AARP's Clout, And Social Security

Potent Machine Pointed Against Bush's Proposed Changes

(CBS)  At the convention, actress Jayne Meadows was reaching out to her generation, at a booth, selling a product that helps older people get out of their chairs.

She wasn't the only one selling something there.

Dozens of companies set up booths pushing things such as low-cost insurance and health-care programs.

It's one of the fuels that keep the AARP machine running.

The group certifies every product at the convention as a good deal. In return, it gets a royalty, or fee, on every sale.

Those royalties add up to $300 million a year, about 40 percent of AARP's annual revenue. It uses the money to push its social agenda.

"We're not like a corporation," Novelli says. "All the money that we get from marketing goes into these social programs and goes into member-value programs. … So, as far as we're concerned, it's kind of a social-entrepreneurship idea."

Those programs help AARP members with legal, consumer and health issues.

They are run out of the group's headquarters, a 10-story building with its own zip code, not far from the White House.

The word goes out from there through a sophisticated communications machine.

First, there's AARP magazine, which goes to 22 million homes every month, the largest-circulation of any magazine in the country.

It tries to appeal to baby boomers with articles you wouldn't expect to see in a magazine for retirees.

For instance, Kevin Spacey, who is 45, isn't old enough to belong to AARP but is on an AARP magazine cover. Why?

"He talks a lot about taking care of his mother in her last days," says one of the magazine's editors. "He's never talked about it before. It's great for our audience."

AARP also communicates through a television operation and the radio.

AARP reaches some members on the Internet, and for those who prefer information the old-fashioned way, there's a huge automated direct-mail operation in Florida.

It's all run by Novelli, a 63-year-old who took over AARP after a long and lucrative career in marketing and politics. He's put the tools of his old trade to use for AARP.

Focus groups are one of those techniques, and he let Rather watch one.

Rather joined pollsters behind a one-way mirror as they watched and listened to members' concerns.

On that day, the topic was the high cost of prescription drugs.

"I have to have my prescription filled," said one participant, "let's say twice a month, and that's $30 right there. And that's a generic brand. I mean, something's gotta be done about this."

These members are not very happy about the Medicare prescription drug law passed, with AARP's support, in late 2003.

That measure is still a sore subject at AARP.

The Bush administration proposal provides, for the first time, subsidies for prescription drugs. But it also gives significant benefits to the drug and insurance industries. The bill passed Congress only after Novelli threw AARP's support behind it at the last minute.

Instead of cheers, the move brought Novelli a torrent of criticism from Democrats and members. But Novelli defends his decision.

"You get what is good, and then you build upon it," he says. "And that's where we're going. …(Supporting the bill) was the right thing to do. We're sure of that."

AARP is still trying to defuse some of that criticism, campaigning to change the part of the law that makes it illegal for Americans to cross the border into Canada to buy much cheaper prescription drugs.

But, Rather says, AARP is now waging a much bigger political battle, with much higher stakes: It is fighting Mr. Bush's plan to overhaul Social Security.

The president wants to let workers put some of their Social Security taxes into private retirement accounts. The theory is people will make more from investing in stocks and bonds than they would get in Social Security benefits.

The Washington buzzword for this kind of change is "privatization," and it's the ultimate taboo at AARP, where they believe Social Security should remain a guaranteed pension for all.

"We do not favor the idea of taking money out of Social Security to create private accounts," Novelli states flatly. … It would introduce all this risk into a system that doesn't need risk. …To introduce risk into the bedrock retirement system of the country is not a good idea."

The risk, Rather says, is that any investment can go down just as easily as up. Just ask all those dot-com zillionaires in the '90s about that.

There is no individual risk in the way Social Security works today. Everyone is guaranteed a monthly check, no matter what happens to the stock market.

In his last state of the union address, Mr. Bush made Social Security reform his top domestic priority. Since then, he's campaigned in nearly 40 cities, trying to persuade voters that privatization would keep Social Security solvent.

As far as AARP is concerned, the White House wants to fix something that isn't broken.

The group has spent millions trying to persuade the public of that, as well as Congress.

Novelli, and many economists, say Social Security will be solvent for another 35 years. And minor changes today will keep it solvent for decades beyond that.

"In your judgment," Rather asks Novelli, "is Social Security in dire straits, in deep trouble right now?"

"No, no. It's not in crisis. But, it does need to be strengthened … for future generations. And if we take steps now, it'll be a lot less painful than if we wait until later."

So far, AARP seems to be winning the battle for public, and political opinion. Polls show only one-quarter of Americans approve the president's handling of the issue. And leading Republican senators are, so far, unwilling to embrace privatization.

AARP says the battle isn't over yet, but Novelli is optimistic, saying, "We do have clout. But, the clout comes from our members. It's because they vote. It's because they're politically active."