peter g. peterson's billion dollar legacy by esmé e. deprez

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PRIVATE EQUITY // LUXURY // PHILANTHROPY PETERSON’S $1BN LEGACY PETERSON’S $1BN LEGACY EXCLUSIVE INTERVIEW: PERLA GROUP MIDDLE EASTERN TURNKEY SERVICE PROVIDER WILL LAUNCH THE REGION'S FIRST TAXI JET SERVICE BLACKSTONE'S FOUNDER TAKES ON NEW CHALLENGES PULLING THE TRIGGER ARE INVESTORS GETTING BACK INTO THE GAME? WHAT WORKS IN A RECESSION? EXPLORING BUSINESSES THAT THRIVE WHILE OTHERS FAIL ALSO INSIDE THIS EDITION GETAWAY OF GETAWAYS WHERE LIFE GOES ON TOYS FOR THE AFFLUENT WATCH INDUSTRY OUTLOOK WEALTH MANAGEMENT SOLAR ENERGY ONLINE GAMING 9 771662 864002 ISSUE XIII - SUMMER 2009 CHF 12.00 • eur 7.50 • gbp 6.00

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Billion Dollar Legacy, Esmé E. Deprez, The Elevator, Issue XIII Summer 2009.

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Page 1: Peter G. Peterson's Billion Dollar Legacy by Esmé E. Deprez

Private equity // Luxury // PhiLanthroPy

Peterson’s $1bn LegacyPeterson’s $1bn Legacy

exclusive interview:

PerLa grouPMiddle eastern turnkey service provider will launch the region's first taxi jet service

Blackstone's founder takes on new challenges

PuLLing the triggerare investors getting Back into the gaMe?

What Works in a recession?

exploring Businesses that thrive while others fail

also inside this edition

getaway of getaways where life goes on

toys for the affluentwatch industry outlook

wealth ManageMentsolar energyonline gaMing

9 771662 864002

issue xiii - suMMer 2009CHF 12.00 • eur 7.50 • gbp 6.00

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He tackled Wall Street and Washington – now this financier-turned-philanthropist is on a quest to save America’s errant economy

legacy

billion DollarleGacy

words: esMé e. deprez

“Kurt Vonnegut and Joseph Heller were at a wealthy hedge fund manager’s palace out in the Hamptons,” Peterson recounts, when Vonnegut turned to Heller and asked, “Joe, doesn’t it bother you that this guy makes more in a day than you ever made from the worldwide sales of Catch-22?” Heller rejected the assumption and replied instead, “No, because I have something he doesn’t have.”

“What the hell could you have that he doesn’t have?” asked Vonnegut.

“I know the meaning of enough.”“That kind of clicked with me,”

Peterson says in a low and tempered voice, his calm demeanor accompanied by a firm sense of gravity manifested in a furrowed brow. His face is tan and weathered with deep dimples that bounce as he moves his mouth, and rimless eyeglasses sit atop a slightly bulbous nose. Always impeccably dressed, his striped silk tie complements a matching handkerchief tucked in the pocket of his dark navy suit and a crisp shirt peeks out at the wrists just enough to catch a glimpse of gold cuff links.

America, meanwhile, does not know the meaning of “enough,” Peterson says. After the 2007 initial public offering of Blackstone, the private equity powerhouse he co-founded in 1985 with Stephen A. Schwarzman, Forbes declared Peterson the 147th richest person in America with a net worth of

$2.8 billion. He has since committed $1 billion of his $1.8 billion windfall to endow a new eponymous foundation. Its mission is to make things click for government officials and the American public as well, “before it’s too late.”

The irony, of course, in Peterson telling this anecdote, is that he may be all three characters in one. Like Vonnegut, he’s bothered by the ostentation of his Wall Street peers who he thinks don’t realize the value of a dollar, and like Heller, he ruminates constantly about the lessons of “enough” that his Greek immigrant upbringing instilled in him at a young age. He is also, however, like the hedge fund manager, a billionaire who has made most of his money in private equity from leveraged buyouts (i.e. other people’s money) with a palace of his own at the beachfront playground of Manhattan’s wealthy. This may complicate his mission.

