An Interview With Pete Peterson

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L.G.: Are you actually going to pump a billion bucks into this foundation?

P.P.: Oh, over the next several years, it'll be that much. My current plan is to also put much of my estate in it, and whatever's left over is going to the foundation, which I emphasize is non-partisan.

L.G.: Hopefully your stock in Blackstone will go up, right? It's taken a little bit of a hit in the past several months.

P.P.: But I was fortunate enough to liquefy some of my holdings.

L.G.: Yes, I've read $1.9 billion. That's not bad.

P.P.: And some of that goes to my kids. I have five children and nine grandchildren.

L.G.: I think they can make do. But we already have think tanks, and everybody has a great idea about some aspect of public policy. When will we see these good ideas actually enacted?

P.P.: I can make a big distinction between an ordinary think tank and what I have in mind. The problem with most of these challenges is not so much that there's a lack of proposals—and there's certainly no lack of agreement on how unsustainable these problems are. Just doing something about them, that's the issue. So in a few cases, you might need some new proposals. In several of these areas that we're going to focus on, there are several ideas, any one of which would be a lot better than what we're doing now.

L.G.: Right.

P.P.: But the problem is to do something.

L.G.: Who's going to be the vehicle to carry the ball forward? I mean, you're supporting John McCain, right? You're one of his economic advisers?

P.P.: Well, I don't know the extent to which that's the case. I'm called one of his economic advisers.

L.G.: Now "Mr. Straight Talk"—who initially opposed the Bush tax cuts and voted against them—has said that he's for making them permanent. Why should we believe that John McCain is going to take care of this multitrillion-dollar forecasted deficit, when he talks like that?

P.P.: I want to remind you of something about John McCain. He wanted to tie the tax cuts to the same thing, frankly, that Bill Clinton, Bob Rubin and Congress did in the 1990s, which is tie them to spending caps, tie them to pay-as-you-go rules, where you'd have to make up the revenue loss by reducing benefits. That's a very different proposition than just tax cuts. And I think he has a track record of being a true fiscal conservative—for example, on the spending side. There were only a few Republican senators who voted against the Medicare prescription—drug benefit, and I talked to John from time to time about how totally unsustainable the current Medicare program was—huge debts, huge taxes that would be implied. You may recall he voted against it on the grounds that the current Medicare program is unsustainable. He said: ‘Why should we make it more unsustainable until we've reformed the basic program?’ So I think to talk about tax cuts in a vacuum, and by that I mean not in a context of spending patterns, is to oversimplify the tax-cut issue.

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