As Medicare and Social Security have come to account for about a third of the federal budget, some former AARP officials say it is increasingly risky for the group to try to wall off the programs from cuts.
AARP, the lobbying powerhouse for older Americans, last year made a dramatic concession. Amid a national debate over whether to overhaul Social Security, the group said for the first time it was open to cuts in benefits.
The backlash from AARP members and liberal groups that oppose changes in the program was enormous — and this time around, as Washington debates how to tame the ballooning federal debt, AARP is flatly opposed to any benefit reductions for the nation’s retirees.
AARP’s rejection of any significant changes to the nation’s safety net could be a major factor as policymakers seek a deal to put the government’s finances in order through raising taxes and cutting spending on federal programs, possibly including popular entitlements such as Medicare and Social Security.
Republicans say scaling back Social Security and Medicare, the largest drivers of future government deficits, is necessary. President Obama has previously been open to benefit cuts.
But for lawmakers who would have to vote for such changes, AARP’s 37 million members and $1.3 billion budget are a force to be reckoned with. In the past eight months, AARP has sponsored a series of candidate debates, run television ads, circulated questionnaires and held more than 4,000 meetings around the country to mobilize its legion of supporters to oppose any cuts.
Under the slogan “You’ve earned a say,” the group has been building opposition to entitlement changes. A recent poll by the organization found that 70 percent of Americans 50 and older think Medicare and Social Security shouldn’t be part of the upcoming fiscal debate.
“We’re fighting to stop cuts to Medicare and Medicaid that will hurt beneficiaries,” said AARP’s top lobbyist, Nancy LeaMond. “We want to ensure that Social Security is not part of this deficit discussion.”
Leading bipartisan proposals to reduce the federal debt have proposed changes to entitlement programs, including raising the Medicare eligibility age from 65 to 67 and adopting a stingier formula to determine Social Security payments. Both proposals were discussed during secret negotiations between Obama and House Speaker John A. Boehner (R-Ohio) in summer 2011 during efforts to resolve the country’s debt ceiling crisis. Those talks collapsed without a final agreement. But many political observers expect the proposals to resurface as Democrats and Republicans try to reach a deal to avert the “fiscal cliff” — the government spending cuts and tax increases set to kick in at the beginning of next year.
AARP opposes raising the age for Medicare eligibility on the grounds that it would increase costs for younger seniors while driving up premium costs for older ones. The group opposes efforts to shrink Social Security cost-of-living increases, which it says would cost older seniors thousands of dollars in benefits.
AARP’s critics say it is looking out for current retirees at the expense of future generations.
“We’ve been stealing money from our children, and one of the main reasons that we’ve been unable to stop is that AARP is so opposed to any change to the entitlement programs and they’re politically powerful,” said Kevin A. Hassett, an economist at the American Enterprise Institute.
But AARP argues that it is protecting benefits vital to both current retirees and younger Americans. With the demise of guaranteed pensions in the workplace and the inability of many workers to save enough for retirement, Social Security and Medicare are increasingly indispensable.
“You have people in their 40s and 50s who are cascading toward a terrible retirement,” said Eric Kingson, a Syracuse University professor who co-chairs Strengthen Social Security, a coalition that has joined AARP, organized labor and others in opposing any benefit cuts in the program.
AARP and others say the recent economic downturn has made it even more urgent to protect entitlements. Households with adults approaching retirement have median retirement savings of $120,000, about the same as 2007, according to the Center for Retirement Research at Boston College. But balances for younger workers have shrunk, meaning that more that half of all Americans could see their standard of living decline once they retire, the center said.
A recent issue of the AARP Bulletin — the largest circulation magazine in the world, sent to all its members — warned seniors that the proposed change to Social Security previously embraced by Obama and Republicans could cost “a potential cumulative loss of thousands of dollars.” The organization followed that with a letter to all members of Congress cautioning against Social Security changes.
Dozens of Democratic senators are vowing to protect Social Security — including Sen. Majority Leader Harry M. Reid (D-Nev.), who has said any changes to the program should not be considered as part of the upcoming debate over the fiscal cliff.
This would not be the first time that AARP has applied its political muscle with decisive effect.
The group’s backing was influential in passing what liberals called a flawed Medicare prescription drug plan in 2004. Then, AARP’s opposition doomed President George W. Bush’s proposal to partially privatize Social Security. And its support was instrumental in helping to enact Obama’s health-care overhaul, which reshaped parts of Medicare.
“It is the 900-pound gorilla,” said Frederick R. Lynch, a Claremont McKenna College professor who wrote a book about the organization. “All AARP has to do is whisper.”
But as Medicare and Social Security have come to account for about a third of the federal budget, some former AARP officials say it is increasingly risky for the group to try to wall off the programs from cuts.
Aware of growing political support for entitlement changes, even among traditional Democratic allies, AARP signaled a shift in thinking last year. John Rother, then AARP’s top lobbyist, said at the time that the organization was open to benefit cuts for Social Security recipients. This was widely viewed as a major departure for the group and welcomed by some as refreshingly realistic. But the statement caused a furor among the many interest groups opposed to such a change.
Soon afterward, Rother left AARP. He says it’s important for AARP to advocate for its position but also to be flexible.
“You want to be perceived as being a strong advocate, but at the same time your long -term interest is in solving a problem,” he said in an interview. “The art, if you will, is to make sure that you are operating and messaging in such a way as to get the best possible results for your members within the context of solving the problem.”
Rep. Nan A.S. Hayworth (R-N.Y.), who has spoken with AARP officials about their policy, said she wishes the organization would do more to talk to its members about the financial challenges facing entitlement programs rather than simply opposing cuts.
“I think it’s important to have a mature conversation so we understand the challenges we face going forward,” she said.
In 25 years, spending on Medicare and Medicaid is projected by the Congressional Budget Office to equal 10 percent of the economy — double the current percentage. In the same period, Social Security spending is expected to rise from 5 percent of the size of the economy to 6 percent, mainly as a result of the retirement of baby boomers.
LeaMond, AARP’s top lobbyist now, said that Medicare savings can be found by slowing the growth in health-care costs and that Social Security can be strengthened without cutting benefits, though she did not say how.
She said AARP members care deeply about the long-term solvency of the programs even if they don’t want to bear the brunt of the cost of fixing them.
“If the critics spend anytime with our members, you cannot help but be struck by their powerful sense of legacy,” she said. “They want to leave Medicare and Social Security as strong for their kids and grandkids as for them.”