>> the subcommittee will come to order. when percy founded in 1988 medicare did not exist. he understood seniors need access to health insurance and found a solution. what began as an organization that field the need not yet met by society has grown and evolved over the last 50 years into aarp eink and the affiliated entities. with the astana showman of medicare in 1965, health

insurance became widely accessible however as we would discuss today the former congresswoman ginny brown-waite and i took a closer look into aarp over the last 18 months, reviewing every publicly document and the facts suggest that aarp has strayed from the core mission. the facts show that aarp no longer operates a seniors

advocacy organization. instead, it is more closely resembles a for-profit insurance company. in 2009, aarp raised 46% of its revenue from royalty payments versus just 17% from the membership dues. while the questions have indeed been raised in the past about aarp's reliance on royalties the amount of these payments has tripled over the past decade. aarp asserts that the policy positions are making all the volunteer board of directors which is separate from its business interests. the facts show otherwise. in 2010, the entire board of aarp insurance plan was

collected and processed $6.8 billion in insurance premiums in 2009 also served on the board of directors of aarp which makes policy decisions. the aarp insurance plan funneled millions of dollars to aarp's incorporated in 2009. the facts show aarp is dependent on the hundreds of millions of dollars that it receives primarily from insurance companies and could not continue to operate in its current fashion without this revenue. aarp's revenue from membership dues totaled $246 million in 2009 just barely enough to cover its employee compensation and legal and accounting fees.

aarp's decision to endorse more than one-half trillion dollars of medicare cuts to pay for the new entitlement program seemed to directly contradict its mission. this became more disconcerting when medicare officials warned that the medicare cuts were so severe that seniors access to care could be jeopardized. medicare officials also revealed that the health care law will result in a migration from medicare advantage to medigap plans that could force as many as 7 million seniors to give up a plan they know and like. it turns out on a close examination of aarp's medicare

insurance business the facts show that aarp had a unique financial incentive that was a transparent for seniors with congress during the health care reform debate. as a result of the unique contractual relationship between aarp and the united health corporation, aarp stands to earn $1 billion over the next ten years as a result of the democrats' health care overhaul on top of hundreds of millions of dollars of insurance royalties that they currently collect. this is just one of a number of shocking details contained in a report earlier this year by mr. reichert and me many of which will be discussed today i

would now like to recognize mr. reichert who's been a driving force in this investigation to make a brief opening statement. >> thank you mr. chairman allowing me the time to say a few words. first i want to take a moment just to thank all of the volunteers that a volunteer with aarp and the wonderful work that you will do. i know there's some here in the hearing room today and some that may be listening across the nation. thank you for volunteering to be engaged in helping our seniors across this country and i know that mr. rand and hammond and others are representing aarp. your heart is in the right place but sometimes we can sort of find yourself misguided and going down the wrong path is to make sure as representatives of the people and across this

country. and that aarp is on the right path. the mission statement is to make sure we help seniors and that's really what we want to do, too. we want to help seniors and make sure they get the best health care coverage they can get, this insurance coverage so they can have the best retirement that we know they all deserve as they worked so hard during their lives. but i sort of became very concerned and is back in 2007 when it first cut was mentioned to medicare advantage and was a 200 billion-dollar cut associated with an schip vote and i was very puzzled to be honest with you, very, very puzzled as to why medicare or aarp would support the 200 million-dollar cut in

medicare advantage. >> eventually that happened is they didn't support the cut and schip found other ways to support their financial needs. and then along came the health care bill and 523 billion-dollar cuts of medicare was announced as one of the mechanisms to pay for the health care bill. close to hundred billion dollars of cuts again to medicare advantage for mentioned as the part of the solution to finding finances to find the healthcare bill. so again, to myself and mr. herger and ginny brown-waite began to ask questions and i began to be honest with everyone in the room and people watching today we don't get forthright answers. we are just looking for some very simple answers simple questions as to where money is

going and why aarp supported and have a trillion dollars to medicare which we just wanted to know on behalf of the seniors with the truth was and we couldn't get it. so now we find ourselves today after 18 months of interviews and exchanging letters and here we are today at this hearing. i wish we could have been more forthright and you could have been more forthright with your answers. hopefully today he will be and we will be able to get to the bottom of this and make sure to get there that our seniors are cared for properly and that they enjoy their retirement at the desert so i appreciate your presence here today and look forward to asking you some questions and getting some

straight answers. thank you. >> i thank mr. reichert and for your dedication for being involved in this process. before recognizing the ranking members start for the purposes of an opening statement, i ask unanimous consent all members written statements be included in the record without objection so order. i now recognize ranking member stark for his opening statements. >> chairman, i want to thank you both for holding this hearing. and there are questions to ask about aarp. of course we could ask the same questions of the chamber of commerce which outranks aarp as the top spender of lobbying the last 12 years spending three-quarters of a trillion dollars lobbying over that period. we are going to ask the

questions of american crossroads, which was founded by carvel growth and spent millions with its sister organization trying to defeat democratic candidates in the last election. but republicans don't seem to want to ask those questions today and it's easy to understand why. those groups oppose the affordable care act and aarp supported it. so this amounts to nothing more than a political witch hunt to the organization that spoken in favor of health reform. any organization that could stand in the way of a goal to privatize social security and medicare turned senior citizens over to the mercy of private health insurance would be suspect. i have to admit in the past i've raised questions about aarp. it's true that in addition to the work they do at the keating

for us elderly they make a tremendous amount of money off the businesses the market to us. and it's no surprise to america's seniors that their products make them probably the biggest player lighting can i get from medicare the advantage, part de drug plans, and it's obvious to us when you are shopping the market the plans are well priced and have good features. so it's not exactly they are hiding under the veil as the republicans would suggest. but many aarp members have looked forward to joining for the discounts and other deals the gets. they've investigated the aarp for a year and now it's time that all the republicans have

found is publicly available information which here it is. this is all publicly available. i must admit its large and heavy. it's a complex organization all of which is legal. ..

>> my colleagues across the aisle know that us seniors trust aarp, and that's why the republicans applauded the endorsement the medicare prescription drug bill in 2003, which i thought was wrong and a bad thing for aarp to do, but the republicans loved it. now, eight years later, they are trying to break the trust the american seniors have in aarp, and before they announce their budget that will devastate medicare, social security, medicaid, the republican plans to privatetize social security

and kind of silence aarp, and that's why we're hear today. we should see this for what it is, a waste of government time, an abuse of government resources that have been an indicative attempt to settle a political score and silence a voice that represents the use. i give back my time, and i look forward to hearing the others. >> i thank you the chair, mr. stark, and now i welcome chairman of the committee on oversight. >> thank you as chairman herger said that aarp was created with a noble goal promoting independence, dignity, and enhancing the quality of life for older americans, and as a physician before i came to congress, and now as a member of congress, i interacted with many volunteers in my home state of louisiana who have done

excellent work. under 501c4 this means promoting social welfare in the common good enjoys exemption from federal income taxes. today, 50 years after its founding as a small nonprofit, aarp has changed into what appears to be an insurance in advertising power house. according to the most recent data we have, aarp incorporated in for-profit organizations annually processed billions of dollars in insurance premiums and earned nearly $700 million in insurance revenues and advertising revenues. only a fifth of the revenue comes from membership dues and contributions. since 2002, aarp's revenue for membership dues increased modestly, and over that same period by partnering with others to sell insurance, aarp has

gains in its royalty income that any private sector business would envy. revenues tripled growing from $650 million in 2009. yet as its grown, the funding for charitable work flat lined. contributions to the aarp foundation between 2002 and 2009 grew by only 11% or $3.1 million. funding for the elderly decreased by about 9%. the parts of aarp that fulfill its original purpose seem not to be sharing in the bownty that's come to aarp from its insurance-related activities. another concern regarding aarp is whether they provide accessive exe compensation for the executives.

