said one investment advisor, who tagged Blackstone as "trading in poisoned waters."

Peterson Constantly Warns of Crisis, But Failed to Warn of the 2008 Wall Street Meltdown

For decades, Peterson has been warning of a "Pearl Harbor scenario," an epic meltdown of the United States economy caused by "entitlement" spending, specifically on Social Security and Medicare, which are better described as "earned benefit programs," since workers save for them with every paycheck. But Peterson failed to warn the public about the $8 trillion housing bubble and the financial crisis brewing on Wall Street.

Blackstone owned the Financial Guaranty Insurance Company (FGIC), the world’s fourth largest bond issuer, which had branched out from municipal bonds into home-equity securities and subprime mortgage debt. FGIC, of course, went belly up, but by that time Peterson had sold most of his shares in a Blackstone IPO in 2007 on the eve of a catastrophic meltdown -- not caused by deficits, Social Security, or Medicare, but by recklessness, Wall Street gambling, and greed.

Blackstone’s Controversial 2007 IPO; Share Price Still Has Not Recovered

In 2007, Peterson and Shwarzman decided to sell Blackstone Group in a public offering. The entire notion of a private equity group going public was perverse. Private equity was supposed to be private -- dangerous, blackbox investments of the type that only sophisticated Wall Street investors would be able to assess. Some argued that taking these assets public should have been prohibited. The AFL-CIO warned the Securities and Exchange Commission (SEC) that the Blackstone IPO was riddled with problems. The firm was structuring itself to avoid regulation, its real asset and values were unknown, and it failed to use independent auditors among other problems.

But Blackstone convinced former Republican Congressman Chris Cox at the SEC (who famously led the move to loosen capital requirements on mega banks in 2004) to approve the IPO. The sale for $4 billion at $35 dollars a share, made both Peterson and Schwarzman billionaires.

A year later, Blackstone’s value had dropped 40 percent (see graph here). As of February 2013, it is trading at $18.79 a share, showing no signs of the recovery that other Wall Street firms have enjoyed. Perhaps the SEC should have listened.

Peterson Pledges $1 Billion to Groups Focusing on Debt and Deficit Issues

Peterson walked away with $2 billion in his pocket and immediately pledged $1 billion to fund a charitable foundation called the Peter G. Peterson Foundation to "focus on America's key fiscal-sustainability challenges," as he put it.

Even before the 2012 Campaign to Fix the Debt, Peterson had poured millions into a multifaceted effort to support the Simpson-Bowles Commission and its $4 trillion austerity package, a plan which would "destroy Social Security as we know it," according to Social Security Works. He bankrolled 19 "America Speaks" Town Hall meetings to inform the commission's deliberations, launched the "OweNo" TV ad campaign when recommendations were released, and bankrolled the Concord Coalition’s Fiscal Solutions" tour to take the message to the heartland. When the Commission blew up, Peterson gave Erskine Bowles and Alan Simpson a new perch at the Committee for a Responsible Federal Budget to allow them to continue to scold Congress (See more on each of these campaigns below).

Peterson-Funded Deficit-Related Projects

Campaign to Fix the Debt, "Astroturf Supergroup," Pushes Austerity during a Recession

The Campaign to Fix the Debt (Fix the Debt) is the latest incarnation of a multi-decade effort by Nixon man and Wall Street billionaire Peter G. Peterson to slash earned benefit programs such as Social Security and Medicare under the guise of fixing the nation’s "debt problem."

About Fix the Debt

The Campaign to Fix the Debt is the latest incarnation of a decades-long effort by former Nixon man turned Wall Street billionaire Pete Peterson to slash earned benefit programs such as Social Security and Medicare under the guise of fixing the nation's "debt problem." Through a special report and new interactive wiki resource, the Center for Media and Democracy -- in partnership with the Nation magazine -- exposes the funding, the leaders, the partner groups, and the phony state "chapters" of this astroturf supergroup. Learn more at PetersonPyramid.org and in the Nation magazine.

With a staff of 80, a target of $60 million for their budget, $40 million of which was raised by February 2013, Fix the Debt is best described as an "astroturf supergroup." Its message? Deficits are "a cancer that will destroy this country from within," says Fix the Debt founder and Morgan Stanley board member Erskine Bowles.

Pete Peterson thinks he has the cure. Peterson wants to convince Americans -- who overwhelmingly want to keep and strengthen Social Security, Medicare, and Medicaid -- that these programs' very existence threatens our national well-being. After multiple astroturf projects like "America Speaks" Town Hall Meetings, Peterson has upped the ante. He put $5 million into the kitty and announced Fix the Debt on the Peter G. Peterson Foundation website.

This time around, he roped in some 127 CEOs and even more "statesmen" into his quest for a "grand bargain" on an austerity budget by July 4, 2013. With many CEOs kicking in a million each, and spending $1 billion to capture Congress in the past four years, this latest incarnation of the Pete Peterson message machine is well financed and enormously influential. Fix the Debt CEOs met personally with President Obama in the White House on November 14, 2012, and have fanned out across the airwaves with almost identical talking points on "shared sacrifice" and the need to cut "entitlement programs."

