AARP's America Is a Mirage

By Robert J. Samuelson
Wednesday, November 16, 2005

Dear Robert J. Samuelson,

Our records show that you haven't yet registered for the benefits of AARP membership, even though you are fully eligible. . . . I look forward to your joining us.

Sincerely, William D. Novelli, Executive Director

Among AARP's 36 million members, there must be many decent people who benefit from the 5 to 50 percent discounts offered on car rentals, hotel rooms and airline tickets. But I won't be joining, because AARP has become America's most dangerous lobby. If left unchecked, its agenda will plunder our children and grandchildren. Massive outlays for the elderly threaten huge tax increases and other government spending. Both may weaken the economy and the social fabric. No thanks.

Anyone who's watched the steel and auto industries can visualize AARP's America. In those industries, companies and unions unrealistically agreed to overly generous pensions and retiree health benefits that, as the number of retirees multiplied, overburdened the companies. Now past promises collide with present economic realities. Workers and retirees suffer. Wages and jobs are cut; so are pensions and retiree health benefits. On a much larger scale, that may be America's fate.

AARP (which once stood for the American Association of Retired Persons) had a budget of nearly $900 million in 2004. It stays in contact with its members through a monthly newspaper, two bimonthly magazines and an e-mail list of 2.5 million political activists. Robert Bixby of the budget-watching Concord Coalition says that, aside from the president, only AARP can set the terms of debate on federal retirement programs, meaning mainly Social Security, Medicare and long-term care through Medicaid.

AARP would have you believe that it's trying to balance the interests of retirees and workers. It has just released a report, "Reimagining America," that rightly poses these questions: "Can America afford to grow older? And can we do so with intergenerational fairness -- that is, without burdening our children and grandchildren with the bills?" It then spends 41 pages not answering those questions. On the one hand, it concedes that "as a nation, we are not now ready for the retirement of the baby boomers." On the other, it argues that "the problem is overstated." Nowhere will you find a precise agenda of what ought to be done.

Overstated? Well, Social Security, Medicare and Medicaid constitute more than 40 percent of federal spending. Given the baby boom, longer life expectancies and rising health care costs, these programs are projected (by the Congressional Budget Office and others) to grow by about two-thirds or more during the next 25 years. To cover these costs, we'd have to do one of the following: Raise all federal taxes by 30 to 50 percent (depending on whether today's budget were balanced); eliminate defense spending and 30 percent of other federal spending, excluding interest payments; run budget deficits three times present levels.

This year AARP spent $25 million, mostly on TV and print ads, to defeat President Bush's proposal for "personal" Social Security accounts. The punch line of one ad is revealing: "If you have a problem with the sink, you don't tear down the entire house." Translation: The problems of today's retirement programs resemble a clogged sink; "personal accounts" are a radical solution, akin to demolishing the house. Only modest tinkering (fixing the sink) is needed. Brilliant imagery -- and totally misleading.

Like AARP, I oppose personal accounts. But I do so because they divert attention from the basic problems and don't do much to solve them. It isn't just the sink that's clogged; the roof is leaking, the porch is sagging and the wiring is faulty. Unless we renovate the entire house, it will become uninhabitable. That is, we need to rewrite the social contract to reflect improved health and longer life expectancies: Americans need to work longer, eligibility ages for Social Security and Medicare need to be raised gradually, and benefits for wealthier retirees should be reduced.

If we'd started 10 or 20 years ago -- when the problems were equally obvious -- changes would have been easier. The longer we delay, the harder they'll be. But delay is AARP's program. As to the future, its stock answer is: Fix health care. A less costly and more effective health care system would control Medicare and Medicaid spending. True. But several decades of loud calls for a more efficient and effective health care system haven't yet created one. Meanwhile, the question remains: Who pays? AARP expects younger taxpayers to bear most of the burden.

Where's the generational fairness? There are several theories to explain AARP's behavior. One is cynicism. AARP aims to maximize members' benefits; the talk of generational fairness is PR. Another theory is that AARP is scared of its members. Any talk of future benefit cuts might trigger a firestorm. Even when Congress passed the new Medicare drug benefit in 2003, many AARP members protested. They thought the benefit too stingy or objected to any alliance with Bush.

Either way, AARP's America is an illusion. Sooner or later, it will be overtaken by demographic and economic realities. The reluctance to begin refashioning benefits -- focusing more on the neediest and oldest Americans -- will compel more wrenching benefit cuts later. By their abruptness, these will be unfair. But even these cuts won't spare younger workers from higher taxes or cuts in other programs. Like autoworkers and steelworkers, we will learn that we could ignore the future but not avoid it.

© 2005 The Washington Post Company