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TheDC Analysis: AARP, Dems undermine younger workers’ retirement

Workers under age 45 will pay the price for AARP’s lobbying against Medicare and Social Security reforms over the past two decades in the form of reduced benefits, critics say.

AARP has been described as the “800-pound gorilla” in the Medicare and Social Security debates and has played a key role in blocking many pieces of major legislation aimed at restructuring Medicare and Social Security to prolong their lifespans for the past 20 years.

According to a 2003 Los Angeles Times op-ed by Dale Van Atta, former President George H.W. Bush described the 36-million member lobby as being extremely formidable and  “like ugly on an ape” when he opposed the group’s positions.

The group similarly demonstrated its power when it forced Bill Clinton to shelve his plan to cut $58 billion from Medicare to pay for his ill-fated 1994 health care package.

“They’re major role seems to be that of obstruction,” said Ryan Ellis, director of tax policy with Americans for Tax Reform. “The people being affected are not current AARP members, and for some reason they feel they need to obstruct and demagogue to curry favor with their membership.”

The Baby Boom generation’s retirement over the next decade will significantly increase Social Security and Medicare costs while simultaneously reducing the payroll taxes that will be needed to cover benefits.

“If you look at the big three entitlement programs, which are Medicaid, Medicare, and Social Security, they will eventually consume every penny in taxes by themselves, assuming we don’t increase taxes from the current 18 to 19 percent of the economy that taxes normally take,” Cato Institute scholar Michael Tanner said. “Those three programs alone will cost more than that. We could abolish all of the rest of the government and still not have enough money.”

The looming insolvency of the Medicare and Social Security trust funds has been well known since at least the mid-1990s when officials began warning the Boomers’ looming retirement threatened to bankrupt both systems, but politicians in Washington have lacked the resolve to fix the problems.

Ellis primarily blames Congress for the problems in both systems, but says AARP has been an accessory.

Former Fed chairman Alan Greenspan correctly warned as far back as 1996 that Social Security would not remain viable starting around 2010 because of pressures posed by an increasing number of beneficiaries being supported by a declining number of active workers.

Beginning “in the year 2012, the annual expected costs of Social Security are projected to exceed annual earmarked tax receipts, and the consequent deficits are projected to deplete the trust funds by the year 2029,” Greenspan said in a Dec. 6, 1996 speech at Philadelphia’s Union League.

“Medicare currently is in an even more precarious position than Social Security,” he continued.

Nonetheless, AARP and similar groups such as the National Committee to Preserve Social Security and Medicare have worked with congressional Democrats to preserve the status quo.

At the time of Greenspan’s speech, the Medicare trustees predicted the program’s Part A trust fund, which covers hospitalization for the elderly would be depleted by 2001.

AARP fought hard against bipartisan temporary Medicare fixes such as those found in 1997’s Balanced Budget Act (BBA), which successfully kept Medicare from collapsing in 2001 by cutting the rate of Medicare spending.

But the BBA did not address the looming problem of Medicare funding, which Republicans initially hoped to address in 2003 with their initial Medicare prescription drug package, which sought to reform the entire system.

The House version of the Medicare prescription drug bill contained a provision backed by conservatives like former Pennsylvania Republican Rep. Pat Toomey – who is now the Republican nominee for Senate in Pennsylvania — that would have encouraged price competition between the traditional Medicare program and private plans starting in 2010.