in the case of aarp, it far exceeds what one thinks appropriate for a tax exempt organization. they compare the compensation of charities and nonprofits with expenditures exceeding $500 million. in looking at the numbers, compensation it a consistent outlier reaching as high as $1.6 million in 2009. in addition, aarp has maintained travel policies that exceed what are considered best practice recommendations developed by an oversight group when aarp's then ceo was involved in. the differences in revenue vennuated and money spent promoting social welfare and the common good suggest that aarp may have strayed from its original mission and brings into question whether it's appropriate for it to continue to operate as a 501c4 tax exempt organization. this is primarily a question for

the internal revenue service, and we'll be asking them to conduct a review. let me end by saying as chairman of the ways and means committee on oversights, i take this committee's responsibilities -- its responsibilities in oversight very, very seriously, and i intend to take a closer look at the irs's administration of the tax exempt sector and whether the irs oversaw the practices of tax exempt organizations. thank you, mr. chairman. i yield back. >> thank you. i now like to recognize representative john louis, ranking member of the subcommittee on oversighted for the purposes of making an opening statement. >> thank you, mr. chairman. for holding a hearing on tax exempt organizations. however, i do not think we should single out just one organization. while i agree that organization that enjoy a special type status should justify the reason for their exemption. i know that there are about

140,000 other organizations that share the same tax status. mr. chairman, for it is our duty to provide oversight of the non-profit sector. i'm saddened that you have chosen to forfeit your duty in the manner displayed today. you and i both know that this hearing is politically motivated and driven by aarp's support of the affordable care act. your report admits that all the implementations in it came from the document filed in accordance with the law. there's nothing new here today, nothing that is not already published, nothing except aarp apart, nothing unvailing that i can see. i'm mindful that the majority want to cut social security, but

cut medicare. they want to cut programs that help the poor. i can only so mize that the true intent of the hearing is to harm the reputation of aarp, to stifle the voice as we move closer to this debate. if there was a plan to provide real oversight today, we would have a force of an organization who shattered fame type status as aarp, like 60-plus. we would have more organizations, american cross roads gps. they all share the same tax status as aarp. they play a major role in the election. if there was a real plan today, we would have before us, we would have a $2.2 billion a year

raise and a casino operating in iowa under the same type of status as the aarp. i find this unreal. it is unbelievable. if oversight was a true goal, we would look at the compensation paid by other tax exempt organizations including those that oppose health care reform like the chamber of commerce and nfib, all paid and more than aarp. based on all of this, i believe that this is no plan for oversight today. we have a single witness, a bias report and to use the committee resources to sell a score. there's nothing other than -- this is nothing other than a political witch hunt. the ways and means committee is

vowed in this. i ask my colleague who is next? who next is on your list? my college? your church? this is a dangerous game to play. in closing, i'm pleased to have before us today a nationally recognized expert in the law of tax exempt organizations, professor hill who wrote one the leading treaties in this era, and i look forward to her testimony. thank you, mr. chairman. and i yield back my time. thank you, mr. chairman lewis. i want to turn to the subcommittee's first panel. we are joined by jerry rand accompanieded by larry hammond. mr. rand, thank you for agreeing to testify tread. you will have five minutes to

present your testimony, your entire written statement will be made part of the record. you're now recognized for five minutes. >> thank you, mr. chairman. good morning. i am bair rand, ceo of aarp, and joining me is the president of aarp, a member of the aarp board of director the. we, like all 22 members of the board, is an unpaid volunteer. aarp is proud of our record. throughout our more than 50 years of service, we have worked tirelessly to promote nonpartisan solutions to improve the market place, to enhance the public good, especially for those 50 and older, and we will continue to do so in the future. we are strictly nonpartisan organization. we do our work in a very public way. sense its founding, aarp has

made information about its finances, mission, and government available to the public. we post on our website our annual reports, financial statements, irs form 990 tax returns and details break downs of our rev revenues and expenditures, and this is why we're surprised and disappointed both by the title and substance of the report a few members released this week. behind the veil, the aarp america doesn't know. there is no veil. quite frankly, we disagree with each of the conclusions drawn on this one-sided report. first, we reject the obligation that our public policy positions are influenced by our revenues. our policy positions are set by our own volunteer board of directors based on the needs of the 50-plus population. they are determined totally

independent from revenue considerations. we have long maintained that we would forego revenue in exchange for a lifetime health and financial security for all older americans. the revenues we earn from royalties allow us to keep membership dues low. currently, $16 a year while providing outstanding benefits to members and all americans age 50 and older. we also reject the conclusion that we are not good stewards of our non-profit status. the revenue that aarp receives from lending its name to products and services goes directly to fulfilling our mission and serving people 50-plus. our mission includes three major areas. we work to make sure people have access to affordable quality health care. we work to make sure people have the opportunity to achieve

lifelong financial security, and we help and empower people 50-plus to live their best lives. these are the prince. s aarp was founded upon. dr. ethel, percy andrews was appalled to discover a retired teacher living in an old chicken coop. she got a group going to create the first group health insurance plan for people 65 and older in the country, a decade before medicare. in 1958, she created aarp for seniors across the country who needed health insurance for themselves. through aarp, she envisioned a better life for seniors that includes health, economic security, and opportunities to remain active and productive

members of society. when we look at what she did, it is truly remarkable. she came up with a creative marketplace solution to what was then considered to be an unsolvable problem providing access to health care for seniors. she changed the market by bringing seniors together who shared those needs. we are going to follow her lead every sense. lee, our other volunteer leaders and staff are the guardians of that legacy today. we are leading efforts to improve life for all generations by working to provide access to quality affordable health care including lower prescription drug costs, improve and protect financial security including social security, and fighting age discrimination, and advocate for consumers. for example, aarp has supported bipartisan regulation including the lifetime income disclosure

act providing consumers with better information about their 401k plans. we are also proud to endorse medicare antifraud act. this bill sponsored by the chair and ranking member of the health subcommittee empowers the government to reduce medicare fraud. aarp also provides direct assistance to americans. for example, as we sit here today, more than 30,000 aarp tax aid volunteers are helping 2.6 million taxpayers prepare their taxes. in 2010, 193,000 people with low incomes received the total of $233 million in earned income tax credits. last year, aarp volunteered to help more than 526,000 people stay safe on the roads through our driver safety program.

