The Republican Party Investigates AARP's Controversy Tax-Exempt by Valerie Read
In the first chapter of the book ‘The Interest Group’ by Jeffrey M. Berry the definition of an interest group was an organization of people who shared the same ideologies, agendas and strategies who work together to change the political system through lobbying or political parties. Since interest groups can’t be part of the government they can work within political parties to help support their issues (1). One of these organizations is American Association of Retired Persons or AARP. AARP stands as a representative for the elderly American citizens to protect their rights in health-care, social security and a chance to live a better life over the age of 50 (2). AARP has faced many problems within their lobbying and business practices. Now, during the biggest fight on Medicare benefits for the elderly, AARP stands back because fingers are being pointed by the Republican Party.
AARP has been questioned by the Republican Party if they are a non-profit organization or corporation. Their business practices have been questioned when the Republican Party started an investigation in their tax exempt status. AARP foundation as a 501 (c) 4 organization is allowed to engage in the electoral process but it shouldn't be their primary goal as a nonprofit (1). The AARP Corporation and the AARP foundation are two separate entities, but the Republican Party sees them as only a corporation who shouldn't have special consideration to receive a tax exempt status from the US government. AARP Inc. is the second largest source of income to AARP foundation where donations up to $28 million are contributed. Charity donations of $11 million from American Express Foundation, Anheuser-Busch and Time Warner and EPA (Environmental Protection Agency) donated $20 million (6). Under the Lobbying Disclosure Act of 1995 AARP foundation is eligible to receive funds from federal grants. As a charity listed under the 501 (c) 3 any charity that doesn't engage in lobbying is eligible to receive federal grants because AARP foundation is separate from AARP Inc. who has a board of directors and staff (6). This sudden interest in AARP foundation stopped the interest group from helping in the fight against the new plan proposal by Paul Ryan (R-WIS) to cut back in Medicare benefits and convert it to a system of government subsidiaries for private insurance (3). AARP used Grassroots lobbying in emailing 126,000 members to organize them to rally at the state capital to oppose the new budget plan. This tactic will fire up AARP’s membership to organize a rally at the capital and put the fear into congress. Congress fears any retaliation from senior citizens who will not stand for the government’s interference in their Medicare and social security benefits (1).
AARP has been the ally for senior citizens when fighting with the government to protect their Medicare and Social Security benefits. Democrats stood back and waited to see what AARP would do besides standing aside during the investigation (3). The Republican Party’s investigation into their tax exempt status as a nonprofit organization has put AARP on their guard and this is one of the reasons why they hasn't used other tactics to get the attention of the media (3). This could be a situation that AARP can’t avoid.
AARP’s history as an interest group started 50 years ago to serve its members and speak out for those who don’t have a voice. It was founded in 1958 as a non profit, non partisan membership organization with an agenda to help support Americans over 50. Their offices are located in all 50 states including the District of Columbia, Puerto Rico and U.S. Virgin Islands (2).
AARP represent the vision to help set a standard of change in American’s society to respect the views of the elderly. AARP’s motto is to give the elderly a voice through representation for their care with the aid of social media which includes: AARP the magazine, AARP bulletin newspaper, AARP radio and television Shows (2).
AARP serves its members with purposive benefits that help elderly Americans to live a better live by offering a radio show for English and Spanish speaking senior citizens (1). An television show called ‘Inside E’ on public relations dealing with issues that affect Medicare and Social Security, and magazine style show called ‘My Generation’ where senior citizens can learn about new information on health, lifestyle, and health-care. (2).
AARP’s material benefits for its memberships are exclusive discounts, AARP the magazine, and the AARP website (1). The cost of a yearly membership fee for the US, Canada or Mexico is $16.00 and others who live in other countries the membership fee is $28.00 (2).
The interest group’s solidary benefits are the AARP foundation and charity that represents senior citizens in need of health-care who are low income (1). AARP’s services provide products in health, travel and financial services that includes health insurance, automobile and homeowner’s insurance, member discounts on rental cars, cruises, vacation packages and lodging, credit card, pharmacy services and legal services (2).
Its global network through nonpartisan and national organizations helps to improve the life of elderly and their needs in other countries. NRTA (National Retired Teachers Association) is a division of AARP for educators and school personal. They team up with the youth to help the elderly in their community (2).
