June 25, 2008

New League of ‘Deficit Hawks’ Revive Attacks

By Richard Wolf

WASHINGTON -- Eleven years after the last major effort to balance the federal government's books, advocates of fiscal integrity are seeking to make a comeback.

Most notable is Pete Peterson, a son of Greek immigrants and Wall Street chieftain who has vowed to invest $1 billion of his personal fortune to alert Americans that their government is going broke.

He has lured former U.S. comptroller general David Walker to his fledgling Peter G. Peterson Foundation, which will finance advertising, lobbying and grass-roots efforts designed to pressure the next president and Congress.

They're the latest "deficit hawks," but there are others. They are coordinating their efforts with former presidential candidate Ross Perot, who elevated the issue to national prominence in 1992 and has launched a new website -- www.perotcharts.com -- to illustrate the nation's fiscal woes.

Groups representing young people met in Washington last week for a "Youth Entitlement Summit," aimed at mobilizing against the growing Medicare, Medicaid and Social Security benefits that threaten younger generations with trillions in debt. New books have been written, the feature documentary I.O.U.S.A. by filmmaker Patrick Creadon is set for release in August, and a "Fiscal Wake-Up Tour" of policy experts that has appeared in nearly 40 cities since 2005 is returning to set up permanent roots.

The situation has gotten much worse since past presidents and Congress negotiated deficit-reduction deals in 1990, 1993 and 1997. The federal deficit is estimated at $357 billion. The national debt, as calculated by the Treasury Department, is more than $9.3 trillion. Future liabilities, from government pensions to elderly entitlements, bring the total to $53 trillion -- $175,000 per person, according to Peterson and Walker.

Both men say a comprehensive fix will need to include overhauls of the nation's health care and tax systems.

At the core of the effort is Peterson, 82, a founder of the Concord Coalition fiscal watchdog group, who has preached the danger of federal budget deficits for decades. He and Walker spoke Tuesday at a House Budget Committee hearing and met privately with congressional backers of balanced budgets.

"Our first task is to do everything we can to educate the public," Peterson says, with an emphasis on young people "because it's their future." The foundation, based in New York, has just begun awarding its first $10 million in grants and is paying for the production and distribution of I.O.U.S.A. But with more money to give out, "I get a couple of letters a day from people I've never heard of," Peterson says.

Married with five children and nine grandchildren, Peterson is retiring this year as senior chairman of the Blackstone Group, which he co-founded. A former secretary of Commerce in the Nixon administration and chairman of Lehman Brothers, he has pledged to spend $1 billion on the effort over the next several years, beginning with a first installment of $116 million.

"The American dream is seriously threatened," Peterson says, noting that for the first time in history, most Americans predict their children will not fare as well as they did. "The problem is to get the country and the people educated and motivated and activated, so that we can change the dynamic."

The balanced-budget effort comes at a time when Congress is headed in the other direction. This week, Congress is set to approve $165 billion more for the wars in Iraq and Afghanistan. That money, as well as a new 10-year, $62 billion entitlement for veterans' college education costs, isn't paid for.

The foundation is backing an effort in Congress to create a commission that would propose solutions to the imbalance between government spending and taxes and force lawmakers to vote. The bill has 96 co-sponsors in the 435-member House, far short of the number needed to win passage.

"This Congress is so timid, we're afraid to punt," says lead sponsor Rep. Jim Cooper, D-Tenn. "History is watching, and they are seeing this Congress do virtually nothing." (c) Copyright 2008 USA TODAY, a division of Gannett Co. Inc. <>