AARP Takes Brave Stance on Social Security

On Friday, AARP issued a press release that contained the following statement from CEO Barry Rand:

"Let me be clear -- 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. Contrary to the misleading characterization in a recent media story, AARP has not changed its position on Social Security."

AARP's press release was sent in response to a story published in The Wall Street Journal earlier in the day, stating that AARP was dropping its opposition to cutting Social Security benefits and quoting AARP's policy chief, John Rother, as saying, "The ship was sailing. I wanted to be at the wheel when that happens."

The Wall Street Journal story started a media frenzy. Politicians and commentators hailed AARP's change in position as breaking the logjam to meaningful change. Meanwhile, senior activists slammed AARP. Max Richtman, acting CEO of the National Committee to preserve Social Security and Medicare, said, "AARP is losing the confidence of seniors around the country, and not just seniors but people of every age group. I hope the ship that he wants to steer isn't the Titanic filled with seniors."

So what's going on? Does AARP support changes to Social Security or not? You can glean more by reading the organization's press release, which also included the following statements:

• "AARP is engaging our volunteer Board to evaluate any proposed changes to Social Security to determine how each might -- individually or in different combinations -- impact the lives of current and future retirees ..."
• "... long term solvency is key to protecting and strengthening Social Security for all generations, and we have urged elected officials in Washington to address the program's long-term challenges in a way that's fair for all generations."
• "... any changes would be phased in slowly, over time, and would not affect any current or near-term beneficiaries."

You don't even have to read between the lines to see that AARP is acknowledging that some changes may be necessary to keep the system sustainable. Keep in mind that the above statements were released after the AARP was hammered by senior activists. My hat's off to AARP for its brave stance and willingness to become part of the solution to making necessary changes. As a nation, we can't put our heads in the sand and pretend that nothing is wrong with Social Security and Medicare.

But AARP is walking a political tightrope. It will only consider changes that are positioned to be necessary to strengthen Social Security, but it won't endorse changes that are represented as part of a deal to balance the budget. AARP needs to represent its millions of customers who have paid into Social Security for all their working years; it doesn't want to be viewed as providing support to a federal government widely perceived as being unable to get its financial house in order.

AARP's position to separate Social Security from deals on the deficit doesn't represent the reality that Social Security benefits, and taxes are a large part of the overall federal budget. Any changes made to Social Security will affect the federal budget, no matter how the politicians characterize the underlying reasons. And you can't ignore the fact that our deficit is skyrocketing. You can't balance the federal budget without considering large parts of its income and outgo.

AARP remains adamantly opposed to privatizing Social Security, and reiterated this position in its recent press release. I agree with this position. Many Americans are struggling with figuring how to generate reliable lifetime retirement income from their IRAs, 401(k) accounts, and retirement savings. They need the guaranteed, lifetime income that Social Security provides. I'm for maintaining this basic nature of Social Security, but making necessary tweaks in benefits and taxes to keep the system viable for generations to come.

Let's hope that all the rhetoric is just part of the political dance and chest-beating that's necessary to cater to various constituents. It's instructive to remember that the last time Social Security had funding issues in the early 1980s, a Republican president and a divided Congress passed a combination of benefit cutbacks and tax increases to keep Social Security solvent. Let's hope that our current leaders can make similar compromises that are fair and compassionate, and will keep the federal government, Social Security, and our nation strong for generations to come.

More on MoneyWatch:

• What You Need to Know About Social Security
• Boost Your Social Security Payout by $100,000
• 3 Big Myths About Social Security
• 3 Big Myths About Medicare
• Is Social Security a Ponzi Scheme?
• IRAs and 401k: 3 Ways to Generate Lifetime Retirement Income

Steve Vernon

View all articles by Steve Vernon on CBS MoneyWatch»
Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Retirement Game-Changers: Strategies for a Healthy, Financially Secure and Fulfilling Long Life and Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck.

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