Fix the Debt leaders are riddled with conflicts of interest that are not disclosed on Fix the Debt's website; the majority have undisclosed financial ties to firms that lobby on deficit related issues; Fix the Debt CEOs enjoy lavish personal retirement assets, but 39 underfund their employee pension plans; many Fix the Debt firms pay little or nothing in taxes, which contributes greatly to the debt; and Fix the Debt is secretly lobbying for a territorial tax system that will add to U.S. debt and contribute to the offshoring of U.S, jobs. Learn more about this agenda in the main Campaign to Fix the Debt article here.

Fix the Debt leaders know that nothing short of a massive effort will be needed to convince members of Congress to impose fiscal austerity in the midst of an economic downturn. Not only has this failed in the European countries where it has been tried, but poll after poll showed that the American public specifically rejected the Fix the Debt agenda in the 2012 election and want jobs to be the nation’s priority. Learn more about this agenda in the main Campaign to Fix the Debt article here as well as in the Nation’s special edition, "Stacking the Deck: The Phony 'Fix the Debt' Campaign," here.

Concord Coalition Takes Peterson's Message Outside the Beltway

The Concord Coalition, which was founded in 1992, lists Peterson as a co-founder on its website. The organization received $6,036,060 (including $1.5 million in matching funds) from the Peterson Foundation from 2009 to 2012. It specializes in taking the fiscal austerity message outside the Beltway with costly tours and town halls. In January of 2013, the Concord Coalition announced that it is partnering with Fix the Debt on a series of public forums. According to the Concord Coalition's website, "This joint project will focus its efforts on ten programs in six states: Colorado, New Hampshire, Iowa, Wisconsin, Florida and Tennessee." All of the states the programs are featured in, with the exception of Tennessee, were swing states in the 2012 presidential election. The first forum on January 29, 2013, featured Timothy Pagliara, founder of Enact the Plan, a group created explicitly to promote support for the Simpson-Bowles Commission.

See below for more on Concord Coalition's previous tours.

"The Can Kicks Back" Astroturf Group

"The Can Kicks Back" video

On November 12, 2012, a week after the 2012 presidential election, the Peterson Foundation-funded New America Foundation officially launched a new organization called "The Can Kicks Back" for the "next generation" of deficit scolds, largely to the unquestioning adulation of the mainstream press. It serves as the youth arm of the austerity coalition, with its “AmeriCan” character featured in the YouTube video of Alan Simpson going "Gangnam style." More critical press called the video the Peterson crowd's "first media breakthrough in months."

Salon called The Can president Ryan Schoenike's statement to the Washington Post that "[t]he [federal] debt is now the top of line issue for most young people" "a weird lie" and pointed out that this is not the first "pretend youth group" founded or funded by Peterson. "In 1993, he founded 'Third Millennium.' In 1992 he founded 'Lead … Or Leave.'"

The organization, like the Campaign to Fix the Debt, shares an address with the Peterson-funded New America Foundation.

Peterson Asks College Students to Compete to Develop Campaigns on Fiscal Issues

In January 2013, the Peterson Foundation, along with the Clinton Global Initiative University (a younger version of the Clinton Global Initiative, with an annual meeting of "students, youth organizations, topic experts, and celebrities " to "develop innovative solutions to pressing global challenges") and Net Impact (a San Francisco non-profit that works on campuses to train students to become social and environmental leaders in their careers), launched a series of student campaigns called "Up to Us" -- a year-long campus competition that involves teams of students from ten universities in submitting applications and running campaigns to "raise awareness about fiscal sustainability, drawing connections to critical issues such as economic opportunity, budgetary choices, resources available for future investments, and other domestic and global concerns." The campaign's name and website (itsuptous.org) echo a 2009 speech that President Barack Obama made on D-Day at the cemetery overlooking Omaha Beach: "Our history has always been the sum total of the choices made and the actions taken by each individual man and woman. It has always been up to us." The judges of the competition will include, along with Erskine Bowles and Alan Simpson, ABC's George Stephanopoulos and President Bill Clinton's daughter Chelsea Clinton (representing the Clinton Global Initiative and the William J. Clinton Foundation), and the winning team will receive $10,000.

Participating Universities include:

• American University
• Brown University
• Georgetown University
• New York University
• Rutgers Business School – Newark
• University of Miami
• University of Michigan
• University of Minnesota - Twin Cities
• University of Texas – Austin
• University of Virginia – Frank Batten School of Leadership and Public Policy

Monthly "Fiscal Nonsense Index"

In December 2012, the Peterson Foundation released its first monthly "Fiscal Confidence Index" to very little in the way of press fanfare. A selection of polling data on public opinion about the national debt, its second monthly edition, was released January 30, 2012, and captured a little more attention. Huffington Post dubbed it the "Fiscal Nonsense Index," and called it "a case study in how polling data can be used selectively and manipulatively -- and as a broader example of what's wrong with today's narrow, ill-informed debate over fiscal policy." The article points out that, whereas the "index" makes it seem as though Americans want debt reduction to be a top priority, "When Americans are asked in an open-ended way about the priorities of Washington, debt does not make the top of the list." For example, the national exit poll conducted on Election Day in November 2012, which asked open-ended questions, "found that 59 percent of respondents said the economy was the most important problem facing the country; 18 percent said healthcare was the biggest problem; and 15 percent said the deficit was the biggest problem."

