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Poor and Stupid

How big government, big business, big media and big academia block your road to financial freedom- and tell you it's for your own good.

Aarp: The Aged Americans Revenue Police

Posted on 05/09/2007 08:59:55 | Link | Post Comment
Here's a preview of an NRO column coming up in a couple days:If you're of a certain age, you probably carry in your wallet the little red-and-white card of AARP -- the association for older Americans. You've paid twelve and a half dollars a year for that card, and it gets you discounts on insurance, movies and travel.

It also funds political lobbying aimed at increasing taxes, expanding the size and scope of government, increasing government spending, and fighting entitlement reform.

You think AARP is only about saving a couple bucks at the movies for the gray-haired among us? In 2003 political support from AARP was essential in the narrow passage of the vast and costly expansion of Medicare to include a prescription drug benefit. And in 2005, opposition from AARP was a key factor in the defeat of President Bush's initiative to reform Social Security reform through personalized accounts and reining in benefit growth.

Now take a look at what AARP is saying about the runaway cost of entitlements -- the very entitlements they themselves promoted, and the very costs they refused to consider reducing.  

The AARP Public Policy Institute -- a unit of AARP whose mission is to "influence public debate" -- recently published a research paper called "Population Aging, Entitlement Growth, and the Economy."  Here's how the paper sums up the problem of an aging America facing runaway entitlement costs:

Today, we have a workforce that will grow more slowly, a rising dependency ratio [fewer worker and more retirees], rising budget deficits, a national security budget that is growing rather than declining?

So far, approximately true -- though in fact the federal budget deficit has been falling since 2004. But the paper finishes the sentence with one final problem facing America:

?and a prevailing antitax ideology.

The implication is that none of those other problems -- aging workforce, more retires, deficits and defense spending -- would matter, if it just weren't for that pesky antitax ideology. No such ideology infects the minds at AARP. 

According to AARP, it means nothing  that federal  tax revenues are already at an all-time high in dollar terms. The paper says revenues  "are still below their long-run average, and substantially below where they need to be?"

Actually, at an estimated 18.5% of gross domestic product in 2007, revenues are above -- not below -- the 18% average of the last 50 years.  They've only been higher than today in six of the last 20 years, and nine of the last 50 years.

But the facts won't deter AARP any more than antitax ideology will. The AARP paper calls for "not only higher tax revenues from existing sources, but a new tax on consumption as well."

Fairness aside -- and indeed, AARP sets aside the matter of whether a falling number of young workers ought to be made to pay for a rising number of retirees -- won't all those taxes hurt the economy? Not according to the AARP paper:

?some critics regard growth in federal spending financed by higher taxes as a threat to economic growth. While this view is derived from rigorous microeconomic theory, the empirical evidence (micro and macro) does not support it.

Oh yeah? There have only been two times in history when taxes, as a percentage of GDP, grew above 20%, levels that begin to approach what AARP is advocating. The first time was World War II -- does AARP really believe sustaining the unrealistic promises of Social Security and Medicare is the moral equivalent of war? The second was the "bubble economy" of the late 1990s -- does AARP really believe that once-in-a-lifetime growth like that is "evidence" of anything?

AARP's distortions of the facts and its reckless advocacy of higher taxes are all the more odious in the context of AARP's previous public positions on Medicare and Social Security.

In the case of Social Security, AARP's major thrust has always been opposition to private accounts, mobilizing members to make more than half a million calls to senators and congressmen to defeat President Bush's 2005 reform initiative. Whether or not AARP was really trying to protect its own mutual fund business, it has always taken the position that "Social Security is not going broke."

But now we need both higher taxes and brand new taxes?

In the case of Medicare, in 2003 AARP was noisily politicking in favor of adding a prescription drug benefit.  Was that because it would send new government-funded business to AARP's insurance companies? Who knows. But I can't find a single instance in which AARP ever even mentioned the need for higher taxes to fund the benefits they lobbied for.

Again -- now we need both higher taxes and brand new taxes?

I've torn up my AARP card. I've decided that twelve and a half bucks I was paying to AARP was getting me the most expensive discounts in history. Why save a couple bucks on a movie if I have to pay that back thousands of times over in higher taxes?

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