Republican Double Standard: Target AARP, While NRA Gets a Pass
WASHINGTON — Waaaaaaah—waaaaaaaaah–wah. The big bad AARP is beating us senseless with their huge numbers, so the Republican We’ll Show Them Report is out.
And Republican allies have come up with a scary title for AARP to rev up the Right: “AARP is the Death Star of American entitlements.” Through AARP the Right hopes to do a tricky bank shot over to Social Security and Medicare entitlement “reform,” also known as their get out the wingnut vote machine.
Then let’s also take on the NRA on their corporate donations being used for election purposes, which would blow their tax status to smithereens:
Supporters of the carve-out will note—correctly—that NRA cannot take corporate funds specifically to spend on elections; this would void its exemption. But, everyone in politics is familiar with the wink and the nod. Corporations can give general revenue funds which will then free up NRA’s copious individual donor money from their 4+ million members for spending on elections—money they would not have otherwise spent.
I’m not a member of AARP or the NRA. We’re gun owners, my husband an expert on firearms, but I wouldn’t get caught being a part of the NRA, because their notorious mission basically boils down to irresponsible pimping of the gun industry, without any thought to responsibility.
As a side note, the White House set up this showdown with Republicans, while shielding the NRA, because of their support for the DISCLOSE Act, which allowed massive cover for the NRA. Blue Dogs like Heath Schuler made it possible:
North Carolina Rep. Heath Shuler, an NRA backer and conservative Democrat, proved to be pivotal to the NRA deal. Shuler was the first to offer an amendment to exempt the NRA and other nonprofits from the legislation, but that move drew objections from campaign watchdog groups.
“There were a number of concerns that the DISCLOSE Act could hinder or penalize the efforts of certain long-standing, member-driven organizations who have historically acted in good faith,” Shuler said…
The Right’s caterwauling about AARP is not only hypocritical, because their outrage is only toward an organization that’s big and effective, which they see as standing up for the health care law, ACA, but also because AARP has been investigated before, going back all the way to 1988.
A source who knows everything there is to know about tax status C 3, C 4, C 6 entities, including AARP, gave me a hand on understanding this stuff, because this subject is crazy complex. This headline going back to 1988 is a classic, but the article isn’t available online, so I’ve got a screen capture of it. The investigative piece that followed left nothing unturned.
A snippet of it is below:
Low dues bring prospects through the door, and the direct-mail maestros move in from there. AARP — which knows the names and addresses of more Americans than any other comparable organization in the U.S. — accounted for as much as 1.5% of the nonprofit third-class mail delivered last year. The volume of incoming mail is so massive that AARP has its own zip code: 20049. Some members report getting three pitch letters a month for AARP’s health insurance alone. The sell is a bit too hard for some. Mark Gilbert, 74, of Durham, N.C., quit AARP last year after eight years. ”They were always pushing some tour or insurance policy,” he says. ”Every week some fat packet would arrive promoting something. The insistence got to me.” The second wave in the marketing blitz is Modern Maturity and the AARP News Bulletin. In the most recent Modern Maturity, AARP and its commercial partners accounted for 35% of the paid advertising pages. (AARP also airs Modern Maturity Television, a weekly public-affairs show carried on 270 PBS channels.) Competing companies are not allowed to buy space in AARP publications, so members never find ads for any mutual funds, health insurance or mail-order pharmacy services other than AARP’s own. And despite a consumerist bent to many of AARP’s lobbying efforts, Modern Maturity publishing director Robert Wood says he cannot recall ever printing comparison-shopping articles that mentioned competitors. Says Wood: ”We aren’t Consumer Reports.” AARP’s other major marketing advantage is its nonprofit status. This does not mean that AARP cannot make money but rather that any earnings — called ”excess revenues” in nonprofit accounting jargon — must be spent to further the purposes of the association. AARP’s lawyers carefully construct each business agreement to ensure that no matter how great the proceeds to AARP, they remain tax-free. In recent years, large financial companies paid an average of 6.2% of their revenues in federal income taxes; applied to AARP’s business revenues, that percentage could yield taxes of more than $9 million. Instead, AARP paid no federal income taxes at all last year. The Internal Revenue Service generally