Pete Peterson's 'The Education of an American Dreamer'

June 9, 2009— -- Pete Peterson has lived the American Dream.

The son of Greek immigrants, Peterson grew up during the Great Depression, working in his family's 24-hour diner in a town smack in the center of America, Kearny, Neb.

"It's 1,733 miles to Boston. And 1,733 to San Francisco," Peterson said.

In Peterson's new memoir, "The Education of an American Dreamer," he writes about his humble beginnings and the many successes he's achieved since leaving his family's Nebraska home.

Peterson has held some of the most prestigious positions in the financial world. He was CEO of Lehman Brothers in the 1970s, President Nixon's secretary of commerce, chairman of the New York Federal Reserve, and co-founder of the Blackstone Group, a hedge fund that amassed a worth of $31 billion.

Through all that, Peterson said, he never forgot the lessons of hard work, sacrifice, and personal savings that he learned from his father. Armed with these lessons and $1 billion, Peterson has devoted himself to educating future generations that he worries will suffer the consequences of today's overspending.

"I visualize myself on a death bed," Peterson said on "Good Morning America." "And I visualize myself saying, 'You know, you enjoyed the American Dream for yourself. You don't think it's gonna be there for your kids, and so forth. And yet, knowing that and having all this money, you did nothing.' And I can't imagine a worse feeling than that."

The self-made billionaire shared his concerns for the future of the American economy and offered five solutions to reclaiming fiscal responsibility in the areas where he feels it is most needed: health care.

1. Develop a Health Care Budget

Peterson said he believes the United States spends far too much on health care.

"We're the only country that doesn't have a budget for health care," Peterson said. "They leave it to the states and Medicare to decide how to allocate [the money]."

Without a federal budget, Peterson described the system as "totally open-ended" and called the incentives "perverse."

2. Develop a Best Practices Method in Health Care

The current system encourages endless tests that, Peterson argued, are inefficient and costly.

"You [patients] don't care what kind of procedures and tests they do because it doesn't cost you anything," Peterson said.

But for the doctors, Peterson said, the increased chance for profits and the decreased chance of litigation make it worthwhile to conduct expensive, sometimes unnecessary procedures.

"We need to be more efficient and stop the over-prescribing of tests, surgical procedures," Peterson said.

3. Reform Open-Ended Tax Subsidies for Health Insurance to build an Incentive for the Consumer to Reduce Costs

Currently, Peterson said, the tax-free system does not allow patients to make decisions on a procedure's value and worth.

"There should be a progressive tax, based on salary that sets limits on how much health care you can deduct without paying taxes on it," Peterson said. He said there should be limits on how much of the employee's benefit is tax free, adding employees should have to pay taxes on some of their contribution so there is a built-in incentive to reduce costs.

4. Elderly Who Can, Should Pay for Their Own Health Insurance

Peterson said that able elderly people should pay for their own health insurance, arguing that this would allow us to take care of the poor while still having an incentive to reduce costs.

He proposed an affluence test. "If you make above a certain income, you start paying taxes on your social security. People with incomes less than X amount can deduct this," Peterson said.

5. Create an Integrated Health Care System

Peterson suggested that a single coordinated system could drive down rising health care costs.

"Instead of having eight different doctors, have one doctor who gets a set payment to care for your health -- all the records are there, and they don't do things that they don't think is necessary," he said.

Read an excerpt from Peterson's "The Education of an American Dreamer":

Chapter 1 Kearney

Beacon in the Night

Kearney, Nebraska, where I grew up in the 1930s, was a good-sized town by the standards of the plains. It was large enough for people to want to eat at all hours of the day and night, and the Central Cafe, my father's restaurant, was there for them. It was half a block from the Union Pacific railway station, its neon sign blinking through the night beckoning the train crews rotating off their shifts and the passengers who had arrived, for whatever reason they had come, at the absolute midpoint of the United States. Kearney was halfway between Boston and San Francisco, 1,733 miles from each, as attested by the plaque near the swimming pool at the 1733 Park where I played as a boy.

My father had worked for the railroad. He took a job no one else wanted, washing dishes in the steamy caboose that served as living quarters to a crew of laborers laying track in western Nebraska. From washing dishes he learned to cook, which he much preferred to driving railroad spikes and hauling rails and ties. But the track crews couldn't work through the Nebraska winter, so when the crew crossed paths with a traveling circus looking for someone to feed its collection of roustabouts, aerialists, and animal tamers, my father took off with the circus. This was sometime around 1917, five years after he arrived at America's golden shore from Greece, a boy of seventeen who spoke no English and had a third grade education.