In July 2014, the L.A. Times reported on the latest "Fiscal Confidence Index" numbers, finding that "Americans' supposed level of concern over the national debt has scarcely budged over the 20 months that Peterson's been measuring it. So if there's "concern," it appears to be a steady-state background hum." Furthermore, the poll's conclusion that Americans consider the national debt a major problem is questionable, according to the L.A. Times. "The problem with these polls is that they're done in a vacuum. According to the list of questions Peterson publishes, the pollsters don't define the national debt for respondents. They don't talk at all about what's been happening to it or its fiscal driver, the deficit, or place it in historical context."

Comeback America Initiative and the "Magical Misery Tour"

The Comeback America Initiative (CAI) is a 501(c)(3) founded in 2010 by David M. Walker, who was the first President and CEO of the Peter G. Peterson Foundation (see below for more) as well as former Comptroller General of the United States. The Peterson Foundation is a major financial backer of CAI, having granted the organization $3,100,000 in fiscal year 2011 to support a three year initiative to address federal fiscal issues. CAI's Paul Volcker, Alice Rivlin, Douglas Holtz-Eakin, Alan Greenspan, Maya MacGuineas. C. Eugene Stuerle, and Robert D. Reischauer all have known ties to Peterson. CAI is also a partner organization in the Fix the Debt Campaign. The organization describes itself as "non-partisan" with the mission to "promote fiscal responsibility and sustainability by engaging the public and assisting key policymakers on a non-partisan basis in order to achieve solutions to America's fiscal imbalances."

In the months leading up to the 2012 presidential election, CAI launched the "$10 Million A Minute Bus Tour," featuring Walker. Although the Peterson Foundation bankrolls CAI, Walker took umbrage when U.S. Senator Bernie Sanders accused Walker of carrying water for Pete Peterson. Walker claimed that the Peterson Foundation did not provide any direct funding associated with the bus tour, and the sources of funding are not disclosed, although Peterson has funded other operations himself outside of the Peterson Foundation. The tour hit over 23 cities in 17 states, with 33 events in the 33 days leading up to the election

When launching the tour, Walker partnered with Ross Perot in a USA Today op-ed warning that the debt was rising by $10 million a minute, with "serious sustainability challenges that threaten our future position in the world" and even "the future domestic tranquility in our streets." They covered most of the Fix the Debt talking points and touted ideas like "no budget, no pay," "which would stipulate that if Congress fails to pass a budget and required spending bills by the end of a fiscal year, the members would not get paid until they fulfilled this responsibility." In January 2013, the House passed a bill that sparked the "debt ceiling" debate and included "no budget, no pay" language. Multiple media outlets ridiculed the House for failing to read the Constitution, which does not allow Members of Congress to adjust their pay during session.

Campaign for America's Future writer Richard Eskow dubbed the bus tour pure a "Magical Misery Tour" and pure "astroturfing": "Somehow the Peterson crowd thought that it would electrify the nation to see Walker, a former Comptroller General, ride around on a converted Greyhound (or whatever vehicle they've purchased) with other aging anti-government types."

Eskow was wrong, however. The thrifty budget scold did not use a Greyhound. CAI chartered and "wrapped" a bus with their slogan (see image above), a much more pricey endeavor and one of the Center for Media and Democracy's (publisher of SourceWatch) top ten signs of an astroturf organization.

Simpson-Bowles Commission and Ties to Peterson Groups

Peter Peterson

Peterson and his foundation had ties to The National Commission on Fiscal Responsibility and Reform, commonly known as the Simpson-Bowles Commission after its co-chairs, former U.S. Senator Alan Simpson and Morgan Stanley board member Erskine Bowles. The commission was initiated by President Barack Obama via Executive Order on February 18, 2010. According to its website, the commission was charged with proposing recommendations designed to balance the budget by 2015.

At the launch of the Simpson-Bowles Commission, it was announced that the commission would be "partnering with outside groups," such as the Peter G. Peterson Foundation's America Speaks initiative (see below for more on America Speaks Town Hall meetings).

The Washington Post's Dan Eggen, in a November 2010 story titled "Many Deficit Commission Staffers Paid by Outside Groups," revealed that two members of the Simpson-Bowles Commission worked for Peterson-funded organizations. One of them was Ed Lorezen, who worked as the Senior Policy Advisor to the CEO of the Peter G. Peterson Foundation, and formerly as the Concord Coalition's policy director from 2005-2007. The other was Marc Goldwein, whose salary was paid for by the Peterson-funded New America Foundation's Committee for a Responsible Federal Budget (CRFB), where he is a Senior Policy Analyst.

Other commission members included Fix the Debt leaders David Cote, Alice Rivlin, and then-Senator Judd Gregg, as well as Representative Paul Ryan, whose proposed 2013 budget, the so-called "Path to Prosperity," would implement massive cuts in social safety net program spending while slashing the top tax rate for corporations and individuals from 35 percent to 25 percent.

