AARP Looms as Key Player in Deficit Panel Debate
Policy + Politics

AARP Looms as Key Player in Deficit Panel Debate

With only three months left for President Obama’s deficit commission to agree on proposals for cutting the deficit, one question looms especially large: What about the AARP?

The giant advocacy group for older Americans – once known as the American Association of  Retired Persons -- has tens of millions of members, a powerful lobbying organization and a nationwide ability to mobilize at the grass roots.

It also has an all-consuming interest in protecting Social Security, and it increasingly appears to be on a collision course with the 18-member deficit panel. “If there is an 800-pound gorilla on Social Security, it is the AARP,’’ said Robert L. Bixby, executive director of the Concord Coalition, an advocacy group that supports fiscal discipline.

The panel’s two co-chairmen, Erskine B. Bowles and Alan Simpson, have both warned that Social Security is on a path to insolvency and signaled that any fix should involve both cuts in future benefits and increases in the payroll tax.

Simpson, a former Republican senator from Wyoming, created an uproar last week with disclosure of a letter he wrote suggesting that many seniors take advantage of Social Security and that the retirement program was like a “milk cow with 310 million tits.”  Before that, Simpson had repeatedly warned that Social Security was already nearly bankrupt. Bowles, the Democratic co-chair and a former Clinton Administration chief of staff, has used less flamboyant language but also warned that the system is unsustainable.

An army of defenders, including the nation’s labor unions, has already begun a boisterous public campaign to protest the commission’s activities. 

But AARP may be the one player that can almost single-handedly block -- or enable -- changes to Social Security. 

A Nonpartisan Approach
And while the group is a ferocious opponent of cuts in Social Security benefits, analysts say its position is more nuanced and less partisan than many other advocacy groups on the right and the left. If there is any hope for a bipartisan agreement on Social Security, they say, it will need the AARP’s support.

Like many liberal groups, the AARP is against measures to cut Social Security as a way of reducing the budget deficit, which the group says it didn’t cause. But the group has signaled an openness to adjusting the program’s tax revenues and spending in order to shore up its long-term fiscal stability.

“Everybody understands there’s going to have to be some kind of change, and we’re willing to have a broader discussion about that,’’ said David Certner, AARP’s legislative policy director. “What we don’t like is when we are talking about a Social Security solvency package, and the discussion is all about reducing the  deficit, which Social Security didn’t create.”

Indeed, the group has played a pivotal role in every major political battle over old-age entitlement programs during the past quarter century. In 1983, when the Social Security trust fund was just a few months away from bankruptcy, the AARP supported increases in payroll taxes and gradual increases in the retirement age.

In 2003, the AARP broke ranks with many liberal groups and provided crucial support for a Republican bill to provide prescription-drug benefits under Medicare.

But in 2005, senior citizens groups waged a massive and successful campaign to sink President George W. Bush’s proposal to convert part of Social Security to a system of private investment accounts.

In a muscular show of its clout, AARP tripled its spending on lobbying that year, to $36 million,  and ran a heavy advertising campaign as well. Perhaps equally important, it galvanized its vast membership to put pressure on lawmakers across the country. Bush abandoned his effort before he had even proposed a specific bill.

A Lower Profile, For Now
This year, AARP has kept a lower profile. It is not a member of Social Security Works, a coalition backed by major labor unions and a long list of liberal advocacy groups,  that has fiercely  criticized Obama’s deficit panel. Nor is AARP planning a broad publicity campaign to warn against cuts in Social Security, as several other groups are.

AARP officials say they won’t hesitate to fight major cuts in Social Security. But they have kept their distance from the fray  in part because many of the more vocal protests are “partisan” and aimed at influencing the November midterm elections. By contrast, they say, AARP members include a broad mix of Republicans, Democrats and independents.

At the same time, AARP officials have been cold to the Simpson-Bowles commission. Last year, the group helped defeat a Senate bill that would have created a deficit commission similar to the one President Obama created by executive order. Earlier this year, AARP quietly declined to testify at a commission hearing that was open to any groups that wanted to express a view – the only such hearing the commission plans before submitting its final recommendations to President Obama and Congress late this year. It also joined liberal groups in a letter asking the panel to be more open in its deliberations.

Though the group stopped short of demanding Simpson’s resignation following last week’s controversy, it warned that his comments represented a “departure from reality” and “give us little confidence the commission can fairly look at important programs such as Social Security.”Simpson apologized for his comment last Wednesday, saying he had made a “doozy’’ of a mistake.

Top AARP officials say they have long agreed that Social Security has long-range financial problems. And they have suggested their openness to modest adjustments that would put the program back on sounder footing.  But AARP officials remain opposed to most proposals for cuts in benefits, and see little hope of  finding  common ground with the deficit panel. “The deficit commission is looking at spending cuts,” Certner said. “They are only looking at the solvency part of the equation. We should be looking at how to strengthen income security.”

The Dwindling Social Security Surplus
Social Security has run big annual surpluses since the early 1980s, but annual outlays are beginning to exceed annual revenues from payroll taxes. And while the Social Security trust fund has an accumulated surplus of $2.5 trillion, payouts for benefits will increasingly squeeze the rest of the federal budget because the government will have to pay off Treasury bonds held by the trust fund. If no changes are made to either benefits or payroll taxes, the program’s trustees predict that the trust fund itself will be exhausted by 2037.

Indeed, AARP officials have suggested changes on several occasions. In the late 1990’s, at the request of the Clinton Administration, the group held a series of forums on Social Security with the Concord Coalition.  (The Concord Coalition receives some of its funding from the Peter G. Peterson Foundation. Peter Peterson separately finances The Fiscal Times, an independent digital news and opinion service.)

The AARP and the Concord Coalition came close to agreeing on a package of changes that had support from the Clinton White House and key Republicans in Congress. But hopes of a deal crashed when Clinton became swamped by the Monica Lewinsky sex scandal.

In 2007, after President Bush abandoned his campaign for partly converting Social Security to private accounts, AARP officials again pushed for a discussion of modest adjustments. The group’s surveys of older citizens showed support for raising extra revenue by raising the ceiling on the amount of annual wages subject to payroll taxes. (The ceiling, which is adjusted each year for inflation, is currently $106,800.)

“AARP always tried to take a rational approach,’’ said William D. Novelli, who stepped down as the AARP’s president last year and was succeeded by A. Barry Rand. “They believe you have to work both sides of the equation. Everything has to be on the table.”

Related Links:
AARP, Dems Lobby Older Voters on Health Care Law (The Hill)
AARP Lobbying Expenditures (Open Secrets)
Focus on Social Security (The Fiscal Times)