also in 2010, our advocacy efforts helped consumers save more than $3 billion in lower utility costs. last year, more than half a million people visited our great for good website and connected with more than 260,000 volunteer opportunities in their communities. today, aarp and the aarp foundation in partnership with nascar's jeff gordon and hendricks motor sport are leading the drive to end you thinker and help more than 6 million seniors and another 6 million in their families who face the horror of going hungry every day. that's aarp. working to make sure that the american dream lives on for all generations. thank you. >> mr. rapid, i thank you --

mr. rand, i thank you for your testimony. i'd like to call to your attention, the monitors in a chart detailing aarp's sources of revenues. according to aarp's consolidated financial statement, aarp's royalty revenue which comes primarily from insurance companies was $240 million in 2002 and grew to $657 million in 2009, an increase of nearly 2%%. -- 200%. during that same period, aarp's revenues from membership dues advertising and federal and other grants have remained relatively flat. it is safe to say that aarp could not operate or function as it does today without the money

it makes from its insurance business which certainly raises suspicion about where aarp's motives lie. if aarp did not have the nearly one quarter of a billion dollars in royalty payments coming in, most of which are from insurance companies, what sort of changes would aarp need to make? >> quite frankly, aarp is very proud of the fact that its membership dues are kept low. we work at keeping them low. in fact, the director from the board is at that we want to keep membership dues low. we don't expect to extract incremental dollars from our membership. we invest in it, so we're proud of that particular fact. now, royalties.

royalties from health insurance companies, royalties from financial products, royalties from other products, lifestyle products, we believe that part of the solution to meet the unmet needs of the 50-plus population. >> mr. rand, if you could answer my question. if you did not have these huge profits from the insurance company, what would you do? what would that do to your -- >> it would decrease our ability to serve 100,00050-plus, and 173,000 members. all of our revenue, all of our revenue goes towards our mission. >> so, in other words, this is very important, the revenues that you're bringing in from the profits that are made, the royalties # that are made from your insurance companies, is that not correct?

>> it's very important to our members, and it's very important to the 100,000 50-plus. let me give you an idea -- >> therefore, you have a great interest in those revenues, those royalties being high as we've seen the huge increases that have taken place in a relatively short period of time. >> as you know, royalties are tax exempt, but let me tell you what we do with the money. >> but just answer my question. >> well -- >> you have a great interest in that those royalties be high because they basically -- i mean, your dues would be higher if they weren't, so is that correct? >> would you like me to tell you where our interests lie? >> just yes or no; is that correct? >> obviously it would -- >> answer the question, please. >> well, answer is we have an interest in meeting the unmet

wants and needs of our population. that's what our interest is. this is not something that we devise. all of these insurance products come from our members and the 100 of the 50-plus population who say we have these needs. they give us those needs and wants, and if they're in the insurance area, we convey those to providers of insurance. that's what we do. >> i understand. i appreciate if you keep to answering my question if you would. i thank you for that. you stated in your testimony that quote -- "under the democratic health care overhaul, the aarp's branded insurance plans for 50-64-year-olds will become obsolete and aarp will no longer receive revenues from those plans."

can we take from that statement that aarp will not endorse or sell insurance in government-run agencies and aarp will not accept commission payments or licensing fees from any insurance plan operating in the exchange, and will you make that commitment today? >> we don't sell insurance, mr. chairman. >> you do receive real royalties which ranks you as the 6th largest health insurance company in the united states; is that not correct? >> the answer is we're not an insurance company. we do not sell or underwrite insurance. >> don't you receive royalties from insurance companies. >> excuse me, could you just repeat it? >> do you not -- aarp, does not aarp in royalties receive the

6th highest profits of any insurance, health insurance company in the united states, is that not correct statement? >> it's not correct. we don't receive profits, sir. >> royalties. >> i don't know what the -- >> you receive royalties that would rank you, again, this is public information. >> absolutely. >> that would rank you as a 6th largest for-profit, were you a for-profit, which the irs does not rank you as, and that's one of the purposes of this hearing, would rate you as you were an insurance. anyway, your public information -- >> yes. >> would, would indicate that. finally, i'd like to highlight the recent comment from an aarp's spokesman that aarp is committed to transparency and the hearing will provide us yet another opportunity to answer any questions.

i found this quote somewhat refleshing given aarp's repeated refusal for 18 months to provide members of this committee with financial documents relating to the aarp insurance plan. aarp's services and details about aarp's medicare and insurance contracts. given your new commitment to transparency, i have a few questions i'd like you to answer or to commit to answering on the record. in 2007, aarp retained 4% of every medigap insurance premium it received. in 2009, aarp retained 4.95% of premiums paid for every aarp

medigap policy. could you tell us how you decided on 4.95%, and what went into that conclusion? what percentage of aarp's medigap premiums will aarp keep in each year from 2011 until the current contract expires in 2017? >> may i address your premise? >> i'd like you to address my question. >> well, that's what i think i'm trying to do. >> well, premise and question are two different things. if you could address my question, what went into your decision for aarp to increase this royalties from 4% to 4.95% first of all, and what percentage do you an anticipate

those aarp will keep from each year from 2011 to 2017, so if you could address my question, please. >> number one, the royalties have nothing to do with the premiums of the beneficiaries, nothing to do with the premiums. the premiums -- >> that's not my question. i asked you what went into your decision that it would be 4% and what went into your decision to increase it from 4 to 4.95. that's the first question. >> that's a renegotiation between united and aarp. >> okay. what could you tell us, what percentage aarp medigap premiums, what you will keep in each of the years, the year we're in, 2011, through 2017 which is what you're contract

runs for. will it go up again? will it remain at 4.95? >> i can't answer the future. we have not talked about that. >> okay. how much money did aarp earn on investing seniors insurance premiums money before kicking a portion of the premiums back to united in 2008, 2009, and 2010? >> the premiums from the beneficiaries since 1958 have gone into a trust, a legal trust. it has been the collecting portion of these checks and beneficiaries. >> now, again, if you could answer my question. that's public information what you're stating. >> yeah. >> we all know that. what we don't know, and what you

would not answer us when we requested from you, and what my question is is what portion of the premiums did you give back to united money before kicking in a portion? >> all of the money that we took in -- >> how much did you earn in investment before giving it back? that's my question which is not public record. >> first -- do you mind if i answer in two parts. >> if you answer it, yeah. >> okay. first part, any interest we have goes back to the mission which is means it goes back to the 50-plus. >> that's not answering my question. you stated that already. >> okay. >> can you be precise in answering my question which you're avoiding and which you would not answer for 18 months. >> mr. chairman? mr. chairman? >> i'm not certain what's going on here, but to some degree, the

witness' entitled to an opportunity to respond. if the chairman or witness does not agree that's responsive, then we are entitle to as members to extract a best answer, but at this stage, you're preventing the witness to answer or responding. >> the yesman has not been recognized. i will take that to be that you refuse to answer my question. >> no, i'm not. >> okay, then either answer the question or move on to the next one. you are not answering the questions i'm asking you. >> all the money that we have that comes from the trust goes to the mission. none of the money is taken out of the premiums. >> mr. rand, let me say for the third or fourth time, that is not the question i asked. i asked what is that amount?