On November 10, 2010, Simpson and Bowles released a chairmen's proposal. In an appearance on Democracy Now!, journalist Robert Kuttner had this to say about the budget-cutting recommendations by the co-chairs: "We’re in a prolonged recession that bears more resemblance really to a depression. And you cannot get out of a depression by austerity. The idea that you should have an arbitrary set of cuts in the deficit at a time when you need more public spending is totally perverse. It’s the economics of Herbert Hoover. It’s the politics of the Republican right. And it’s one more indication of the capture of the Obama administration by Wall Street. I mean, Erskine B. Bowles gets over $300,000 a year for attending a few meetings of Morgan Stanley, the investment bank, on whose board he sits, so he gets more money in board fees than 99 percent of Americans earn. And you’ve got three privately funded commissions by the Peterson Foundation, Pete Peterson, proposing the same stuff. It’s intended to create a drumbeat to carry out a wish list that has long been the goal of fiscal conservatives, that has nothing to do with this crisis."

Although the "Moment of Truth" report was released on Dec. 1, 2010 and is referenced frequently as the commission's "final report," the commission failed to achieve the votes needed to issue a final report and therefore could not force Congress to act on its recommendations. Simpson and Bowles continued their advocacy for their plan through the Peterson Funded "Moment of Truth" project at the New America Foundation's CRFB (see more below).

Concord Coalition's "Fiscal Solutions Tour," September 2010

The Concord Coalition (see above for more) -- which received $6,036,060 (including $1,500,000 in matching funds) from the Peterson Foundation from 2009 to 2012 -- launched its “Fiscal Solutions Tour” on September 23, 2010, shortly before the release of the Simpson-Bowles Commission chairmen's report in November 2010. Had the Presidential commission not failed to reach the votes needed to advance its recommendations to Congress, the tour could have been the deficit scolds' main vehicle for rallying grassroots support behind a Simpson-Bowles austerity bill. Economist James K. Galbraith called the tour "the latest Peter G. Peterson Foundation effort to rouse the public against deficits and the national debt -- and in particular (though they manage to avoid saying so) to win support for measures that would impose drastic cuts on Social Security and Medicare." The tour was conducted with support from the Peter G. Peterson Foundation, and included the following primary speakers: Concord Coalition's Robert Brixby, Comeback America Initiative's Douglas Holtz-Eakin, William Novelli, the Brookings Institution's Isabel Sawhill, and then-Peterson Foundation Director David M. Walker. It visited California, Iowa (three stops), Pennsylvania, New Hampshire, Texas, Illinois, and Georgia.

OweNo Ad Campaign, November 2010

Number One ("Hugh Jidette")

On November 9, 2010, a day before the release of the Simpson-Bowles Commission chairmen's report, the Peterson Foundation launched OweNo, a $20 million PR campaign complete with website and TV ads, to convince America that reducing the the federal budget deficit should be the nation's top priority.

The ad campaign showcased a fictional character named "Hugh Jidette," a pun based on the words "Huge Debt," meant to poke fun at the U.S. deficit. Jidette, so the story goes, is a man running for president on a platform to "Borrow like there’s no tomorrow!" and "Let our kids pay!"

Writing about Jidette, Dean Baker states, "...Mr. Jidette, [a] manufactured character[,] is just one part of Peter Peterson's billion-dollar campaign to undermine Social Security and Medicare; Jidette is the culmination of a three-decade-long effort by the wealthy Wall Street investment banker . . . This disingenuous campaign is an effort to scare tens of millions of voters into giving up the Social Security and Medicare benefits that they have worked for and depend upon, so that the wealthy can have even more money. And since the wealthy are the ones financing the debate and the politicians' campaigns, the smart money is betting on them right now."

The Moment of Truth Project

The CRFB launched The Moment of Truth Project (Twitter handle @bowlessimpson) on March 8, 2011. It was funded by a $300,000 Peterson Foundation Grant in 2011 after the Simpson-Bowles Commission]] failed to garner enough votes to pass a final deficit reduction package and is named for the chairmen's report. The Peterson-funded project gave Erskine Bowles and Senator Alan Simpson a host group, staff, and a PR platform to continue their advocacy for cuts to the federal budget after the commission ended.

Funding Development of High School Curricula to Push Austerity

In 2010 and 2012, the Peterson Foundation gave a combined $3,032,596 to Teachers College at Columbia University to develop a curriculum in order to push the foundation's message of fiscal austerity in high school classrooms. The curriculum, now called "Understanding Fiscal Responsibility," stresses a "willingness to do the hard work of analyzing the trade-offs in less-than-perfect resolutions" and includes a segment on "The History of Social Security: Social Security Act of 1935: Did the creation of a federally administered old-age pension program support or threaten American values and traditions?"

Peterson-Pew Commission on Budget Reform

The Peterson-Pew Commission on Budget Reform met from January 2009 to December 2011. Its formation was announced on January 14, 2009. It was a collaboration of the Peter G. Peterson Foundation, The Pew Charitable Trusts, and the CRFB. The CRFB is indirectly funded by the Peterson Foundation through its host organization, the New America Foundation (NAF), which received $2,050,000 from the Peterson Foundation from 2009 to 2011.