Friends and family rave that Peterson is the best person to consult when faced with any sort of problem. Ever since he was young, he reflects, “I wasn’t content to simply know what I knew, or thought I knew. I wanted to write about it, speak about it, even teach others.” When famed New York gossip columnist and close friend Liz Smith signed a $1 million book contract in the late 1990s and told Peterson she had no savings to speak of, he immediately set about instructing her on her finances. “He actively interfered in my life to keep me from doing something with this money,” she says. “He was determined to keep me from flittering it away.”

Now it’s the American public and federal government Peterson is address-ing. Along with David Walker, former Comptroller General of the U.S. and head of the Government Accountability Office, he established the Peter G. Peterson Foundation last July to raise awareness about a looming $56 trillion deficit that they say, left untouched, will leave the country in ruin.

A prominent fixture among business executives on Wall Street and policy makers in Washington for decades, Peterson served as commerce secretary under Richard Nixon and as chairman and CEO of Lehman Brothers in the 1970s. Since “retiring” last December after 23 years as chairman of Blackstone (no one who knows him actually believes that he will slow down until

he really does not have a choice), he can now finally commit full time to the foundation, the culmination of a lifelong passion and last great attempt to shape the world. The New York Times calls him “one of a growing number of philanthropists whose foundations are spending increasing amounts and raising their voices to influence public policy—a marked shift from their traditional position.”

Peterson is to the federal government’s check book what Al Gore is to climate change: a crusader riding on his reputation, contacts and personal wealth to tackle a long-term problem that is politically complicated at best and hopelessly quixotic at worst. At a time when so many Americans are struggling to pay their bills, and populist sentiment against greed and corruption rises with each bank bailout and executive compensation plan, many question how a Wall Street billionaire can lecture the country on spending. “The headline of this is that it’s self-serving and hypocritical,” says Jeff Faux, founder of the Economic Policy Institute, a liberal think tank in Washington.

As he discusses in his new memoir, The Education of an American Dreamer, the June release of which coincided with his 83rd birthday, Peterson attributes much of his success over the years to luck. But with this next phase that may be beginning to change. He pledged to give away so much money when the economy and the country were in a much different state. The foundation’s inauguration last summer was the subject of much publicity but has since been overshadowed by lawmakers scrambling to revive the American financial system with federal spending diving deeper into the red each day. Is Peterson’s scolding on fiscal responsibility needed more than ever, or, as Robert Frank of The Wall Street Journal puts it, “is he simply worried about dried up lawns just before the hurricane hits?”

After nearly half a century as a self-defined “addicted workaholic,” Peterson’s announcement to retire from Blackstone at its 2007 public offering was a defining moment. Shortly after, “the phones seemed to stop ringing.” He had also recently stepped down as chairman of the Council on Foreign Relations—quite literally, in fact, when

On a spring morning, sitting back in a black

leather chair in the spacious 48th floor

offices of his new foundation overlooking

Fifth Avenue, Peter G. Peterson recites an

anecdote he likes to use – a lot – to demonstrate the

philosophy he says he’s lived by since growing up in the Great Depression.

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he stumbled off the stage and tore the rotator cuff in his right shoulder (“I think you’re taking stepping down a little too seriously,” a friend joked later). The injury landed him on the operating table, where he would return less than two years later with a broken hand.

As the financial crisis started to take hold throughout the country, a life crisis—and legacy crisis, perhaps—took shape as well. Restless nights and melancholic laments to friends evolved into depression, because “at my age,” he says, “when you’re going through these kinds of transitions it’s very difficult.” And so he reverted back to two of his favorite pastimes to cure himself: psychotherapy sessions and his reputation as a deficit hawk.

“I had an image of what it might be like on my deathbed to have all this money that I don’t need and being very concerned about the future and not having done anything,” Peterson says. “And I thought that was unacceptable.” He thought of the old adage his former professor at the University of Chicago, George Stigler, once told him: when you don’t have a choice, you don’t have a problem. As Peterson saw it, he had no alternative—he had to spend that money. “What am I going to do, sit out on the beach and count my dollars? Play golf every day of my life? I didn’t think the typical retirement life was for me.”

