AARP on Social Security: A Game-Changer for Entitlement Programs?

Progress in the Social Security funding debate could reshape discussion about our entitlement programs.

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Following intense critique from fellow activists, AARP backtracked on comments made by its policy chief, who hinted that the organization might consider cuts to Social Security benefits as part of the program's funding reform. Historically, the organization has been one of the fiercest opponents of any cuts to the program, which is projected to exhaust its funds by 2036.

"AARP is as committed as we've ever been to fighting to protect Social Security for today's seniors and strengthening it for future generations," AARP's CEO A. Barry Rand said in a statement. "Contrary to the misleading characterization in a recent media story, AARP has not changed its position on Social Security."

[In Pictures: 10 Places to Retire on Social Security Alone.]

Rand's statement came in response to comments by AARP's policy chief John Rother that were reported in the Wall Street Journal on Friday, indicating the organization was dropping its longstanding opposition to cutting Social Security benefits. "The ship was sailing," Rother told the Wall Street Journal, and added that changes were inevitable for the program. He also said AARP wants to be at the helm of the dialogue to minimize any negative impact that proposed changes to Social Security could have on its members.

Alicia Munnell, who heads Boston College's Center for Retirement Research, wasn't surprised by the organization's seemingly sudden change of heart. "I think it's an organization that's trying to be relevant, and just saying it cares about its constituents and saying 'we're never giving in on anything' [is] just not a way to be relevant," she says. "I think they think this program should be fixed sooner rather than later, and keeping a position that says no cuts under any circumstances means you can't really start a dialogue."

[See How to Maintain Your Lifestyle in Retirement.]

Experts say hidden between the lines of AARP's "new" stance is evidence that the most powerful lobby for older Americans could be coming around to the idea of compromise, which has the potential to reshape Washington's approach to revamping entitlement programs as a whole. U.S. News recently spoke with Bill Novelli, professor at Georgetown University's McDonough School of Business and CEO of AARP from 2001 to 2009, about the organization's latest comments and the future of Social Security. Excerpts:

Do Rother's comments represent a fundamental change in AARP's stance?

In my opinion, this is not a sea change for AARP. This is AARP trying to take the positions that it's held and move the ball forward, and that's what we need. Nobody has the silver bullet here. We have to sit down and negotiate and figure it out. They have been saying right along that they are open to the idea of figuring out ways to get to Social Security solvency, and that includes both sides of the equation: the revenue side and the benefits side.

The information that came out of AARP didn't surprise me. What surprised me was the way some of the policymakers and some of the special interest groups reacted to all this, acting as though it was AARP reversing itself, which I don't think it is at all.

[See How to Successfully Plan for Retirement.]

What prompted these comments on Social Security now?

AARP is basically doing what they always do. They're trying to lead, they're trying to be constructive, they're trying to make positive contributions to this huge debt and deficit debate. Social Security is one of the ways in which you really could solve a problem, and that could be a catalyst for taking on the tougher [problems].

We've got to have Social Security solvency and we've got to do it with adequacy and fairness. You've got to take longevity into account. People are living longer. You need to make Social Security progressive—it's a safety net, and I think that they've recognized this all along.

Raising the [payroll tax] cap has been something talked about all along. Even in 2005 when President Bush tried to carve private accounts out of Social Security, even then he implied he would be willing to talk about a raise in the cap.