Commission members included, among others, co-chairs Bill Frenzel (former Republican congressman from Minnesota) and Jim Nussle (former Republican congressman from Iowa and Director of the Office of Management and Budget under President George W. Bush), president Maya MacGuineas (President of the Committee for a Responsible Federal Budget and Director of the Fiscal Policy Program at NAF), and directors Erskine Bowles (former director of the Small Business Administration, and deputy chief of staff and chief of staff under the Clinton Administration; also co-chair of the Simpson-Bowles Commission), Vic Fazio (former Democratic congressman from California), William H. Gray, III (former congressman from Pennsylvania, chairman of the House Budget Committee, chairman of the Democratic Caucus, and majority whip), and advisors Peter G. Peterson, Alice Rivlin, Alan K. Simpson, Paul Volcker, and Carol Cox Wait.

In December 2009, the commission issued a report titled "Red Ink Rising: A Call to Action to Stem the Mounting Federal Debt."

Then in November 2010, the commission issued a follow-up report titled "Getting Back in the Black."

America Speaks "Town Hall" Meetings Carry Pete Peterson Message

PR Video Produced by America Speaks

From 2009 to 2011, the 501(c)(3) organization "America Speaks," which was founded in 1995, was given $2,337,471 by the Peterson Foundation to push out its message on fiscal austerity outside the beltway with a series of "town hall" meetings. The meetings coincided with the activities of the Peterson-Pew Commission and the Simpson-Bowles Commission.

[America Speaks sponsored 19 town hall meetings linked by video on the same day, June 26, 2010, during the six months while the Simpson-Bowles commission was underway and the six months before the chairmen released a report.] These "Town Halls for the 21st Century" made headlines when the audience revolted against the message they were being spoon fed. Respected financial writer David Dayden wrote: "The entire event was absolutely designed to create a panic about the deficit among the participants. Slickly produced scare videos talking about the dire straits of the budget were prevalent. Multiple charts and graphs without precise numbers or percentages were handed out. Speakers discussed how “most Americans are concerned about the deficits and debt,” and how we cannot grow our way out of the problem."

Campaign for America's Future writer Roger Hickey wrote that, with respect to Social Security, misleading information was presented to the audience. "America Speaks gave participants no explanation of the fact that Social Security has its own source of funding, and thus does not contribute a dime to the deficit. Americans actually have been paying extra payroll taxes to create a trust fund that will make sure full benefits can be paid for decades into the future - and thus there is no rational reason to cut Social Security benefits (or raise the retirement age) in order to reduce the Federal deficit. But you wouldn't know that from the America Speaks materials or explanations. The Social Security program is simply presented as another big spending program and participants were presented with various ways to cut benefits."

America Speaks Audiences Revolt, Reject Budget Cuts, Support Higher Taxes on the Rich and Wall Street

The Wall Street Journal's Thomas Frank, describing the results of the town hall meetings, had this to say: "The event took place...with thousands of citizens meeting in different cities. They duly absorbed a booklet alerting them to the danger of deficits. They deliberated. And then something funny happened on the way to the consensus. According to a preliminary compilation of results, participants supported 'an extra 5% tax' on incomes of greater than $1 million per year (by 68%) and an increase in the corporate income tax rate (59%). They thought a 'carbon tax' was a good idea (64%) as well as a "securities transactions tax" (61%). On Social Security, austerity was nowhere in sight as 85% backed raising the limit on taxable income, and only a miserable 27% thought that we should 'create personal savings accounts.' Majorities favored cutting defense spending and expressed support for further recovery measures even if they increase the deficit."

America Speaks in LA – They Want Economic Recovery, No Social Security Cuts

Erskine Bowles says in the America Speaks video (see above) "we need to hear your ideas" so he can take the message back to policymakers in Washington. Although America Speaks audience supported progressive ideas, like a financial speculation tax, these ideas were not included in the Simpson-Bowles austerity plan released a six months later on December 1, 2010.

Fiscal Summits: "Journalists in the Service of Pete Peterson"

The Peter G. Peterson Foundation has sponsored high-profile annual conferences called "Fiscal Summits" each spring since 2010. In 2012, speakers included President Bill Clinton, Treasury Secretary Tim Geithner, Senator Alan K. Simpson, and other politicians, journalists, and organizational leaders. A January 2013 article in Remapping Debate describes them as follows: "An essential and successful element of the Peterson strategy is to create an environment where it is widely if not universally believed that there is no alternative to his vision. In this view, it’s 'not realistic' to believe the country can afford the same programs it once did. . . . A review of the proceedings of the Fiscal Summits of the last three years makes agonizingly clear that most of the journalists who conducted interviews or moderated panel discussions both reflected and amplified the Peterson worldview -- entirely unselfconsciously, it would seem." For example, CNBC's Maria Bartiromo asked Rep. Paul Ryan (R-WI), chair of the House budget committee, during the 2011 summit, "I wonder if you had dealt with Social Security that perhaps you would not have to have some of the other spending cuts that you are talking about — on education, food stamps, cutting services on the people who desperately need those services." And during the 2012 summit, CNN's Erin Burnett asked House Speaker John Boehner, "Do you think that democracy is part of the problem? That in a democracy people are always going to vote for more things, they are never going to vote to take them away. Now the payroll tax is down; good luck ever having it go back to the way it was. Good luck with a lot of these things. Is democracy going to be what sends us over the cliff?"