Peterson looked to fellow billionaires and realized that “virtually all the ones I really admired were major philanthropists.” So, he writes, like Michael Bloomberg, George Soros, Eli Broad and his role model David Rockefeller, “I decided that was what I wanted to do.” He and his wife would soon become the third most generous American philanthropists in 2008, according to The Chronicle of Philanthropy. Beneficiaries besides the new foundation included the Peterson Institute for International Economics (another creation of his), Sesame Workshop and the New York-Presbyterian Hospital.

Years of harping about fiscal discipline and generational inequity had already made Peterson a target among friends. They mock his relentless crusade and the plethora of op-eds and articles it has produced for the New York Review of Books, Times Sunday Magazine and Atlantic Monthly. He’s written five books that point out hulking yet somehow unseen financial crises,

including most recently Gray Dawn: How the Coming Age Wave Will Transform America - and the World in 1999 and Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It in 2004. “Once you put it down, you won’t be able to pick it up,” joked Ted Sorenson, President Kennedy’s speechwriter about one. Leslie H. Gelb, a friend and colleague at the Council on Foreign Relations, recently riffed that while it took him 15 years to write one book in the time it took Peterson to write five, “it was easy since [Peterson’s] were all the same book with new covers.”

Peterson needed his new foundation to be different.

Back in 2007, Peterson sat alongside friends Paul Volcker, Warren Buffett and Bob Kerrey on a panel sponsored by the Concord Coalition, an organization that advocates for fiscally responsible public policy that Peterson helped found in 1992, as David Walker accepted the Concord Coalition’s “Economic Patriot Award.” Walker was Comptroller General of the United States and head of the Government Accountability Office since President Clinton had appointed him in 1998. He advocated many of the same policies about which Peterson was passionate on his “Fiscal Wake-Up Tour,” a series of Coalition-sponsored visits to cities and college campuses nationwide to bring attention to the federal government’s growing budget deficits. Peterson recruited him relentlessly for weeks, Walker says, until “he convinced me that I would probably have a better chance of accomplishing my final objective by coming with him and being able to do things at the foundation that I couldn’t do as Comptroller General.”

Walker and Peterson warn of “large and growing budget deficits, dismal national and personal savings rates, and a ballooning national debt that endangers the viability of Social Security, Medicare, and our economy itself.” A ticker on the left side of the

foundation’s website keeps track of a number too big for most of us to comprehend: $56,400,000,000,000—all those zeros mean trillion—which equals the “Real National Debt” according to their research team. It is followed by another ominous figure, $184,000, the burden of every individual American today. The U.S. government puts the figure closer to $11 trillion but the foundation contends that its number accounts for the government’s unfunded promises to military pensions, existing debt, Social Security and Medicare benefits and the like. They project that these latter two entitlement programs represent almost $43 trillion of red ink alone and cite studies showing that both funds will run out of money long before Peterson’s grandchildren reach retirement age.

Peterson has been a lifelong Republican, but clarifies, “I am a Rockefeller Republican. And there are two of us left, David Rockefeller and myself, I think.” His party has let him down profoundly, which “at least used to have a principle called fiscal conservatism,” he says with a heavy sigh. “I could not have imagined that we’d have a Republican administration that got rid of spending caps, got rid of pay-as-you-go and had endless tax cuts and terrific increases in spending.” Peterson’s lectures to George W. Bush on the immorality of providing long-term tax cuts to “genuine fat cats” like himself at the expense of more pressing entitlement reform have long fallen on deaf ears, and he has loudly lambasted the former president’s administration and Republican Congress for overseeing the “biggest, most reckless deterioration of America’s finances in history.”

During the 2008 presidential elections, Peterson supported John McCain, calling him “a true fiscal conservative.” But, says Michael, one of Peterson’s four sons and the foundation’s vice chairman, “the foundation is strictly nonpartisan and nonideological and Obama’s victory didn’t change our mission in any way. It

them a strong sense of “enough.” With a third-grade education and no English, Peterson’s father opened a successful diner at which Peterson, the eldest child, took his first job at age 8 counting money.

Peterson was an overachiever throughout grade school, mastering Greek and the clarinet and receiving only one “B” after failing to draw frogs in high school biology. He struggled with his weight throughout childhood (and would into adulthood) and his mother forbid him to play contact sports. Classmates labeled him a “sissy.” But if those years taught him anything, “it was that I could prevail through sheer obsessive diligence,” he reflects. “I could out-work and out-study almost anybody, and if that’s what it took to conquer a situation, that’s what I would do.”

