Pete Peterson's Long History of Deficit Scaremongering

Lisa Graves

February 20, 2013

Fix the Debt financier Peter G. Peterson knows a thing or two about debt: he’s an expert at creating it. Peterson founded the private equity firm Blackstone Group in 1985 with Stephen Schwarzman (who compared raising taxes to “when Hitler invaded Poland”). Private equity firms don’t contribute much to the economy; they don’t make cars or milk the cows. Too frequently, they buy firms to loot them. After a leveraged buyout, they can leave companies so loaded up with debt they are forced to immediately slash their workforce or employees’ retirement security.

In 2006, Blackstone ransacked Travelport, a travel reservation conglomerate, piling on $4.3 billion in new debt, then pocketing $1.7 billion to pay shareholders and itself. Travelport promptly fired 841 workers to meet its new debt obligations. It was a great deal for Blackstone but “a horrible one for Travelport,” according to one investment adviser, who described Blackstone as trading in “poisoned waters.”