Fiscal Times

The Fiscal Times is owned and funded by Peterson. Launched in early 2010, it describes itself as a "digital news, opinion and media service devoted to comprehensive quality reporting on vital fiscal, budgetary, health care and economic issues." As of January 2010, it had hired eight "seasoned reporters," according to The Nation, and formed an agreement with the Washington Post to "jointly produce content focusing on the budget and fiscal issues." It claims to be independent and non-partisan, but has been criticized as being inherently biased due to its direct connection to Peterson and its focus on Peterson's "pet issues".

The first Fiscal Times piece to appear in the Post, "Support Grows for Tackling Nation's Debt," did not mention Peterson's funding until a later correction to the online version removed a statement by Robert L. Bixby, the Concord Coalition's executive director. The correction notes, "The article should have noted that the Concord Coalition receives funding from the Peter G. Peterson Foundation. Peterson, but not his foundation, also funds the Fiscal Times, the independent news service that prepared the article." The article pushed for the creation of a special Congressional commission to address budget decisions and deliver an up-or-down-vote package (which President Obama eventually did with the creation of the so-called Simpson-Bowles Commission, although the commission failed to produce a final, binding report). According to The Nation, "Supposedly, this would give them political cover. Look, no hands. We just cut Social Security but it wasn't our fault."

Budgetball Economic Policy Education Game

Founded in 2009 and funded by a grant from the Peterson Foundation, Budgetball has been criticized as an effort to promote austerity measures, including cutting Social Security and Medicare. It has also been called "a blend of Ayn Rand's The Fountainhead and Death Race 2000."

According to its Facebook page, Budgetball is an educational sport "designed to raise awareness about the issue of the federal debt and encourage discussion and debate about America's fiscal future." Its website is budgetball.org.

College TV Network mtvU Hosts Peterson's "Indebted" Program and "Debtski" Game

In 2008 and 2009, the Peterson Foundation partnered with mtvU, a division of Viacom's MTV Networks targeted at college students, which is available in dorms and some cable packages and gives advertisers and music promotion companies access to the college-age "market," to create a program, "Indebted" (short for "in-debt education"), to push Peterson's austerity message. The program's website echoes the font and language (with the tagline, "We're broke, let's fix it") of the later Peterson-funded Campaign to Fix the Debt. According to the Peterson Foundation, "The program encourages students to take action to secure their futures. The campaign’s aim is to empower young people to protect themselves financially and to work together to advocate government fiscal responsibility in order to change the course of the nation’s future." The campaign seems to consist of several videos made available online early in 2009, and an online contest to create a video game in support of Peterson's mission. The winning game was created by a 26-year-old Lehigh University graduate named Brian Haveri and is called "Debtski." The game is only available to play at the Peterson Foundation's "Indebted" website.

According to the credit bureau TransUnion, the average student loan debt each borrower carries is $23,829 as of early 2013, an average 30 percent increase per borrower since 2007, and more than half of student loans are in deferment status, most likely due to the fact that more than half of college graduates under the age of 25 are either unemployed or underemployed. However, the "Indebted" website focuses more on the national debt than on this skyrocketing student loan debt.

As a Salon article pointed out about another Peterson campaign targeted at youth, this is not Peterson's "first 'pretend youth group' attempt. In 1993, he founded 'Third Millennium.' In 1992[,] he founded 'Lead … Or Leave.'" Another group involved in advancing Peterson's agenda on debt is The Can Kicks Back, which also presents itself as a youth group.

I.O.U.S.A. Propaganda Film

I.O.U.S.A. Official Trailer

Funded by the Peter G. Peterson Foundation and the Concord Coalition (a group also co-founded and funded by Peterson), I.O.U.S.A. is a 2008 documentary film directed by Patrick Creadon that paints a picture of impending economic doom because of the U.S. deficit.

The film opened in over 300 theaters, according to the Peterson Foundation. It was broadcast nationally on CNN in January 2009. The film includes interviews with David M. Walker, Warren Buffett, Alan Greenspan, Paul Volcker, Robert Rubin, Alice M. Rivlin, Steve Forbes, and, of course, Peterson himself.

Critical of the film's message, Dean Baker of the Center for Economic and Policy Research (CEPR) states, "This film should be viewed as part of a larger effort to dismantle Social Security and Medicare, the country's core safety net programs. The reality is that our budget is essentially fine, it is our health care system that is out of control. But fixing health care would require going after the drug companies, the insurance companies, and highly paid medical specialists. But those folks are all powerful, so the IOUSA crew went after old people instead."

CEPR created a minute-by-minute guide intended to debunk the film's claims, available here: IOUSA Viewer Guide. The organization also compiled a report titled "IOUSA Not OK: An Analysis of the Deficit Disaster Story in the Film IOUSA," available here: "IOUSA Not OK."

Peterson Failed to See the 2008 Financial Crisis

While Peterson has been warning of the dire threat to the economy posed by deficit and entitlement spending, he completely missed the 2008 financial crisis generated by his own industry. According to economist Dean Baker, known for sounding early warnings on the housing bubble: "It is especially outrageous that the Peterson crew would be leading this crusade to cut Social Security and Medicare[, i]n part . . . because [when] they were running around yelling about deficits projected for 2050, those of us who were trying to warn about the $8 trillion housing bubble could not get attention. The Peterson . . . crew['s] imaginary horror story helped to conceal the real disaster that was about to blow up the economy" (see above for more about his role in the Financial Guaranty Insurance Company and more).

