01/08/2011 10:24 am ET | Updated May 25, 2011

Pete Peterson's Crusade to Cure the Global Debt Bubble

Peter G. Peterson, founder of Blackstone, the private equity giant, and former chairman, Lehman Brothers, backed by the support of 55 former US officials, is calling on president Obama to instantly organize a bipartisan effort to deal with the nation's debt and bloated federal budget.

In a personal interview with me in late December, Peterson, chairman of his own foundation, admitted, "What I fear is that we need a crisis to educate the public on the seriousness of the problem. What I hope is that the president will decide this is a major national issue, spell out what needs to be done, and what kind of a future we want."

Peterson is adamant; "We need a positive view of the kind of America will emerge," he told me. "We need an elevated national dialogue leading to a bipartisan agreement."

If not, the former secretary of commerce in the Nixon administration warns, "The implication if we dont do something is clear. The interest costs will begin to consume the budget."

Indeed, a study commissioned by the Peterson Foundation shows that by 2027 interest on the federal government's debt will be the largest item in the budget -- far more than the amounts spent on education, infrastructure and research and development.

By 2055, if there is no reform, the interest expense for servicing U.S. Treasury debt will require 100% of the US government's tax revenues, according to figures supplied by the Peterson Foundation.

Peterson is plainly worried about the nation's debt weakening its influence in global politics. "If the current trends continue, the exploding amount of U.S. debt owned by foreign lenders leaves us vulnerable to their economic and political demands," his latest report suggests.

Peterson recently polled 55 former treasury secretaries, former members of the Council of Economic Advisers, former Federal Reserve Board governors and previous directors of the Office of Management and Budget -- and was heartened that to a man they agreed wholeheartedly with him that the long term structural financial outlook of the United States is not sustainable unless there are major cuts in the federal budget as well as tax increases.

Now, he is trying to organize a global pressure group made up of other nations with too much debt and too large an elderly retired population to tackle solutions for this widespread quandry in a unified fashion. The Peterson Foundation is preparing projections for debt servicing across the globe and trying to estimate the total costs for funding the aged everywhere -- to show that the rising cost of medical care and social security plagues more than just the U.S.

The painful lesson; to underscore there are going to be far fewer taxpaying citizens and that as a result -- social insurance programs all over the world are not being funded sufficiently.