AARP’s entrepreneur benefits are its research in aging related products, alliance with NGOs (Non Government Organizations) and GOs (Government Organizations) on improving the needs of the elderly across the globe (45). The National Event for Life@50+ and AARP’s National event & Expo brings information and entertainment to its 27,000 members and nonmembers annually (2).
AARP represents the interest of the senior citizen over 50 and posts bulletins on their website about the issues that are facing them today. The $1.3 trillion budget deficit was brought up as a major voter concern because it would cut defense spending by $100 billion, raise the price of gasoline tax by 15 cents, lower the corporate tax rate by 26 percent and limit their deductions for the home mortgage interest (5). Its affect on jobs would trim the federal workforce by 10 percent and cut subsidies for farms. Obama would extend the Bush’s tax cuts at all income levels for two years, preserve benefits for long-term unemployment and cut pay-roll taxes for employees for one year. This budget deficit would affect health-care by slowing down funding and small provisions. Medicare would be affected by the lack of savings and declining of pensions by the number of unemployed, and it would increase the social security full retirement age to 68 (5).
Another story revealed the state government budget crisis in California and Pennsylvania. The largest share of state revenue is 43 percent that comes from general funds, state income and sales tax. State programs that funded healthcare and living assistance to the elderly were being reduced due to the lack of revenue from the general funds, state income and sales tax (4). Medicaid covers one in twenty Americans and is the nation’s biggest payer of long-term care for the elderly by covering 40% of nearly $180 billion a year (4). Any Medicaid program is a federal-state funded program that prohibits restricting of income eligibility standards, but California Gov. Jerry Brown (D) signed an $11.2 billion dollar bill to reduce benefits for the poor, sick and elderly. The state of California reduced numbers of hours paid to aides for the Adult Day Healthcare Program who help the elderly bathe, dress and eat (4).
Some states dropped optional state programs that paid for eyeglasses, adult dental care, reduced payments to doctors, hospitals and nursing homes. This affected programs such as Age Well a nonprofit that provides range of services of seniors in Orange County. The program has 300 centers statewide and serves 27,000 elderly (4). The cost for each patient is about $72 to $86 a day paid by Medi-Cal (California Medicaid). These services assisted older people with health problems to help manage their health at home with medical treatment, physical therapy, social services and meals (4).
The cut backs in state funded Medicaid programs affected the Medical Assistance Transportation Program in Crawford County located in Meadville, PA run by program director, Cindy Hall. This program is funded by state and federal money with volunteers who drive patients to their doctor and treatment appointments. The volunteers are retirees and who are reimbursing for mileage. Its budget includes 900,000 miles a year at $1.7 million (4).
The purposes of these bulletins are a good example of the Pluralism Theory where interest groups educate the public on policies, encourage people to be more active in the political process and help in choosing the right representation in the policy making process (1) . AARP helped it’s members to pay attention during elections and focus on issues to organize themselves in their home state to rally together to fight cut backs in Medicaid programs that help the poor and elderly (4).
AARP’s resources include a 35 million membership that receives $224 million in revenue per quarter from its membership dues. In 2004 AARP’s revenue from investment income was $62 million and received $83 million in government grants (6). The interest group used $10 million of its government grants to stop the social security reform bill in 2005. AARP’s total assets in 1989 totaled to $1 billion in federal funding from tax payer’s dollars, $62 million from investments and $900 million from corporate royalties. This is part because AARP members spend $150 a year on products and services. AARP spends $93 million in publication advertisement, $80 million a year from federal funding in lobbying, $5 million on full page advertisements in 50 major newspapers and print advertisements (6).
In 2004 AARP received $83 million in government grants from 5 federal departments. These funds were provided for job training for low-income senior citizens, tax filing assistance, programs to prevent Medicare fraud and abuse, legal aide, housing aide and telemarketing fraud prevention (6). A total of $49 million in grants for the SCSEP (Senior Community Service Program) launched by the AARP foundation to aid the poor and elderly of each state from five departments. They were the Department of Labor under Title V for Senior Community Service Program ($63,340,168), International Revenue Service for Tax Counseling for the Elderly ($3,386,069), Department of Health and Human Services for Special Programs for the Aging Title IV and Title II Discretionary Projects ($444,493), Department of Housing and Urban Development for Housing Counseling Assistance Program ($626,279), and the Department of Justice for Telemarketing Fraud Prevention and Education ($14,680) (6).