The family business made enough money to send Peterson to college, and after a brief stint at MIT he went on to graduate summa cum laude with a degree in retailing from Northwestern instead. There, he writes, “I found out that I was good at what would later be called multi-tasking, and that I liked it. I was restless in my interests and got bored doing just one thing. I didn’t know it at the time, but I was setting a pattern I would follow for the rest of my life.”

In 1948, Peterson married his first

As stated, the foundation’s goal is to tackle not only the debts and deficits but also the “challenges weakening the foundation of our future: out-of-control energy consumption, an education system that lags behind other developed nations, and a health care ‘system’ that costs more and yet leaves more people behind with each passing year.” The foundation is still getting off the ground, and much of its two-floor space remains empty while the current staff of about 20 employees continues to expand. The office, which rises high over Central Park with views stretching to Yankee Stadium, is also home to Peterson Management, “like a family office,” Michael says, that separately manages his father’s investments.

Peterson repeatedly touts that his life has been “a case study in the American dream.” His parents, Georgios Petropoulos and his wife Venetia, arrived in Nebraska from Greece in the early 1900s. The immigrants soon Americanized the family name and had two sons and one daughter, instilling in

simply changed who we’re going to have to work with in the coming four years. During the course of the foundation’s existence there will be many.” Michael took time away from the foundation and his own Philadelphia-based private equity and investment firm to volunteer for the current president during his fall election campaign—“a pretty good indication,” he says, of the foundation’s nonpartisan commitment.

Last summer the Peterson Foundation unveiled itself as “an independent, nonpartisan convener and facilitator of solutions that transcend age, ideology and party lines,” with Peterson as chairman and Walker as president and CEO. Walker’s “Fiscal Wake-Up Tour” had by then evolved into a documentary, entitled “I.O.U.S.A.,” in which he starred alongside Warren Buffett and Alan Greenspan. The foundation bought the rights to the film—which aimed to be the “Inconvenient Truth” for the financial environment—after its premiere at the Sundance Film Festival and used it for publicity.

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“I found out that I was good at what would later be called multi-tasking, and that I liked it. I was

restless in my interests and got bored doing just one thing. I didn’t know it at the time, but I was setting

a pattern I would follow for the rest of my life.”

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In 1979, Peterson’s attention turned toward Joan Ganz Cooney, a lifelong Democrat, feminist and great philanthropist herself, who he had met years earlier when she was pitching what became the Children’s Television Workshop to the National Education Television board, on which Peterson served.

Peterson’s “revelation on the road to Damascus” regarding fiscal responsibility came two years later, shortly after his marriage to Cooney, while the couple pined over a family friend’s East Hampton estate. The friend agreed to sell them the house in return for Peterson’s promise to examine Ronald Reagan’s budget proposals. “What I found astonished me,” he writes, “I felt that I needed to act like Paul Revere and sound the alarm…Voodoo economics was exactly what it was.” Five years later, the U.S. would cease to be a creditor nation and instead become a debtor nation, and Peterson’s crusade would become more difficult and more intense.

Since leaving Blackstone in December 2008, Peterson has been able to focus more on his family and nine grandchildren in particular. “There were times in my life when I didn’t achieve [balance]—I was so absorbed and addicted to my career and the family didn’t get as much time as they should have,” Peterson says. “That’s a lot different now. I think I’ve learned some lessons from the past.” He and his wife are active on the New York social scene and go out almost every night of the week, she says, and he will soon start instruction on abstract impressionism at the Museum of Modern Art. Says Anastasia Vournas, Peterson’s second cousin and close friend, “He is [still] like the energizer bunny on steroids. He’s not interested in learning how to play bridge or starting a stamp collection or any of those rich leisure time pursuits.”

Seated between Henry Kissinger, a friend and former colleague whom he served beside in the Nixon White House, and Donald Marron, fellow private equity tycoon, Peterson posed for a Vanity Fair photo shoot at the Four Seasons’ Grill Room in May. The 50 biggest spenders had gathered at “Manhattan’s Star Chamber for the power lunch” to celebrate its 50th anniversary, where Peterson is often seen on Sundays with his wife Joan and

Liz Smith. Diane Sawyer, Peggy Noonan and Barbara Walters are other frequent guests, as is Joel Schumacher who joined Peterson over Easter weekend at his Florida estate and helped him produce a mockumentary for a recent roast of the restaurant’s owners. Smith and Schumacher rave about Peterson’s vulgar and self-deprecating humor and love of practical jokes.