i will take that to be you're refusing to answer my question, and i'll move on. >> now that i understand the specifity of your question, over the years interest earned from the trust which is aarp's trust is -- would vary anywhere from 60 million to 90 million depending on the years. >> okay. thank you. if you could, i'd like you to answer that in writing if you don't have that to our committee. how much does aarp receive annually for the use of aarp's brand for aarp medicare advantage insurance plans in aarp medicare prescription drug insurance plans each year over the course of the current contract? >> i can give you accumulative answer if that suffices because i don't have it by the individual insurance products. it is roughly 420-430 million

from royalties from united health care for their ability to use our brand on their products. >> okay. i believe that's already publicly known. could i request you to respond in writing to that? >> we can -- we can respond in writing, yes. >> with the answer? >> yes. >> all right. thank you. i thank you, mr. rand. i now recognize the ranking member, mr. stark, for five minutes. >> the report from my colleagues across the aisle raises some objections to the aarp sponsoring of nascar driving

jeff gordon. this race is question -- this raises questions according to their report about whether scarce taxpayer dollars are being used to sponsor a nascar team. you do sponsor a nascar team? >> we sponsor what we call the -- the answer is yes, and as the drive to end hunger car. >> well, i guess if it's bad for aarp to do that with taxpayers' dollars, it's okay for the pentagon to do it. i'd like to insert in the record the role call vote, february 18th of this year, an amendment offered up by ms. mccollum from minnesota that we eliminate $700 million in funding used by

the department of defense to sponsor a nascar vehicle, and i'd also know that my colleagues and most of the republicans on this committee voted against that amendment. and if you did vote with us in eliminating these fundings, thank you, but it seems to me that there's a difference here that it's okay to spend taxpayer funds on nascar by the department of defense, maybe it helps them learn how to fly those airplanes or whatever they are doing, but then to insinew ate that you all, aarp, are doing something sinister, that just doesn't seem quite right to me, and i wonder if, mr. rand,

can you explain why aarp makes this investment in nascar, and why you think it is valuable? >> well, number one, we don't make the investment in nays -- nascar. we make the investment in a coalition of both awareness and partners to end what is an insidious issue in america which is 51 million people who suffer from hunger who go to bed every night struggling to figure out how they are getting their meal. >> you make money. >> we don't make money on this. >> i mean, there's revenue coming out of the nascar thing? >> no. we take our revenue, and we invest in this issue. >> which is to help? >> >> end hunger, help us with hunger, to figure out how we can have a national network -- >> okay. >> that helps with the infrastructure, access to food, delivery of food, awareness of

the issue. we believe that we have six, over 6 million seniors who suffer, yet another 6 million including their family, that's 12 million that are focused on -- >> sounds like a great -- now, can you explain what the department of defense does with the money they make on their nascar involvement? >> i can't, sir. >> i suppose they bomb yemen or any ideas what they might do with it? >> no, sir. >> okay. i don't either. i mean, it seems to me if it's all right for our people in uniform then it's all right for us old folks who wore uniforms for years. does that make sense to you? >> it makes sense to me. >> all right, good. thank you, thank you, mr. chairman? there's a new chairman, thank

you. >> that's me. >> i yield back. >> thank you, mr. stark. mr. rand, i want to put a chart up on the screen. i know you can't see the tv screens, but i believe you have it. i think our committee provided it. it's chart number seven, and if you could put the chart on the screen for the viewing audience, i would appreciate that. i want to call attention to this chart. it must be operated exclusively on social welfare and promote common good. this chart's derived from the consolidated financial statements. the red line shows royalty revenue, and i'll get back to the definition of royalty in a moment, but royalty revenue including payments from insurance companies with a 2 00% increase from 2002 to 2009, last

figure in 2009 was $657 million. dun at the bottom, those lines that are not as easily seen are dollars transferred from aarp incorporated to aarp's legal counsel which was actually showing a decrease of $300,000 over that time period, and dollars in the blue, i'm sorry, in the gold is dollars -- i'm sorry, blue, dollars transferred from aarp to the aarp foundation which was $3.1 million, so in looking at this, you know, the for-private entities that brought in these royalty revenues and your charitable mission, the growth has not kept pace, and so this calls into question in my mind, are we really meeting that obligation as a 501c4 which are charitable

contributions. how does that comport with aarp's exempt status, sir? >> all of our money does go to the mission. there may be a particular program that has not kept pace with investment, but i will tell you that with the -- >> when you say mission, are you referring to your -- >> our social good mission. >> that leaves $414 million on the table here if you just do some simple math that -- i'm just wanting an explanation of the discrepancy here. it seems to me that those bottom lines would not be flat or showing a decrease over that time period. >> mr. chairman, may i add information here? >> yes, sir. >> i think part of the problem comes in looking at the difference between a c4 and a

c3. >> no, i understand that. >> i know you understand it, sir, but the requirements and definitions are considerably different. >> okay. i'll get to that in a moment, but thank you. >> okay. >> let's move on to something else. i want to follow-up on some of the inquiry that mr. herger was working on. in looking at the medigap policies, i understand that you have licensing agreements with insurance companies; is that correct, sir? >> we have a arrangement where we have our brand that is lent to them assuming that -- >> this is the licensing agreement. >> you can call it a license agreement. we call it a royalty. >> royalty. okay. i'll get to the definition of royalty in a moment, and under the medigap arrangement, only

due-paying members, aarp members are allowed to participate in the medicare policies, is that correct, sir? >> sir, again, if i could? >> well, mr. rand runs the organization. mr. rand, can you answer that question? >> you -- >> is it only due-paying members allowed to participate in the aarp medigap arrangement with the insurance companies? >> i believe we have some products that you don't have to be -- >> i'm talking specifically about medigap. >> when you start out, the answer is yes. some leave the program and stay with the insurance, and we are happy that they stay with the insurance. >> okay, okay, fair enough, and you receive in this arrangement at least based on the information we gathered from public records and so forth and your consolidated statement, you receive the premiums that are

collected from these beneficiaries in the medigap policies; is that correct, sir? you collect the premiums? >> there -- they are collected in the trust fund. >> part of aarp. >> that's right, since 1958. >> that's right, and you retain 4.95% of those premiums as royalty? >> no, sir, that's incorrect. we don't retain any of the premiums. those premium dollars are written to the specific insurer. >> i understand they are written to the insurer, but there's an arrangement by which you retain a royalty -- >> no, sir. >> what is this 4.95%? >> it does not come out of the premiums. the premiums go into the trust fund, sir. >> okay. >> they are then matched --

>> so is this a separate royalty payment by the insurance company? >> no, sir. >> where does the money come from? >> if i could just complete one statement. >> go ahead, sir. >> perhaps i could be clearer. >> go ahead, sir. >> the trust fund is a collection in which the beneficiaries send their check. there are 2-2.5 million checks and wires that come in. they get collected, and they are given to the appropriate insurer and that's part of the administration that the trust has. >> okay. so this is an administrative fee you're saying? i have a document here from rhode island, state of rhode island that shows total member contributions, lives covered, breaks it all down, and it says royalty to aarp, percent of

member contribution, 4.95%. >> that's the royalty, sir. >> that's what i asked you in the first place. >> i know, but royalty has nothing to do -- royalty has nothing to do with the trust fund. it has -- the trust fund just takes the beneficiary's payment to united or jenworth, or any other insurance provider, collecting the dollars and transfers it to the appropriate insurer. that's all it does. >> so the 4.95% is not -- >> it's the royalty fee associated with our contract or a contract that talks about we're going to lend you our aarp logo if you do certain things associated with improving insurance products to our members and people 50-plus. >> so there's a 4.95% go to the

grant or trust or aarp? >> it goes to us in revenue. >> i know, but what entity? >> aarp. >> but, okay. well, let's leave that there for a moment. royalty income, which is excluded from unrelated business income under section 512b of the tax code, often raises a number of questions, and there's been litigation, and while royalty income that's excluded under the code is an issue that is difficult, you know, a lot of times it relates to intangible property. it's my understanding that putting aside the 4.95% issue which you classified as royalty earlier, you also retain these premiums. it's an unspecified period of time. i'm not certain what that period of time is. can you tell us how long they

