Death can be so inconsiderate. Peter “Pete” Peterson, the billionaire investment banker who spent much of his life ginning up anxiety about the federal deficit in order to take money away from the old and sick, died on March 20. His death came as the deficit is poised to rocket well north of a trillion dollars, thanks to the mad round of tax cuts that Trump signed in December. Peterson’s star had faded in recent years as the deficit shrank to economic and political insignificance in the recovery after the Great Recession. Sadly for him, he won’t be around to pound the pulpit, declaiming for austerity, now that the red ink is flowing again. Austerity was always for others, not himself; he was worth, in monetary terms, about $2 billion, according to Forbes.
Peterson rose from clichéd humble origins: the son of Greek immigrants who ran a diner in Kearney, Nebraska, he escaped the prairie to climb the status ladder via MIT, Northwestern, and the University of Chicago. He took a job in advertising, and then moved on to Bell & Howell, a camera company whose claim to fame was developing the zoom lens that Abraham Zapruder used to film JFK’s assassination. His success at the company won him the admiring attention of Richard Nixon, who brought him on first as an economic adviser and then as commerce secretary. Nixon soon doubted his loyalty—he “enjoyed socializing with journalists and Democrats,” as the New York Times obituary put it—and Peterson was out within a year. Unsurprisingly, he heard the call of Wall Street, and took a job as chairman of Lehman Brothers, which was then troubled, though not yet synonymous with disaster. As he told the Times in a 2007 interview, “I was experienced enough to realize that the real money was made on investments rather than in selling your body by the hour.” Marx couldn’t have put it any more bluntly.
He made money turning Lehman around, but he didn’t really hit the big time until he co-founded, along with Steve Schwarzman, the private equity firm Blackstone, which took its name from the surnames of the principals: “schwarz” is German for “black” and “pétra” is Greek for “stone.” (Schwarzman is perhaps most famous for his reaction to Obama’s proposal—which went nowhere—to eliminate a generous tax break enjoyed by private equity and hedge fund guys: “It’s a war. It’s like when Hitler invaded Poland in 1939.”) The two founders really cashed in when Blackstone went public in 2007, thirty-two years after its founding. Peterson took home $1.88 billion from the IPO and retired from the firm soon after.
Peterson might have been just another billionaire, known only to colleagues and connoisseurs, if not for his side hustle: peddling fears about the fiscal road to ruin. He founded the Concord Coalition in 1994, and was appointed by Bill Clinton to his Bipartisan Commission on Entitlement and Tax Reform. Those two names included Peterson’s two pet obsessions, which would preoccupy him for his remaining twenty-four years: the idea that our bitterly divided political leaders must put aside their many differences for the sake of shredding the already minimal American welfare state.
His two pet obsessions: Let’s all find bipartisan harmony. Let’s shred the already ragged American social safety net.
A dwindling band of elites has long promoted “bipartisanship,” as a scheme by which the upper classes conspire to put one over on the masses by creating a bogus consensus, be it for austerity or imperial war. (Now the two parties have diligently built out their own separate branded strategies for achieving those aims.) And “entitlements” is, for the clued-in Beltway policy sage, a tendentious way of saying “Social Security, Medicare, and Medicaid.” The term originates from budget jargon; it refers to programs that one is eligible for by right, and for which spending must rise to meet demand regardless of whether Congress is in the mood to appropriate the money every year to fund them. But when the likes of Peterson use the term, they mean to associate it with one of the leading symptoms of pathological narcissism—a petulant and insatiable demand for “more.”
So it was in pursuit of his late-life dream of tightening the belts of people below him on the distributional ladder, that Peterson co-founded the Concord Coalition (as in the site of the “shot heard round the world”), and showered groups like The Committee for a Responsible Federal Budget with tons of cash. When Blackstone went public in 2007, Peterson devoted a billion—a good chunk of his share of the proceeds—to fund an eponymous foundation, whose mission was, among other things, putting a lid on entitlement spending and cutting the costs of health care. He continued to throw big bucks at the foundation in subsequent years. The Huffington Post put the sum at $458 million between 2007 and 2011; and according to the Foundation’s tax returns, he gave another $160 million in 2014 and 2015. Since much of his estate will be given to the foundation, Pete Peterson will continue tightening our belts from the crypt.
In pursuit of the dream of elite consensus, the Peterson Foundation’s grantees straddle the political spectrum, including the labor-friendly Economic Policy Institute, the Clintonish Center for American Progress, the safely establishmentarian Brookings Institution and Urban Institute, together with the right-wing American Enterprise Institute. The Foundation has even doled out small grants to the Mercatus Center, the libertarian redoubt of anti-regulatory dogma at George Mason University. And as a token of bipartisan comity, the Foundation also subsidizes the Committee for a Responsible Federal Budget, which could be poised to wheeze back into a notional position of relevance thanks to the Trumpian deficit spree.
Nor has Peterson neglected to think of the children: HuffPo reported that he promised $2.4 million to Columbia University’s Teachers College to develop a curriculum “to help high school students understand the facts, significance, and consequences of the nation’s fiscal challenges.” The Foundation’s tax returns show it has continued to support the program.
Peterson’s diagnosis of Social Security’s problems was simple: it’s too generous. The Peterson Foundation’s web page on Social Security reform does concede that the upper brackets could pay higher taxes, but most of the space is devoted to schemes to raise the retirement age and slow the rate of increase in benefits by changing the annual inflation adjustment. (In point of fact, of course, Social Security is in no imminent financial peril, and would not face any longer-term struggles if the rich would only consent to be fairly taxed.) Peterson sneakily proposed reducing benefits for affluent recipients and raising those for poorer ones—the sort of means-testing measure that sounds good, until you realize that the ultimate aim of these sorts of schemes is to turn Social Security—which he once described as “a well-padded hammock for middle- and upper-class retirees”—into a welfare program, thereby undermining its political support. If the better-off have no stake in it, they’ll just want to privatize the whole thing for themselves and leave the poor to the tender mercies of Paul Ryan.
As for health care, Peterson’s prescriptions are all about cuts and cost-shifting: reduce federal “subsidies” by raising the age for Medicare eligibility, raising premiums and co-pays, turning Medicare into a voucher to buy private insurance. The words “administrative costs” (which are extremely high because of our insane dependence on private insurance) and “single-payer” (which could cover everyone for less than we pay now to cover far less than everyone) are unmentioned.
Peterson was revered among establishment political and media figures, though his infatuation with bipartisanship looks like a holdover from a different time. There are far more rabid clowns in control these days. But any effort by the respectable to rehabilitate the likes of Peterson as representatives of some pre-Trumpian Golden Age of reasoned discourse should be beaten down with heavy sticks. Let’s make sure this guy stays safely buried.