Now that he has finished writing his last book, “I’ve got more time to think and work on the foundation,” Peterson says. “I will be here much more and involved.” He reports to the office a few times per week and often works remotely from home. Walker commutes from Virginia to join him for one pre-arranged meeting per week and schedules others as needed to discuss their latest sit-downs with people such as David Plough and Linda Warren, from whom they gleam hints on how to employ strategies the Obama campaign used like targeting social networking sites such as Facebook and MySpace. The foundation is taking particular aim at the younger generation “to grow a youth movement,” organizing educational campaigns and “citizen engagement” efforts across the country. “InDebtEd” is a recently launched partnership with MTVu (the music channel’s college network) with kitschy gimmicks that include a video game called “DebtSki,” in which players navigate a rotund pink pig on a jet ski collecting coins and avoiding unnecessary purchases, and “Budgetball,” a new sport, apparently, described as “a variation on Ultimate Frisbee, with added game twists related to budgeting strategies.”

Of Peterson’s $1 billion commitment, the foundation has received approximately $325-350 million so far, Walker says, and will continue to get about $100 million per year until the total is exhausted. Walker estimated that grants and operating expenses totaled $20-25 million for the first year (a number of expenses that would otherwise be paid for by the foundation are paid for by Peterson Management, “in part because we have a beautiful space,” Walker says. “It’s really more expensive than you ought to have for a non-profit organization.”) So far, he says, the foundation, which is private, has given out about $12.5 million in grants to organizations touting similar

private equity firm to go public—Blackstone was valued at $33.6 billion its first day on the market. Also during this time, Peterson added chairman of the Federal Reserve Bank of New York to his resume and would later recruit Timothy F. Geithner as its president.

“I’ve had many more careers than most people—some people would say I haven’t been able to hold a job,” he muses. “That’s one way of looking at it I suppose.”

profitability, he was forced out when a power sharing agreement with Lewis L. Glucksman turned sour. Restless and anxious to move on, he soon tapped former Lehman colleague Stephen A. Schwarzman and in 1985 the duo started the Blackstone Group with a personal investment of $200,000 each. They would eventually diversify the private equity firm into commercial real estate, alternative assets and financial advising and grow it into the first major

wife and soon started attending the University of Chicago Graduate School of Business at night while working at a market research firm during the day. It was the beginning of “this tendency to focus on work at the expense of family and personal relationships…one of the legacies [my father] passed on to me.” The marriage would soon end in divorce.

A number of professors at Chicago Business School influenced Peterson but perhaps none more so than the Nobel prize-winning economist Milton Friedman, a staunch advocate of limited government and free market policy. In 1953, Peterson married his second wife, Sally, with whom he would have four sons and one daughter. At age 27, he became the head of the Chicago office of advertising firm McCann-Erickson, earning a salary of $50,000. It was there that Peterson began shaping American culture, albeit in a small, somewhat chalky way: he advised the executives at Tums to add flavoring to their tablets. By 34, he was the youngest president of Bell & Howell, a Fortune 300 company with 15,000 employees, where he “inspired the invention of the boom box.” But as his career progressed steadily, his workaholism would again deteriorate another marriage. He even missed the birth of his first son when he left on a business trip as his wife sat one week away from her due date, just as his father had done decades before.

After the assassination of President Kennedy and with the Vietnam War raging on, Peterson found himself growing tired of corporate responsibilities and longed to take an active role in shaping public policy. In 1967, he moved the family to Washington, where he worked alongside Defense Secretary Robert McNamara on the board of trustees at the Brookings Institution and established a commission on philanthropy for David Rockefeller. Shortly thereafter, he was nominated as assistant to the President for International Economic Affairs and later Secretary of Commerce under Richard Nixon. His face landed on the cover of BusinessWeek and The New York Times proclaimed that he was known around Washington as the “economic Kissinger.”