Peterson and the Carried Interest Tax Loophole

According to economist Dean Baker, "Peterson has been the recipient of tens of millions of taxpayer dollars through the fund manager's tax break. This tax break, which is also known as the 'carried interest tax deduction,' allows managers of hedge and equity funds to pay tax on their earnings at the 15 percent capital gains tax rate, instead of having it taxed as normal income. As a result, Peterson paid a lower tax rate on much of his earnings than tens of millions of people working as school teachers, fire fighters, and other middle income jobs. Peterson not only collected the money himself, he came to Washington in 2007 to lobby Congress when it debated ending the tax break. He apparently wanted to make sure that his friends would still be able to benefit from this tax break even after he had retired."

Self-Proclaimed "Deficit Hawk"

Peterson refers to himself as a "deficit hawk," but critics say he generally targets things such as Social Security first and foremost and not other sources of government spending, such as defense spending. William Greider of The Nation, for example, is particularly critical of Peterson, saying in a January 2010 article, "Social Security...[and] Medicare and Medicaid...are Pete Peterson's favorite targets. He has flogged Social Security as a blight on our future for at least twenty years. He is a nut on the subject. His 'facts' are wildly distorted or simply not true. Never mind, the establishment press portrays him as a disinterested statesman."

A 1994 article by The American Prospect's Robert S. McIntyre, also director of Citizens for Tax Justice (CTJ), criticizes Peterson's motives, stating, "Peter G. Peterson, as he cheerfully admits, is not a member of the middle class. He's a rich Republican Wall Street investment banker. But in his crusade against deficits and entitlements, he adroitly poses as a champion of the middle class. Given his circumstances, it's not entirely surprising that Peterson is an outspoken opponent of the federal government's two most progressive programs: the graduated income tax and Social Security. What is odd is that his pose as a friend of the common American succeeds; that he publishes in liberal journals like the Atlantic and the New York Review; and that he enjoys a largely uncritical press. [B]ecause Peterson cloaks his goals in the rhetoric of progressivity, the press has fawned over him. The misleading notions that entitlements are running up the deficit, stealing from future generations, and maintaining the elderly in affluence while young people suffer, have become received wisdom for many. Peterson's bottom line is that the middle class gets too much from government and pays too little for it, while corporations and the rich deserve a break. Curiously, that's not how he sells his program."

The Peter G. Peterson Foundation

Founded by Peterson in 2008 with the fortune made from the public offering of the private equity firm he co-founded, Blackstone Group, the Peter G. Peterson Foundation's mission is to "increase public awareness of the nature and urgency of key fiscal challenges threatening America's future and to accelerate action on them. To address these challenges successfully, we work to bring Americans together to find and implement sensible, long-term solutions that transcend age, party lines and ideological divides in order to achieve real results."

2012 Fiscal Summit: Opening Video

The foundation funds a variety of groups ranging from the right-wing think tank The Heritage Foundation and Peterson's own Concord Coalition to the establishment Brookings Institution to the more liberal Center for American Progress.

For more information, please see our SourceWatch article on the Peter G. Peterson Foundation. A list of their grantees can be found on their website: Peter G. Peterson Foundation Grants.

Other Roles

Current

Peterson is a trustee of the Committee for Economic Development, a Life Director at the Japan Society, a life trustee for the Museum of Modern Art, Director Emeritus at the National Bureau of Economic Research, and an honorary member of the Public Agenda Foundation.

He is a member of the Advisory Board for Common Good, board member for the World Trade Center Memorial Foundation, member of the Independent Commission on International Development Issues (also known as the Brandt Commission), Chairman Emeritus as well as current Board Member for the Council on Foreign Relations, founding Chairman of the Institute for International Economics, and founding President of the Concord Coalition.

Past

Peterson formerly sat on the boards of the Sony Corporation, Minnesota Mining and Manufacturing Company (3M), General Foods Corporation, RCA, The Continental Group, Cities Service, and Sirius Satellite Radio (now SiriusXM).

He was also Co-Chair of the Conference Board Commission on Public Trust and Private Enterprises. He was also involved with the Center for the National Interest (formerly known as the Nixon Center) and the Schwartz Center for Economic Policy Analysis.

"Honorary Degrees"

Peterson is the recipient of honorary Ph.D. degrees from Colgate University, Georgetown University, George Washington University, Northwestern University, the University of Rochester (NY), and Southampton College of Long Island University.

Resources and Articles

Featured SourceWatch Articles on Fix the Debt

• Fix the Debt Portal Page
  • Fix the Debt's Leadership
  • Fix the Debt's Partner Groups
  • Fix the Debt's Astroturf State Chapters
  • Fix the Debt's Lobbyists
  • Fix the Debt's Parent Group
  • Fix the Debt's Corporations
  • Peter G. Peterson Foundation
  • America Speaks
  • Simpson-Bowles Commission
  • Erskine Bowles
  • Alan Simpson
  • Social Security
  • Medicare
  • Medicaid

Related PRWatch Articles

• Lisa Graves, A 25% Cut for the Pentagon? Key Dems Say Unnecessary Defense Spending Is Crippling the U.S. and Should Be Part of Debt Debate, PRWatch.org, January 14, 2013.
• Mary Bottari, It Ain't Over Till It's Over: Wall Street Gears Up for Austerity Battles of 2013, PRWatch.org, January 2, 2013.
• Ari Berman, How the Austerity Class Rules Washington, PRWatch.org, October 24, 2011.
• Mary Bottari, OweNo! Pete Peterson is at it Again, PRWatch.org, November 17, 2010.
• Lisa Graves, Will WaPo Outsource Health Reform Analysis to Fiscal Times?, PRWatch.org, January 11, 2010.
• Wendell Potter, The Ultimate Irony: Health Care Industry Adopts Big Tobacco's PR Tactics, PRWatch.org, July 9, 2009.
• Diane Farsetta, Meet the Nuclear Power Lobby, PRWatch.org, July 1, 2008.