hold on to the collected premiums in medigap? >> there's two processes. the first process is the collection process. there may be 2-2.5 million either in electronics, the rest is mail. those are sorted through for the various accounts, ie united, so that's an administrative process. that administrative process can take anywhere from a week to two weeks or three weeks depending on how these checks come in. during that period of time, that trust, financial prudence is also in an interest bearing account. >> is there someone beside an interest bearing account? >> as the money comes in, it's in an interest bearing account. there's no other money in

there. interest bearing the. >> okay. >> so that week or two days or three weeks, we earn a small interest as any interest bearing account, as your own checking account that you may have. >> i understand. >> that's one issue, and i think that's the one you're trying to get to. that interest has nothing to do with insurance companies. it does not affect any of the payments associated with the beneficiary. >> you pay tax on that interest? >> i believe we do, but i don't know. >> okay. >> i mean, i'll find out for you. weal get you -- we'll get you that information. >> and get us some idea of how much you earn with that, i mean, what kind of interest earnings do you get on that and the tax paid on it would be helpful. >> we'll get you all that information. >> thank you, sir. you mentioned there's another aspect to this, and -- well, let me back up a moment.

this is all set by con contract arrangement? >> since 1958. >> i understand that, but the -- you have a separate contract with united, for instance or genworth for the handling of these premium dollars? which specifies how long you might hold on to it? >> no. >> there are no contracts? >> well, we have a contract to do the administration for them. >> can you provide us with those contracts? provide the committee? >> yes, we can. >> thank you, sir. the -- you said earlier the interest goes back to the mission. that was kind of a broad statement. i'm just following up on a quote you gave in questioning to mr. herger and that the

royalties have nothing to do with the premiums. can you elaborate more on that? >> premiums are what the insurance companies charge the beneficiaries. >> right. >> separate issue. we have nothing to do with that. royalties come from an agreement when we go through a process that says who can meet the wants and needs of our membership and 50-plus populations. we understand clearly what the unmet needs are. we take those unmet needs, and during the process we invite, in this case, insurance company then, and say who can do the best job in changing the marketplace to meet the unmet needs of our seniors? who can have the quality that our seniors expect?

>> well, i understand that. >> we then -- >> okay, go ahead. >> we then sect. when we select, we then give them permission to use our brand, the aarp brand. with that permission to use our brand, we have royalties and payments for that. >> okay. now, does aarp services have any role whatsoever in setting the premiums? you know, the premium rates? >> the answer is no. >> okay. thank you. that's all i have. >> i thank the gentleman. ranking member of the oversight committee, mr. lewis, is recognized for five minutes. >> mr. rand, mr. hammond. i want to thank you for being here, thank you for your great service to the nation, and for all of your great and good

work. now, the republican report state that aarp charitable contribution only increased by 11% from 2004 to 2008. now, aarp is a social welfare organization. american cross road, gps aarp medigap social welfare organization, the tea party is a social welfare organization. both want to repeal health care reform. i'm not aware of any charitable activity or contribution by either of the these organizations. mr. hammond, are you aware of any social welfare organizations engaged in charitable activities? can you please describe for the committee a few of the charitable efforts of aarp? >> thank you for the opportunity, mr. lewis. that's one of the things i was trying to talk to others about.

a c4 social impact organization is simply that. we established a charitable arm to c3 to deal with vulnerable populations who are in need of assistance in the very essence of their lives to try and state together. the c4 is working on a broader basis on our social mission. we're looking to help people in need, and certainly we do, but we help them in different ways. we help 53,000 job seekers through our 2010 job fairs. we're helping with the drive to end hunger which we are financing. folks say, well, you know, why don't you just throw that money at hunger? why don't you just feed people with that money? well, that would be fine, and it

would feed a lot of people, but the focus suspect that. the foe sus is on -- focus is on defeating hunger in this country and putting a stoplight on hunger and make people understand what a big problem it is. we raised money for relief in haiti, raising money for relief in japan. as mr. rand stated earlier, we've through advocacy efforts saved members money on utility costs. we represented tens of thousands of people at no fee in cases where age discrimination is involved. we've supported efforts through our add volunteers advocacy which is oughts perfectly legal part of the c4 to do the kinds of things our people say they need having done. we're looking at 100 million

americans who are age 50-plus, about 37 plus or minus are members, but we're not doing it just for our members, but we're doing it for everyone. >> thank you, mr. hammond. mr. rand, do you want to respond? >> i want to add clarity. this is what i was trying to explain when we were asking the questions about where does our -- where do our dollars go in terms of a social good organization. roughly 25% of our revenue,25% of our expenditures, excuse me, go to benefits such as tax aid, driver safety, other programs, 25% of our expenditures. member services, 240 million, about 24%. advocacy and research, 10%.

communications operations, 8%, and that's really focused on education where there are great magazines. those are some examples on a higher percentage basis well beyond the two programs that there seems to be a chart that says they went down, but this tells ewe -- you in a broad sense that the vast, vast majority that all of our money really goes to our social welfare mission. >> thank you. mr. rand and mr. hammond, i find it so strange and out of the ordinary that if our republican colleagues of mine are attacks aarp today as retribution for health reform, it will be more than happy as mr. stark suggested to stand with you when they created the medicare drug benefit. i want unanimous consent to

insert in the record a list of quotes from my republican colleagues when mma was passed. mr. rand, i don't believe you were at aarp at that time, but mr. hammond -- >> without objection, the gentleman's time -- >> mr. mr. chairman, you took more than 50 minutes. i went to vote, and when i came back, you still were asking questions. you took at least 15 minutes. >> the gentleman's time expired. mr. johnson is recognized for five minutes. >> thank you, mr. chairman. >> thank you all for being here. >> the health care bill cuts medicare advantage by $206 billion. those cuts are going to result in millions of seniors no longer selecting medicare advantage coverage either because the plans are no longer available to

seniors or because they are too expensive and offer fewer benefits. i want to know if you were aware of these cuts when aarp endorsed that legislation? >> mr. johnson, if i might answer? >> sure. >> yes, we were certainly aware of those cuts. that's been aarp's position since medicare advantage was first instituted. we do not believe that access payments should go to programs that are paid for by the other 75% of the taxpayers who are involved in regular medicare. that's been our position and our public policy for at least 10 years. >> so you don't believe that people ought to be able to choose their own health care program? >> we absolutely believe they should choose their on programs. we don't think they should be subsidized into programs. >> okay. the for-profit aarp's insurance plan collects medigap premiums,

invests money, earns interest on it, and then keeps 5% of the premium amount and the interest earned off the cloak. the rest of the premium is sent to united health group. the 501c4 receives royalty payments directly from united health group for aarp's medicare advantage and medicare prescription drug plans. why does aarp handle insurance profits differently depending on whether it's medicaid advantage or medigap? you want to answer that too in >> yeah, i'll give it a shot and mr. rand can fill in with anything he has to say. >> number one, medicare advantage is a program that is sponsored under medicare, not through private insurance. >> that's right. >> it follows all the government regulations.

therefore, the way that that royalty payment is done is under federal regulation. >> okay. so you didn't really tell me about medigap though. >> medigap, i think first of all, i'd like to make a slight correction in what you indicated. all of the premiums for those issues go into the insurance trust, the grant or trust that the chairman was talking about. that is a legal entity set up in 1958 to receive those and to hold the group policy and to receive the premiums, hold the premiums, invest that, and, yes, we do receive interest income for that float which is perfectly legal. we do take royalty payments from that money that comes in, and

then as requested by the insurance companies to cover their products, we return the balance of that money to them. >> does aarp receive more in royalty payments for aarp branded medigap than medicare advantage plans? >> i'm sorry, sir, repeat that. >> do you get more from medigap than you do medicare advantage, plans that y'all have started. >> talking about royalties, sir? >> yes. >> yes, we do. >> you do? >> yes. ..

advocating for and it looks like your braking in the cash while they are losing benefits and pay more for coverage. >> may i make one comment, sir, one of the priorities we set is that no traditional benefits under medicare would be lost in fact medicare would be strengthened so i just want to make that clear in terms of benefit cuts. >> the gentleman's time -- >> my time is expired, thank you mr. chairman. >> the gentleman dr. mcdermott is recognized for five minutes.