Peterson moved back to New York to rescue Lehman Brothers from bankruptcy as chairman and later CEO in the 1970s. After overseeing record

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ideals such as the Concord Coalition to focus on policy recommendations, the Institute of Medicine to find ways to reduce health care costs and America’s Promise Organization to teach financial literacy to the country’s youth. ($3 million was also donated to the Nuclear Threat Initiative to create an institute for nuclear security, another of Peterson’s longtime interests.) The foundation releases reports, books and citizen guides on topics like Social Security and the national deficit and has commissioned surveys on American sentiments about public and private debt.

The foundation strives to raise public awareness of the nation’s financial instability and persuade Congress and the federal government to institute increased transparency in

accounting and budgetary matters, simplify the tax code and revitalize budget controls with regards to spending and taxation. They also call for the establishment of a “Fiscal Future Commission” consisting of members of Congress and the Administration and non-governmental officials to provide recommendations on how to control the budget and reform taxes and entitlement spending. The commission would then receive an up or down vote by Congress, enabling quick and efficient policy change, they say.

“Our nation is sinking deeper and deeper into debt and unsustainable promises while Americans are asking more and more from government,” Peterson testified before the House Budget Committee last June, where he urged members of Congress, alongside Walker, to join in their mission. “This is a vicious cycle that MUST be broken, before it breaks us,” Peterson stressed.

Peterson and Walker made similar pleas to President Obama and his administration directly during the Fiscal Responsibility Summit held at the White House in February. Obama had just signed the $787 billion economic stimulus plan and promised to halve the annual deficit (which he says totals $1.3 trillion, an inheritance from the

Bush Administration) by the end of his first term and reinstate pay-as-you-go budgetary measures. Obama called the long-term solvency of Social Security “the single most pressing fiscal challenge we face by far.” Echoing Peterson, “we cannot simply spend as we please and defer the consequences,” the president said. “I refuse to leave our children with a debt that they cannot repay.”

Using their contacts to target lawmakers and policymakers directly, Walker says, is the starting point from which these two men approach their crusade and sets the foundation apart from other initiatives created to tackle these problems in the past. They do this by taking advantage of Peterson’s connections in New York and his connections in Washington, their experience working in the private,

public and now not-for-profit sector, and their provenance from different generations (Walker is 52, young enough to be Peterson’s son).

It is, of course, hard to say how much the Obama administration will listen to Peterson and his new foundation. Says Liz Smith, “this is just my theory, but I think he’s a little disappointed that he hasn’t been invited by the current administration to contribute.” Peterson’s close relationships with many Obama administration officials, however, can’t hurt his chances. Paul Volcker, who leads the president’s Economic Recovery Advisory Board, is a longtime friend, former colleague and current board member at the Peterson Institute for International Economics. Peterson has been a mentor to Treasury Secretary Timothy F. Geithner for years, and the pair often convened for breakfast meetings when Geithner was still at the New York Fed and Peterson at Blackstone. They were spotted having lunch at the Four Seasons in early March.

Even before the recession, Peterson recognized the ire that Wall Street wealth can produce. He likes to fashion himself in the model of the “old

money elite,” eschewing the behavior of his peers like Schwarzman who came under fire for a 60th birthday celebration at the Park Avenue Armory in 2007 where he dropped $3 million on 500 guests including Rod Stewart and Patti LaBelle. Yet for all Peterson’s insistence that he’s still just an average small-town Midwesterner, an early adopter of the plain black sedan who refuses to buy a private plane does not a common man make. In 2007, Peterson and his wife bought David Geffen’s Fifth Avenue duplex for a reported $37.5 million—he had long desired a view of Central Park—and then there are the large estates they own in Southampton, N.Y. and Vero Beach, Fla. He has come a “long way from Kearney, Nebraska,” indeed.

Peterson made his Wall Street fortune largely through leveraged buyouts at Blackstone. (Its stock was initially priced at $31 a unit —the company valued at $33.6 billion total—but has since tanked with the economic downturn. It was trading around $11 at the time this magazine went to press. Peterson maintains a 4 percent stake.) Private equity firms take over companies using enormous amounts of investors’ debt and benefit from capital gains taxed at 15 percent compared to earned income taxed at rates nearly twice that much. Blackstone’s IPO triggered some members of Congress to try to close this loophole, but the attempts eventually failed. Peterson dismisses the idea that raising these taxes would do much to aid the looming budgetary concerns and says it would be unfair to target only these earnings. But if the government is short on revenue, critics say, it could start by patching up this loophole and make investors like Peterson pay more.

