An article in Friday's Wall Street Journal has Social Security advocates angry and scratching their heads. It suggests that AARP -- one of the most powerful interest groups in Washington -- has done an about face on the question of cutting retirement benefits for seniors as part of a grand bipartisan bargain on shoring up the programs finances.
The change in posture, agreed to by AARP's board, has already sent shock waves through the Beltway's large and influential entitlement reform community. It's prompted calls from lawmakers and centrist and conservative groups for Congress to seize the initiative and agree to cut benefits. It's mobilized Social Security's strongest advocates against AARP, and it's prompted AARP to initiate a partial walk back -- a statement calling the story "misleading, but reiterating that the group could support Social Security reforms if they don't cause future retirees too much pain.
"It has also been a long held position that any changes would be phased in slowly, over time, and would not affect any current or near term beneficiaries," says AARP CEO A. Barry Rand -- in other words, the group could support some cuts, so long as they only impact people many years away from retirement.
But conversations with insiders suggest the Journal story, while mostly on point, underplays a key part of the story. What AARP decided doesn't necessarily constitute a change in policy, but rather a major strategic decision to announce their acceptance of those cuts now, while the legislative zeitgeist is about "fiscal responsibility", instead of later.
"It's terrible timing," says Roger Hickey, Co-Director of the Campaign for America's Future, and one of DC's veteran Social Security warriors.
In a big way, what AARP has decided doesn't surprise Social Security's progressive defenders. The two constituencies have had a complicated, sometimes icy relationship. But they have allied recently behind the idea that Social Security should not be dealt with in the current fight over budget deficits. AARP has reopened the rift by making this strategic shift -- to blink as a signal to tax-averse conservatives that they'll play ball on a stand-alone Social Security deal if revenues are on the table.
The Journal article quotes AARP's top policy guy, John Rother, supporting the decision. "The ship was sailing. I wanted to be at the wheel when that happens," he said.
But multiple sources note that Rother's long wanted this outcome, and had aligned himself with an influential faction in the White House that supports a deal on Social Security that includes benefit cuts and revenue increases -- to make the program more sustainable and to signal to U.S. creditors that the country can manage its budget.
One of those sources is Eric Kingson, Co-Chair of the Strengthen Social Security Campaign, and Co-Director of the Social Security Works coalition.
"I think AARP is moving in front of its constituency, I think they're going to get burned," he said "The damage has been done, the message has been delivered.... Even if you think you eventually give ground on Social Security, this is terrible timing -- a terrible mistake."
Top officials at AARP disagree.
Quoth Rother: "[S]ome of our members will no doubt be upset by any such effort, but I believe most would welcome a balanced and fair proposal that could strengthen the program for future generations and possibly even improve it for current vulnerable beneficiaries."
Here's how the Journal describes the reforms AARP is willing to accept:
The group will accept cuts, but won't champion them, and it is particularly leery of certain concepts such as eliminating benefits for wealthier recipients.
It wants tax increases to fill most of the program's financial hole, and it insists that a deal must be crafted apart from broader deficit-reduction negotiations.
That's very much in line with the stated view of senior administration officials who have been pushing Social Security reforms for much of President Obama's first term.
"The ideal thing is to get more realists to use their enthusiasm for deficit reduction -- their professed enthusiasm for deficit reduction -- to lock them into the reality that something on revenues has to be part of the solution, and to make sure that nothing's done on entitlements that's damaging to our interests without making sure that revenues are on the table in a meaningful way," noted one senior Treasury official at a background roundtable with reporters several weeks ago.
At the moment, Social Security is off the table in Congressional negotiations, led by Vice President Joe Biden, to raise the national debt limit, and cut federal spending. That's because Republicans continue to oppose any new revenues for the program. But there are signs of a last minute push to foist Social Security into the mix -- or at least take it on while the going is good.
At a Capitol press briefing Thursday, retiring Sen. Kay Bailey Hutchinson (R-TX) introduced a new plan to cut benefits by raising the retirement age and paring back cost of living adjustments.
"If we all do it together then there's not going to be the cheap shot stuff like savaging Paul Ryan because he made an attempt on Medicare," she said. "Someone has to write the first draft, always pity the first draft writer because then everyone jumps in and makes it look like it wasn't a good draft but it was, starting is good."