>> i think you gentlemen understand what you're being made part of today. it's the re-enactment of a play by arthur miller called the crucible. is a play about witches in salem and the evidence had to be found that these women were controlled by the devil. your sin as you know is that you back to the affordable care act. now, i'm sure the chairman has a long list of other groups that are going to be brought in here, and ensure that the pharmaceutical industry will be brought in here because they got a deal they don't negotiate pharmaceutical prices that credited secretary sebelius has

prevented from negotiating better prices for seniors. pharmaceutical industry i think they must have gotten a pretty good deal on that. that was put in back when they put in the drug benefit of two years ago, and they said you couldn't negotiate better prices for seniors. you could do it for veterans, quite a bit for them before the, 50, 60%, but you couldn't do it for seniors, so the pharmaceutical industry cost quite a bit in there and they support it. i am sure we are going to have them in here to go over their finances and how their money is spent and where they get it and how they use it for lobbying and get tax deductions and then we will probably have the medical device people appear and i keep things from the scooters were saying you have trouble moving around? just come on in and we'll get

you a scooter and will be paid for bye medicare and goodness they got a little deal that went out in the care act, and down the list we are going to go. the question really is are we going to go after every organization that is a 501c3 and a 501c4. and if we are going to start that, then we are going to have churches in here. there ought to be some churches we look carefully at. this is an oversight committee and we ought to be going after them. the question that comes to my mind in listening to all this is how did you make the decision to back the affordable care act. i don't think you got just one morning and said let's back this thing, tell us about the process you went through because i want to understand why you committed this sin.

if you confess your sin to end this hearing and go home if you won't confess as to how you can to this terrible decision i'd like to hear you talk about it. >> thank you very much for the opportunity to talk about it. first of all, as many of you know, this is a vital part of our mission to have affordable, accessible health care for all americans. it is health security. this has been our mission for over 50 years, over 50 years. when we talk to our members they ask us what it was the needed the most. we took down a list of what they said they needed. one was no pre-existing conditions because they couldn't get insurance yet they were still getting sick and was their leading cost of bankruptcy in

homes and so we advocated for no pre-existing conditions. and in fact, there were many portions of the insurance industry pushing against the age reading because they were getting older and we are paying ten sometimes more depending on the state than a young person as we have less out of pocket to pay. we don't want age discrimination to continue so we advocated for taking the ten x they were paying and the bill has the maximum 3x. we don't get enough money to send our kids to college and at the same time try to figure out how to pay for their separate insurance so we would love to be able to have them on our insurance policy. so we can do both, helped give

them a the american dream, closing the doughnut hole. >> the time is expired. if you could close up quickly, please. >> because a was 40% of the out of pocket cost we closed the door mudhole completely following the community care options for those people who don't want to go to nursing homes -- >> the gentleman's time is expired. i recognize the gentleman from washington, mr. reichert for five minutes. >> thank you, mr. chairman for being here this morning. first of all, the conditions listed i think most members of the panel, democrats and republicans would agree with, i do. we take issue with some of the comments as far of the witch hunt. we can demonize this about

really what it boils down to is representative in florida who represents a lot of seniors who have some questions. it's his responsibility to have those questions answered. and then as far as my part in this, just an old cop. and so i hope you can understand you know and understand why you're here today. we just want to find the answers, and so i just want to go through a couple things. first of all, look, we exchanged some letters coming and the responses we got back were we met them all in response to the questions that we asked, and in fact this transparency issue is referred to earlier by the chairman where one of the comments made is no public or confidential propriety or information, some information is not public or confidential and

proprietary to only the aarp and its member benefit providers. there is a transparency issue after the letters were sent and the responses were really not adequate we had a face-to-face meeting with your cfo tom nelson, and others couldn't answer the questions that i posed to them. the one out of four seniors will lose medicare advantage. what happens to those coming you have act were real scientists working in your organization, is that correct, just yes or no because my time is limited. >> yes. >> i would assume -- i don't believe we factorial because we are not in the insurance business -- >> you must have actuaries who can now about your future for you, right? you're a large organization you have to have actuaries. i would think -- >> if we do i will give you --

>> thank you. the actuaries have to look out forward and say we can predict what's going to happen to these one out of every four seniors how much insurance they may lose its benefits are for aarp, united way, with the impacting affect will be, but we finally had to end up calling in health and from the irs. this report as people refer to it as the republican report is a report formed with the health debate to help with the irs personnel who assisted the staff in going through this information. this is sent me the information. this is accurate, statistical information gathered through a very serious analysis of the money that you are making in revenue birse the covers is the money that you're disturbing in your 501c3. one of the answers, nelson gave me is that this whole thing is

for protecting the greater good, which kind of goes to your, one of your mission statements and enhance the public good but what about protecting the american seniors we don't want others shouldering the burden of paying these traditional premiums to allow others to have insurance. the whole health care bill is built on that. am i not correct? yes or no, please. the whole health care bill is built on others for helping to provide for others isn't that true? so -- >> yes -- >> thank you. so why would you be against another program that is helping seniors and others shouldering the burden? that doesn't make sense to me. the fact that you support these cuts is just amazing to me.

protecting aarp's members -- aren't you concerned about that? aarp come your not suggesting i hope that the half trillion dollars of medicare cuts the would jeopardize the seniors access to health care is good for seniors. are you? >> no, and i'm ready when you would like me to respond. >> do you -- you keep records, meticulous records, right? i would just like to say if you can provide me with a list of times you visited the white house i would be interested in that. thank you. >> the gentleman's time has expired. mr. thompson is recognized for five minutes. >> i just want to state for the record i believe that it's totally appropriate that we look at the tax status. i think it's a very important thing to do, and this kennedy

certainly has the jurisdiction responsibility to review this issue. i think our taking it on is very appropriate. also, however, i want to state that review i believe must be fair and impartial, and it shouldn't be done to carry out some sort of political vendetta. after aarp support of the medicare part de measure this support i might add was counted by then-president bush and a speaker hastert, chairman thomas, of this committee and the chairman of the other committee with jurisdiction. aarp's financial interest i think was probably more clear than in than it is after the support of the health care measure, and there was no question as to whether or not their tax status should be looked at, there was no

oversight of aarp at that particular time, and i just find it curious that we are looking at this particular time, and i think we have to ask the question is this political payback or will this committee be receiving the tax status of other nonprofit organizations that didn't involved in the political process such as 60 plus, the republican leaning group that claims that it is the alternative, the conservative alternative to the aarp. i'm a little mystified as to why they aren't here, or american crossroads or the tea party for that matter or churches or even corporations, multibillion-dollar corporations who show multi-billion a was of profits and then we read in the papers they don't pay one single dime of corporate taxes. i think it is a very slippery slope where we are going today,

and i just want to make sure that everybody recognizes that and i'd like to see this committee get back on its regular order course of business. i wanted to give mr. rand and opportunity to finish his comments. to finish. will he be coming back or -- >> he will be coming back if you would like to freeze the question if it's appropriate with the chairman i would be glad to try to give you an answer. >> why don't you go ahead and finish up where he had left off. do you want to rephrase? >> yes. my question really was the process by which you arrived at the decision to back the affordable care act and he was describing the things the members had talked about and wanted but never got to how that decision was made.