The targeting of young people has led some people to accuse Peterson of plotting a generational war, and he has become a popular target for those who decry calls for “entitlement reform” as little more than a “euphemism for cutting benefits.” “He doesn’t come to the table as an honest broker,” says Jeff Faux of the Economic Policy Institute. “His jihad against the deficit is one sided, aimed at cutting the safety net while leaving taxes and other expenditures that benefit the investor class untouched.” To be sure, Peterson supports the inheritance tax and readily acknowledges that his taxes will need to

go up, especially given the current crisis. But while millions of people across

the nation are losing their jobs, and with them their health insurance, Faux says the foundation’s calls to scale back Social Security benefits and increase the retirement age is born of a class bias. He accuses Peterson of lumping together Social Security, assistance to needy people and rising health care costs when the latter is what will ultimately cause Americans to go bankrupt. Plus, Faux says, “Wall Street has done more than anything else to contribute to [the current crisis]. Peterson is correctly concerned about the future, but it’s ironic that [his] world—the world of high finance and Wall Street—are the people who have most contributed to the shortsightedness of American policy and the way we run this economy.”

All told, $1 billion pales in comparison to the amount of money the government spends in a year. But the difficulty is always trying to make one’s voice heard, says Andrew G. Biggs, a resident scholar at the American Enterprise Institute, a conservative think thank in Washington, who has recently joined Walker on his “Fiscal Wake-Up Tour.” “You could argue he’s been trying to fix these problems for so long—maybe they are too difficult,” says Biggs. “On the other hand, they are not going to be fixed right away so there is no danger that this foundation will cease to be necessary. A billion dollars can certainly speak volumes. The difference is resources, and there is nothing comparable.”

That kind of commitment does put Peterson in the category of top-tier philanthropy, according to Robert Frank, a veteran reporter covering the wealthy for The Wall Street Journal. The bigger problem may be how to measure the results of Peterson’s new foundation. “These philanthropy guys are obsessed with measurable results,” Frank says. “They want to give away their money the same way they made it.” Bill Gates may be able to realistically say one day that it was his efforts that led to the eradication of malaria, and Michael Bloomberg can point to the Department of Education’s report cards to show how he has directly impacted New York City public schools. If the government eventually does climb its way out the hole, who’s to say it was Peterson’s foundation that made the difference? “Philanthropy has been most

successful when it’s devoted to one part of a community,” says Frank. Peterson’s goals are a bit more amorphous.

Back at the foundation, Peterson gazes out at the Manhattan skyline anxious to see how American International Group’s chief executive Edward M. Liddy will fare before Congress later that afternoon. “That poor guy is under fire today,” he says. “But that demonstrates the mentality, ‘I want all the rewards and none of the risks.’ It all has to do with the culture of America that has become very short term, wanting it all now and not wanting to pay for it.” Peterson predicts Wall Street will undergo dramatic changes after the current meltdown has subsided, warning of more regulation, less leverage, reduced profits and increased taxes. “Wall Street has become not the folk hero but the folk

“Wall Street has become not the folk hero but the folk enemy,” he says, “and it’s going to take many years to get over this.”

enemy,” he says, “and it’s going to take many years to get over this.”

Peterson needs to convince the American public to start a movement toward financial solvency and look to him as the hero and not the enemy—as Joseph Heller, who knows the meaning of “enough”, and not the self-indulgent jet setter parading around his wealth. The “active octogenarian” is attaching his name to one last ball of fire in hopes of producing a legacy that will live on after he does. “People who know me politely suggest that my favorite piece of furniture is not an antique table or an heirloom chest but my trusty soapbox,” he concludes. “I’ve been climbing on it for years and delivering my opinions, solicited or not…I have no intention of getting down from that soapbox.”

TOP LEfT: cLad In TradITIOnaL GrEEk drESS wITH yOunGEr brOTHEr jOHn, LEfT [famILy PHOTO]mIddLE LEfT: wITH yOunGEr SISTEr, ELaInE [famILy PHOTO]bOTTOm LEfT: a yOunG PETErSOn In 1927 [famILy PHOTO]