allows a tax-exempt organization to avoid taxes on business income as long as the business is ”substantially related” to the group’s founding purpose. That permits AARP to keep a tax- free 4% ”administrative allowance” for collecting health insurance premiums and forwarding them to Prudential. Last year that fee came to $67 million. The tax exemption also applies to whatever interest the premiums earn while in AARP’s possession — $15 million in 1987. In its other businesses AARP typically receives a percentage of its partners’ gross revenues as royalties, which do not usually trigger any taxes for tax-exempt groups. The association last year brought in another $30 million tax-free this way. (That includes a small amount from the sale of 32 educational books, co-published by AARP and Scott Foresman & Co., which, like MONEY, is owned by Time Inc.) This strategy could be in jeopardy, however; a House Ways and Means subcommittee is expected to recommend that the tax break for royalty income be repealed. AARP’s nonprofit status qualifies its mailings for cut-rate postage. On average, AARP can churn out 74% more mail for the dollar than a for-profit, bulk-rate firm. The nonprofit postal rate is so low that the Postal Service loses an estimated $14 million a year serving AARP, a deficit made up by U.S. taxpayers. Less tangibly, nonprofit status lends AARP the aura of a charitable organization with purer motives than those of its competitors. As a result, AARP tends to inspire uncritical trust among its members. Paul Kerschner, AARP’s chief lobbyist from 1978 to 1983, recalls: ”The staff used to joke that the easiest way to become a millionaire would be to take out an ad in Modern Maturity saying, ‘AARP wants you to send me $100.’ ” Many AARP officials, like AARP members, tend to believe that their association holds to a higher standard than conventional corporations. Says former executive director Brickfield: ”AARP enters its ((commercial)) programs only after determining that they will be of special value to % members.” But it is not always possible to identify any special value to AARP’s programs. In some cases, in fact, more efficient for-profit competitors offer comparable services at lower prices. Nevertheless, AARP is unlikely to pull out of these programs. Even if the association were willing to forgo the income they produce, it is still bound by contracts with its business partners to continue offering all of its products, the mediocre as well as the excellent.
But let’s cut to the bone.
The Right wants an investigation of AARP for the same reasons it went after all the other groups that have members who support the Democratic Party. One of the most important organizations to women in this country, Planned Parenthood, is the latest. Now the Right wants to neuter an organization that aids the boomer crowd and senior citizens, because it’s working effectively for its members. AARP supports policy that its members support, not for the sake of helping itself, with all of the royalties it receives going back into their mission. This latest Republican target is about 2012 and elective cycle neutering of progressive interests, which is to further the lives of American citizens.
AARP is non-partisan, but they’re not stupid. There is no reason to only help one party over another, because their power comes from numbers not ideology and the only way you get numbers is to serve the most people, which isn’t going to happen if you push a political agenda over what’s good for the people you service.
That’s the reason Republicans also blew it trying to privatize Social Security. It wasn’t in the interest of the vast majority of people, so the Right lost trying to push their ideology.
Let’s just not pretend this is about anything other than politics. Otherwise let’s put the NRA and their massive money machine under a microscope too.
That high pitched scream you just heard is the soul of the Republican Party, which can’t survive without sucking on the NRA’s teat. Unfortunately, Democrats have also joined in on that party, which is why the DISCLOSE Act looks away from the NRA.
So, tomorrow the AARP folks will sit in front of Congress for a partisan tongue lashing and when it’s over they’ll go back to doing what they do best. Working for American people who benefit from power being in the numbers, not in pushing an ideology over what’s best for their lives.
Taylor Marsh is a political analyst, writer and commentator on national politics. A veteran national politics writer, Taylor’s been writing on the web since 1996. She has reported from the White House, been profiled in the Washington Post, The New Republic, and has been seen on C-SPAN’s Washington Journal, CNN, MSNBC, Al Jazeera English and Al Jazeera Arabic, as well as on radio across the dial and on satellite, including the BBC. Marsh lives in the Washington, D.C. area. This column is cross posted from her blog.