>> the decision was made by the board after it would seem like torturous hours of discussion and as stated the decision was made based on the principles we wanted to see included in any health care reform act. these are the principles of the things our members told us they wanted to see in the act and as mr. reichert indicated, there are things almost all members of the committee agreed with. we would love to have seen that done on a bipartisan basis because that is what we would try to operate. but we felt that we had to support that act because of those principles and the benefits that would give to seniors. >> mr. lewis, you were cut off during your questioning. would you like to take the remainder of my time to finish

asking your question? >> i appreciate i think it made the point that i planned to meet. >> thank you. i yield back. >> the gentleman yields back. i request unanimous consent that the investigative report behind the veil of the aarp america doesn't know to be entered into the record without objection. >> reserving the right to object. >> the right to object has been recognized. >> reserving the right to object i haven't objected because there is a question as to whether this is an official document who prepared it as a political document and the ways and means document, this is a congressional document. i see your name on it and my fellow colleagues, but i have been waiting to see where this came from and so if you put it in the record how would you

identify it as to what we would look forward to in reading it? if you would help me i'm certainly anxious to withdraw any objection at all, who paid for it, where did it come from, is a campaign document, did it come from the republican congressional campaign committee, or is it a ways and means document without a seal, dak knows i know what the seals mean. >> the gentleman i might mention that the whole purpose object of this hearing is on this report. the committee on a regular basis submits and are accepted by unanimous consent documents that are not involved in this hearing. if the gentleman who doesn't remove his objection we will call for a vote. >> i don't have to remove my -- the one question who pays for this report, where did it come

from, why is there no identification, is it a federal report? that's all i'm asking for. i don't want a roll call vote, i'm ready to roll over and accept it, but i just want to know why it is only to members names on it and why is the source of this information not put on the compass so when i do read it i would no who paid to have this done. if the government paid for it, i would think -- >> again, the gentleman has on the report who has asked for it, so it's my indicated here again if the gentleman -- would the gentleman like a vote? >> i want to withdraw my objection. all i'm asking is who paid for the report and where does it come from? i don't want to make a sheet out of this to you and your colleagues before this? >> the gentleman looked at the

report but it's obvious -- >> it's not obvious and you could direct my attention to what i'm missing. >> with the chairman yield? >> it's my recollection mr. stark issued a similar report in the context -- >> he may have been wrong in doing that. [laughter] -- since you're admitting that -- >> as to what the committee should be doing. >> my friend from new york. it was prepared by two members of the committee. >> you did it, you paid for it so that answers my question. i reserve my objection. estimate the right to object has been reserved. >> mr. chairman, i'm not interested in rolling over. i'd like to know are we saying that this is a report that was produced by just two particular members of this committee? and if it was produced by just to protect other members i'm interested in understanding what

does the committee generated report, and if so, at what point was it shared with the other members of the committee? >> again it's on the report as was mentioned to the gentleman from new york. there's actually three members, former congresswoman ginny brown-waite was also involved and again i think it's very clear -- >> so committee resources used to generate this report or was it done through members account monies or through some private account money squawks >> this has been done through the same account through committees, through the member's account as would be done if you had asked for the gentleman from california had asked from a report from anyone else. >> of the committee or of my staff? i'm trying to determine whether this is a -- >> with the gentleman like a vote or what he removed his -- >> i'm reserving the right to object and i'm hoping to get responses to the question

because the report doesn't identify other than investigative report prepared by dave reichert. does that mean this was prepared mr. chairman by you as a member and mr. reichert as a member or by you as the chairman using the resources of the ways and means committee. speed is the gentleman objecting or not objecting? >> reserve the right to object. >> the gentleman is recognized. >> there is no debate on this report and if we were supposed to consume at so we could respond today we certainly were not given much time. are you telling us, mr. chairman in the very simple question this is like any other report this committee asks for and the people who worked on it would pay their usual salaries, nothing more, nothing less,

there was no external force used -- >> the gentleman -- we need to move on with this hearing. >> we don't need to move on unless -- >> we aren't moving until we get an answer. >> what is so complicated? spec i remove my unanimous consent. >> reserving the right to object. i removed my unanimous consent request and. >> your staff prepared the to prepare the report and you have an understanding that we are not clear who prepared the report and that's all we're asking today. >> the gentleman from illinois is recognized for five minutes. >> back to you in the booth. a couple of questions earlier in

your testimony and written testimony on the first page down at the bottom use it and interesting thing to sentences of your testimony and let me make a couple of inquiries in light of some of your responses to mr. mcdermott and mr. lewis. we've long maintained the we for revenue in exchange for a lifetime health and financial security for all older americans. as an example of this, it's very likely under the affordable care at the aarp branded insurance plan for 50 to 64-year-olds will become obsolete and will no longer receive revenue from those plans. is it your intention to forego future revenues or royalties or sources of income as the affordable care act rules and and are you committing today that you're not going to be earning any of those revenues or royalties or sources of income

from areas that are in the exchange? >> we really haven't had a conversation about the exchange and the strategy about the exchange. >> but that's what you're in pulling in the sentences, aren't you? >> notte. >> okay but when you say that we would forego revenues if this had and come and as an example of that we are for doing revenues that is a reasonable implication of the sentences together isn't it? >> if it's reasonable for you i wouldn't say no. you are putting the two sentences together and perhaps it was my lack of clarity. and so therefore -- >> and i read them together in context. >> would you like me to clarify them, let me put it in context. >> yes, sir. >> you gave us a description of some of the elements of the

affordable care act that he found attractive and i understand those. i need a note. no pre-existing conditions. you reference to the age changing from 10x3x, the baby boomers keeping children on their coverage, closing the doughnut hole, the community care options and there were other things you got cut off based on time that were attractive to me. what are the weaknesses of the affordable care act that compel you to keep an option open that would suggest if the affordable care act isn't successful that you may have to continue in the revenue royalty or income element of this in order to preserve your mission, what are the weaknesses of the affordable care act that compel you to keep the option open. >> let me explain the intent of my statement.

we have long been accused by some elements of being in this for money, for revenue. >> hold that thought that we come back to it. let me highlight some of the folks that have accused you of that, because it's interesting. our panel members really don't disappoint, do we. the gentleman from california, mr. stark, said that aarp members know that they're being sold out by an organization, you, from past conduct, not your action in the affordable care act. the gentleman from new york mr. rangel said that aarp has forgotten where they come from because once you get in the business of making money with the devil you forget your mission and the former speaker mrs. pelosi said she complained that you were in the pocket of republicans at that time and suggested that you had a financial conflict of interest so you're point is you receive a lot of criticism from a lot of circles, but go ahead.