Other cooking jobs followed, and he learned more about the restaurant business. He learned to speak English. His employers often gave him room and board, which allowed him to save much of what he earned. Finally, his experience and his savings reached the point where he was ready to start out on his own. He bought and quickly sold restaurants in Lexington, Nebraska, and in Iowa before settling on Kearney, a town with growth potential and not much competition. It had a college that he envisioned as a source of cheap, smart labor, a handful of Greek families that would make him feel at home, and a vacant lot downtown near the railway station. He bought it and built the Central Cafe, whose sign was a beacon not only to the travelers who passed through Kearney but to its townspeople as well.

"Home of Fine Foods Since 1923," read that sign in inexhaustible neon. That was the year my father opened the cafe. It stayed open twenty-four hours a day, and for twenty-five years it would literally never close. He married my mother a year later. Two years after that I came into the world, and by 1934, when I was eight, I was counting out change to my father's customers.

My biggest challenge as a boy was trying to fit in. But fitting in was really tough, because I wanted to be 100 percent American while my parents clung to their Greek customs. They pulled furiously one way, I the other. All children struggle to escape their parents so they can define themselves, but mine had roots deep in another world.

George and Venetia

My father was George Peterson, which was not the name he was born with. That was Georgios Petropoulos, the surname literally translating into "Peter's son," and often over the years he told me he deeply regretted changing it. "I wouldn't want anyone to think I wasn't proud of our race," he said. In the scheme of things, however, he kept the more important thing he brought from the Old Country, his bedrock values.

He was from a town called Vahlia, in the mountains of the Peloponnesian Peninsula in southern Greece. It was a poor town, and his family was among the poorest. His father, Peter, for whom I am named, according to the family lore preferred sleeping under an apple tree to working and would move only to find a new patch of shade when the shifting sunlight hit his eyes and woke him up. His indolence did nothing to diminish the imperial tendencies of his wife, my grandmother Nicoletta, who upon meeting new people would offer her hand to be kissed. They tried to keep a garden, but rainfall was sparse and water had to be carried in buckets from a nearby stream. They kept chickens, which provided eggs, and goats, which provided milk, and when a new baby was born in the family, a goat was slaughtered over the protests of the children, who had made pets of the animals. My father had six brothers and a sister, and they all slept on straw mattresses crowded together on the floor of the family's two-room house or, if the weather was good, outside in the yard. Regardless of the season, none of them wore shoes. The shoes their parents wore were fashioned from discarded tires. They told time by the sun since they could not afford a clock, and on cloudy days relied on guesswork.

School was an afterthought. Girls could expect six years of education. Boys might reach higher, but only if they paid a price. They would have to leave home at the beginning of each week, walk thirty miles to a larger village that had a more advanced school, and live in a hostel with other boys until the weekend when they could walk home again. This was not my father's lot. For his older brothers who went off to school, my grandmother would bake a loaf of bread and score it with a knife five times, to let them know how much—or little—they could eat each day with slices from the block of cheese she gave them from her homemade stores. At some point, they started dreaming of America.

My father's older brother Nick was the first to make the passage. By 1912, he had a job at a meatpacking plant in Milwaukee and could send money for my father's ticket. The Titanic sank that year, but my father's trip was uneventful in his fetid quarters deep in the ship's bowels where he longed to breathe fresh air. He entered America through Ellis Island and headed to Milwaukee to meet up with Nick as soon as he cleared the immigration hurdles. His first job, at a fruit stand, fell through because he could not understand the customers; if asked for "a couple of apples," he would heave a sackful on the counter. Soon, however, Nick got him a job at the meatpacking plant. It was the starting job from hell, feeding cattle hooves and horns into grinding machines to be processed into fertilizer, the kind of job that to this day immigrants are willing to do because their foothold in America is that precious. Choking dust rose from the machines; the men fed them with one hand and clamped damp rags over their noses with the other, which was murder on their arms and shoulders. My father almost gave up and headed home. But he stuck it out and moved up to cutting meat, learning the fine points of reducing cattle and hogs to roasts and chops with very little waste. When he moved on to the railroad job, he changed his name to Peterson, as Nick had done before him. If he was sorry for it later, he could blame the Union Pacific timekeepers who claimed they could never understand him when he said Petropoulos. And as he grew into his twenties and cooked for railroad laborers and circus folk and saved money and set his sights on building the cafe, he waited for someone to marry.

My mother, Venetia Papapavlou, lived in Niata, in southern Greece southeast of Sparta. The Papapavlous had prospered by comparison with the Petropoulos clan. Yanni Papapavlou—or Big John, as her father was known—had land and a big house. Like everyone else in the village, he had no electricity or running water. Rain supplied drinking water that was stored in big clay pots called amphorae, and there was a cistern that provided water for the garden so that no one had to haul water from a stream.