Articles by Peterson

• Peter G. Peterson, "Don't wait for the debt bubble to burst", Financial Times, February 28, 2011.
• Peter G. Peterson, "Why I’m Giving Away $1 Billion", Newsweek, May 30, 2009.
• Peter G. Peterson, "You Can't Take It with You", Newsweek, April 7, 2008.
• Peter G. Peterson, "Riding for a Fall", Foreign Affairs, September/October 2004.
• Peter G. Peterson, "The salvation of social security", The New York Review of Books, December 16, 1982.
• Peter G. Peterson, "Social security: The coming crash", The New York Review of Books, December 2, 1982.

Books by Peterson

• "The Education of an American Dreamer: How a Son of Greek Immigrants Learned His Way from a Nebraska Diner to Washington, Wall Street, and Beyond", Twelve, June 8, 2009, ISBN 0446556033
• "Running On Empty: How The Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It", Farrar, Straus and Giroux, July 14, 2004, ISBN 0374252874
• "Gray Dawn: How the Coming Age Wave Will Transform America - and the World", Random House, 1999, ISBN 0812931955
• "Will America Grow Up Before It Grows Old?", Random House, 1996, ISBN 0679452567
• "Facing Up: How to Rescue the Economy from Crushing Debt and Restore the American Dream", Simon & Schuster, November 8, 1993, ISBN 0671796429
• Peter G. Peterson & Neil Howe, "On Borrowed Time: How the Growth in Entitlement Spending Threatens America's Future", Ics Pr, January 1989, ISBN 155815003X

External Articles about Peterson

• Suzy Khimm, "Pete Peterson predicts markets will panic over our debt crisis. Sometime.", The Washington Post, January 18, 2013.
• Michael Hiltzik. "Unmasking the most influential billionaire in U.S. politics." Los Angles Times, October 2, 2012.
• "Peter Peterson's Budget Ball." Dean Baker. TruthOut.org. Jan. 24, 2011.
• "Hugh Jidette and Hugh Janus Go to Washington" Dean Baker. TruthOut.org. Jan. 3, 2010.
• "Matthews Show Panel with Peter Peterson and Paul Krugman from Dec. 14, 2010"
• Holly Yeager. Columbia Journalism Review. "The Peterson Dilemma: A funded fellow wrestles with a funder’s influence" Aug. 3, 2010.
• Max Berley and Brian Faler. Business Week. "Spending Big to Stop Big Spending: A billionaire's anti-deficit crusade rankles some Democrats" July 1, 2010.
• Dan Froomkin. "Deficit Commisson's Most Realistic Goal: Scaring The Hell Out Of Americans" Huffington Post. May 28, 2010
• Baker, Dean. Center for Economic and Policy Research. "Peter Peterson Wants to Cut Social Security" May 11, 2010.
• Foser, Jamison. Media Matters for America. "The question reporters still won't ask Pete Peterson." Jan. 5, 2010.
• "The Solution to the Budget Deficit" Baker, Dean. Center for Policy Research. Feb. 23, 2009.</ref>
• "The Peter G. Peterson Crew Is Coming After Your Social Security and Medicare." Baker, Dean. Center for Economic and Policy Research. February 23, 2009.
• "Peter Peterson's Bad Economics" Baker, Dean. Center for Economic and Policy Research. October 20, 2008.
• The Nation Cover Story, titled, "The Man Who Wants to Steal Your Social Security", from March 2, 2009
• John L. Hess, A Crusader in Clover: Pete Peterson, Enemy of Social Security, Counts Journalists as Friends, Extra!, Fairness and Accuracy in Reporting, March/April 1997.
• "Conversation with a Conservative: Peter G. Peterson", Mother Jones, October 26, 2004. ("The Commerce Secretary in the Nixon administration explains that the Republican Party "has lost its moorings" in recent years.)
• Scott Sherman, Kissinger's Shadow Over the Council on Foreign Relations, The Nation, December 27, 2004 (print edition), Dec. 6, 2004 (electronic version). Article discusses Peterson's relation to CFR and Kissinger.
• Dean Baker, "Santa Claus Comes to Wall Street", truthout, December 27, 2007.
• James Ridgeway, "Pete Peterson's Anti-Entitlement Juggernaut Gets Fueled Up by Obama"
• Robert S. McIntyre. The American Prospect. June 23, 1994. "[http://www.prospect.org/cs/articles?article=the_false_messiah/ The False Messiah"

Select Videos

• "Peter Peterson Calls Bowles, Simpson 'American Heroes'"
• "Peterson on Kissinger"