AARP as an interest group affects the political process through tactics and strategies to its members through news bulletins on its website. The members of AARP were notified of Bush’s reform program of Social Security that social security taxes would be put into private accounts and the money would be invested into mutual funds or other securities (6). AARP rallied 460,000 of its members together to call 535 members of Congress complaining about how this new program supported by Bush. The interest group’s multi-million dollar lobbyist effect put a stop to Bush’s 60 cities in 60 days speech by its scare tactic to warn senior citizens about how their social security taxes would be taken away from them and put into the control of a mutual fund’s investment company.
The interest group influenced President Bill Clinton by helping him stop Congress from passing a balance budget that would cut back on Medicare in 1995 and defeated the nomination of Clarence Thomas to the US Supreme Court in 1991 (6). Its use of influence in political party during policy making by sending representatives to Capitol Hill and Think-Tank seminars to keep Congress from reforming social security and Medicare (6).
At the beginning of this paper I brought up the problem that the Republican Party was investigating AARP’s tax exempt. The House’s Ways and Means Committee had held a hearing to investigate AARP’s organization structure, it’s finances and tax exempt status (7). Democrats are debating on this issue with the Republicans calling it a “Political Witch Hunt” that it was a political stunt to stop AARP from participating in stopping the new budget plan proposed by Paul Ryan (R-WIS). Democrats praised AARP as a nonprofit organization servicing 37 million members over the age of 50, supported the Affordable Care Act in March of 2010 and stopped any budget cut in Medicare or Social Security (7).
AARP’s charity and corporation can be held in question because of the funding it receives in federal grants, revenue from investment, products, membership dues and donations. Its charity AARP Foundation and AARP Inc. are separate entities, but the Republican Party is presenting an idea that AARP foundation is a “Shadow PAC” which means it funds its own political agenda with the parties. Any interest group needs funds if it wants to succeed in winning the attention of Congress to fight for the needs of its members. Any member of the House and Congress would rather talk to an interest group than a group of angry senior citizens. That was why AARP was created in 1958 to fight for a senior citizen’s Medicare and Social Security benefits from being cut during a new budget plan or made into a private hedge fund.
1. Berry, Jeffrey M. & Wilcox, Clyde. (2009). The Interest Group Society. (Fifth ed.). (pp. 4-5). (pp. 79). (pp.118-120). (pp. 40-45). New York, NY: Pearson.
2. AARP (American Association of Retired Persons). 2011. http://www.aarp.org/
3. McAuliff, Michael. (2011, April 15). HUFFINGTON POST. Democrats Fear GOP Probes Are Muzzling AARP In Medicare Fight. Huffington Post. Retrieved from http://www.huffingtonpost.com/2011/04/15/democrats-fear-gop-probes-muzzle-aarp_n_849939.html
4. Mercer, Marsha, (2011, May 1). AARP BULLETIN. States Government Face Budget Crisis, 46 States Have Cut Services to Reduce Their Deficit. Retrieve from http://www.aarp.org/politics-society/government-elections/info-04-2011/state-budget-deficit-crisis.4.html
5. Lytle, Tamara. (2010, December 1). AARP BULLETIN. How Will The Election Affect The Deficit, Your Taxes And Social Security? Several Issues Face The Divided Government. Retrieve from http://www.aarp.org/politics-society/government-elections/info-12-2010/divided_government.html
6. Carlisle, John. (2009, May 5). NLPC (National Legal and Policy Center). How The Federal Government Subsidizes AARP. Retrieve from http://nlpc.org/pdfs/AARP%20Special%20Report.pdf
7. Saenz, Arlette. (2011, April 1). www.blogs.abcnews.com. GOP Questions AARP’s Tax-Exempt Status; Dems Call it a “Political Witch Hunt” http://blogs.abcnews.com/thenote/2011/04/gop-questions-aarps-tax-exempt-status-dems-call-it-a-political-witch-hunt.html