Olive, almond, fig, orange, and lemon groves, wheat fields, and vineyards dotted the landscape beyond the house. Only the olive groves qualified as a commercial operation. Big John had an olive press and used the proceeds from the oil to purchase more olive groves. He paid his workers with the very crops they harvested; the olive pickers were paid one bushel of olives for every four they picked, which he would then press into oil for them. The men who picked grapes and stamped them to make wine kept much of it for themselves and sold the rest.

My mother remembered an abundance of food prepared by her mother, Demitroula. Hungry neighbors always knew they would be fed, and her father's generosity extended to the local schoolhouse, where he would hand out small cloth bags filled with a mixture of sun-dried raisins, fruit, and almonds. On weekends this became the stuff of barter and a social life, with Big John hitching up his horses, piling his children—known collectively as Little Big Johns—into the wagon, and driving to town to trade the bags of fruits and nuts for other goods. If there were any bags left, he would give them away rather than carry them back home.

John and Demitroula had an easy, bantering relationship. His was the only horse-drawn wagon in Niata, and he always insisted that she ride in the front seat with him as he drove, a rare display of gender equality in that place and time. But he also warned her, laughingly, that if she got too big for her britches he would assign her to "live spotter" duty in front of the horses, a reference to the dangerous job of locating the land mines that littered the countryside after Greece's past wars. Of course he never did carry out his threat.

His generosity was deep. He had an old neighbor, Stavros, who depended on his donkey, called Kitso, or "helper," to gather wild berries and tsai, the Greek mountain tea also called shepherd's tea. Stavros sold some of what he had gathered for a few pennies or traded it. Returning from church one Sunday with three of his children, Big John heard a commotion as they were passing Stavros's small house. Stopping to inquire, he found Stavros berating his donkey, which had died. "Look what Kitso did to me," Stavros cried. "How could she do this to me?"

Big John agreed that Kitso was a thoughtless beast but joked that she had never done such a thing before. Stavros, not amused, ordered him off his property forever. John hustled away, bought another donkey, and returned the next day to present it as a gift from all the Papapavlou children. They were there as their father knocked on the old man's door and they saw how, still furious, he again ordered Big John off his property. Sadly, Big John explained that his children would have to give the donkey to someone else. The old man was moved to take a look at the animal and then received it with gratitude, gushing with prayers that Big John would live a long and healthy life.

"You had better pray for an even longer and healthier life for your new Kitso," said Big John.

Life in Niata had changed. The young men began to leave for better jobs. Without them Big John could not cultivate his groves, and young women like mother had fewer chances of marrying. So the day came when Big John accepted that three of his children had little choice but to emigrate and join other members of the family already in America. On a mid-September day in 1920, eight years after my father had arrived in America, my mother, Venetia, her sister Patra and brother Demetrios (James), with his new wife Adamandia, boarded a ship called the Megali Hellas in Piraeus bound for New York. They had nineteen days of hell, with passengers falling sick all the way before they steamed past the Statue of Liberty and docked at Ellis Island on October 4, 1920. My mother, like my father, was seventeen when she first set foot in America.

And like him, she traveled halfway across the continent. With the small group of immigrant Greeks, she boarded a train for Fremont, Nebraska, west of Omaha. It was all mapped out. She was to work as a housekeeper for her Uncle John and Aunt Vasso Petrow and nanny to their three children. John was an entrepreneur who owned a restaurant and a J. C. Penney store in Fremont. It was he who had sent the money for her passage.Venetia quickly learned that she would pay a price for her journey to America. She cleaned house and cared for John and Vasso's children and toiled in his restaurant, too. There was no letup and she, like my father, dreamed of what now seemed like a golden past in Greece. But to return home would have been disloyal, and she forced herself to look ahead. After three and a half years, when she turned twenty-one, Uncle John decided it was time for his ward to marry. This could not have come as bad news to my mother.

The Nebraska Greek community was small and highly interwoven, and John knew where to find likely candidates for marriage to a beautiful and highly eligible young woman. One was my father, whose reputation for making a success of the Central Cafe had spread the 160 miles that separated Kearney from Fremont.

Three bachelors called simultaneously at John Petrow's house that day in late May 1924. One, to hear my mother tell it, was a version of Washington Irving's Ichabod Crane, gawky and tall, all limbs and knees and elbows. The second apparently was not memorable enough to recall. The third was my father, smelling of Aqua Velva aftershave, his jet-black hair combed straight back from his forehead and shining with a dose of Lucky Tiger hair tonic. As the bachelors sat in the Petrow living room, no doubt appraising one another, my mother served them water and fruit drinks and thus had a chance to imagine what might lie ahead.

"Which one do you want?" her uncle asked when she returned to the kitchen with the empty tray.

She and my father were married forty days later.