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GOP takes aim at AARP: Will it backfire?

From Ed Hornick and Xuan Thai, CNN
  • House subcommittee opens hearing looking into AARP's tax-exempt status
  • Republicans say AARP "no longer operates like a seniors advocacy organization"
  • Democrats say the hearing is "political payback" for AARP's support of health care reform

Washington (CNN) -- Republicans are taking aim at America's oldest senior citizens group, AARP, in the wake of a GOP-authored report that they contend exposed "the conflict between AARP's drive for profits, the best interests of its members and the organization's tax-exempt status."

Democrats counter that the attacks are based on the organization's support of President Obama's health care reform bill.

"The facts suggest that AARP has strayed from its core mission," Rep. Wally Herger, R-California, chairman of the House Ways and Means' health subcommittee, said at a hearing Friday. He was one of those who released the report, titled "Behind the Veil: the AARP America Doesn't Know," this week.

"The facts show that AARP no longer operates like a seniors advocacy organization. Instead it more closely resembles a for-profit insurance company," he said.

Herger's subcommittee is now challenging AARP's tax-exempt nonprofit status, looking into how the AARP does business and pointing to the organization's profits from the sale of insurance and other products.

The organization made nearly a third of its $1.4 billion budget through insurance sales in 2009, American Public Radio's Gregory Warner told the panel Friday.

Rep. Charles Boustany, R-Louisiana, also argued Friday that the AARP has strayed from its original mission of protecting seniors.

"Contributions to the AARP Foundation between 2002 and 2009 grew by only 11%, or about $3.1 million. And funding of the legal counsel for the elderly actually decreased by about 9%," Boustany said. "The parts of AARP that fulfill its original purpose seem not to be sharing in the bounty that has come to AARP from its insurance-related business activities."

Democrats counter by pointing out that Republicans welcomed AARP's 2003 support of the GOP push for Medicare reform, saying there were no such questions or hearings back then.

Some members called the hearing "political payback" for AARP's support of Obama's health care reform efforts.

"We should see this for what it is," said Rep. Pete Stark, D-California, "a waste of government time, and a vindictive attempt to settle a political score."

The hearing "amounts to nothing more than a political witch hunt to punish an organization that spoke out in favor of health reform," he said, adding that the Republicans aim is "to discredit AARP in the minds of seniors."

"Before they announce a budget that will devastate Medicare, Social Security, Medicaid, they would like to silence AARP," Stark said.

Barry Rand, AARP'S CEO, told committee members that the organization has been nothing but transparent, in contrast to the "Behind the Veil" report's implication that the organization had an ulterior motive for supporting health care reform.

The report concluded that the AARP stands "to make upwards of $1 billion over the next 10 years as a result of the new health care law through the sale of their endorsed-Medicare insurance products," according to a news release from Herger this week announcing the release of the report.

"We post on our website our annual reports, financial statements, IRS Form 990 tax returns and detailed breakdowns of our revenues and expenditures," Rand said. "This is why we are surprised and disappointed both by the title and substance of the report."

He said there is no veil and the organization disagrees with all of the conclusions reached in the "one-sided report."

"First, we reject the allegation that our public policy positions are influenced by our revenues. Our policy positions are set by our all-volunteer board of directors based on the needs of our 50-plus population," he added.

And Rep. Bill Pascrell Jr., D-New Jersey, noted that "the sixth-largest social welfare organization" with the type of nonprofit classification AARP has "is a tax-exempt race track and casino which operates in Iowa."

"I'm sure you'll help me understand why a race track and a casino are more deserving of this classification, because that's what you're getting at," he said. Former GOP Rep. Billy Tauzin, once the chairman of the House Energy and Commerce Committee, admits that attacking the AARP is risky. "A perceived attack on AARP could easily backfire, giving Democrats an opportunity they could quickly use to paint themselves as the party best positioned to protect seniors in the future," he wrote in a Politico opinion piece.

"At the end of the day, I suspect AARP is likely to meet any reasonable test for non-profit status," he added. "After all, it has no stock, pays no dividends and uses the profits it makes from sales and licensing to fund tax-exempt programs which assist seniors."

CNN's Xuan Thai contributed to this report.