>> that was not my point, that was you're point. [laughter] >> the issue at stake here is that our mission started in the 50's. i was 14-years-old when the mission was stated and that is that every american should have access to affordable health care and therefore health care security for life. the question becomes one of many. one is affordable. right now we are having conversations about medicare that medicare is the problem. medicare is a recipient of the expenses of many industries. >> understand that. so, the question is -- >> affordability is the answer. >> and the affordability care act doesn't satisfy you. it's going to maintain affordability and therefore you need to keep the option open to

sell and be involved in these products in the future, is that really it? on of remic the gentleman's time is expired. the gentleman from new jersey mr. pascrell was recognized for five minutes. >> mr. rand, you are a tax-exempt corporation from a private association commodus sir. >> i have a couple of questions for you mr. chairman. i'd like to know whether or not we think or you think that there are specific laws that have been broken here with regard to this tax xm organization. is that one of the reasons or the reason why we are having this hearing? >> that's an and proper parliamentary inquiry. >> oh it is?

>> my question is what laws do you think have been broken since we look at policy and we are not looking at corporate policy here, we are looking at national policy. that is the responsibility. >> i thank the gentleman. again that was outlined in the report, that's why we are requesting of the irs to look into this and let them decide whether or not they properly should be paying taxes on the large amounts of money that they seem to be benefiting from legislation the was passed. >> i think there are legitimate questions that followed the question whether there's a violation of the for-profit nonprofit status and legitimate questions about what is taxable

income versus non-taxable income. >> can i have my ty please? >> none of us are saying this i hope to make aarp policy, if the majority actually looked at the broader question here that we are supposedly discussing on taxes and section 501c for, that is a very specific code as you know that the sixth largest social welfare organization that has a 501c4 classification is a tax-exempt racetrack and casino

which operates in iowa and it pulls in $2.2 billion a year can you blame us for asking questions about why now? it's hard for me, it's really hard for me and i'm sure you will help me understand why a racetrack and a casino is more deserving of this classification than -- because that's when you're getting at, your question in the classification of aarp. you didn't do it eight years ago but you did it now. this classification is that aarp, very clear here the majority will lead the aarp is working investigative team more so than this racetrack. i find that hard to accept. i know for a fact that aarp does great work. i've disagreed with some of your philosophies, so what. can you share with us how aarp directly helps americans and are

in all of the districts of the country? >> yes, i will. let me just give you some snippets in the job category that helped 53 million job-seekers through 2010, 53,000 again we talked about ponder and about 2.6 million finalists pre-tax returns support of schools, provide more than 20,000 supplies and 43 states. the wolverines a bus, we have a tour that we completed 2 million free health screenings, 359,000 people participated, aarp litigation represents tens of thousands of people at no fee and for 160 cases and in 2010 alone again we saved utility in over 18 costs and over 18 states

state $3 billion from the consumers in the state's expanding the services for home and community-based care. >> thank you, mr. rand. you could go on and on. i'm sure our great chairman would agree with all of those activities in the field. he wouldn't want to end any of those activities because he knows to the citizens which he represents and i represent. thank you mr. chairman from your operation. >> i ask unanimous consent to valente the record a letter from the chief operating officer tom nelson which states that less than $31 million out of the $650 million in aarp insurance revenue went to the aarp foundation in 2008. >> reserving the right to object

has that document been provided to the members of this committee? >> this is a letter that was posted on the aarp web site. >> and understand that, and i have no reason to disbelieve the chairman and what he's saying that the letter detect that none of us have seen this and you're asking to be part of the official record of the hearing and typically what happens is the chairman will make available to every member any document that's going to be part of the record and i like this report was never provided to members to be for the media by would want to make sure members are provided with the information the will be part of this -- i might mention the minority and heard all ready to letters unanimous consent that have wracked the company entered but not distributed. >> that's fine. we appreciate the indulgence of the members the didn't object but this is proceeding in an irregular fashion when it comes to this report and so i would be interested in making sure i know

what is being put into the record as part of this hearing. i am responsible to my constituents and anyone in america for what this does and that i was engaging in any form of witchhunt and so interested in knowing which way to be part of this hearing. >> as the gentleman continuing to object? >> unless i can see the document that the chairman saying he wishes to submit to the record i will continue to reserve the right to object. >> i've been handed what is --. >> i would remove my reservation >> does the gentleman review his resignation? >> ticket to demint to review the document. >> the gentleman's objection has been removed so without

objection it will be submitted for the record. now the gentleman from georgia mr. price, dr. price will be recognized for five minutes. >> thank you mr. chairman i want to commend the author of the report because if it brings into question what mr. pascrell talked about as a legitimate question as to whether or not the tax-exempt status of the aarp is warranted and that is a legitimate question and i want to open by simply saying there are a lot of folks in my district who are members of aarp and a lot of folks who volunteer a lot of time and put their heart and soul into efforts to try to help seniors in our community and i want to thank them for the work they do and they are giving such volunteer time to is functioning in an appropriate and legal manner. >> i do want to follow-up on very briefly on the issue of the

support for the health care act. that is part and parcel of the of rejection of the other side. and there was such a huge disconnect between the seniors in my district about their lack of support for the health care act and medicare's aarp's support for it and i think that's what caused the folks to say scratch their heads and say what's going on here, is aarp really -- do they have my senior's best interest or do they have other reasons to act the way the do? and dimension and number of things you felt were appropriate in the health care bill and that's why you supported it because it ended a pre-existing allegedly in the like. it builds the seniors adamantly opposed and so you don't believe the seniors support the rationing of care, do you?

>> we don't support it and i'm sure seniors of -- >> exactly so there is that in the inconsistency you don't believe seniors want it more difficult for them to find a position to care for them, do you? >> we have been supportive of the dhaka six. >> but i get seniors all the time in my district to say i can't find a medical doctor, i can't find a medical doctor because the rules put in place and that's right increase and i know you don't support that. you don't support a decrease in innovation and the health care system, do you? seniors don't come today? >> i don't think anyone supports -- >> exactly. >> the lack of innovation. i believe there's some aspects of the legislation but is there to help innovation, and there's a difference of opinion, isn't there? so there's a difference of opinion among seniors just like a difference of opinion among

the regular population out there which again is why so many of us scratch our head and said well what is aarp doing? there's a huge difference of opinion. the majority of seniors right now believe the bill will in fact a decrease their ability to get the kind of care to desire and that is why we say what was going on a want to shift to this issue of the tax-exempt status because it's incredibly important. it is an appropriate question for this committee to ask, is it not? whether or not an entity as large as the aarp out there is following the appropriate tools to maintain the tax-exempt status. is that an appropriate function of this committee? >> i believe the committee has wide powers and if you want to do that than -- >> i have here a number of questions that i understand that members of the staff of the folks they put together this report were unable to get from

the aarp in spite of the suggestion by aarp that they are open and transparent and want to share the information so i wonder if i might be will to ask to be able to supply these things for the committee's availability. how many millions of dollars still aarp received from its medicare insurance business? that ought to be something relatively simple, shouldn't it? >> we will provide any of your ads that we have sold control over. there are confidential contracts which we can make decisions about bye ourselves. >> i look forward to seeing those, the benefit the in the aarp members received after the aarp revenues increased the members didn't receive in prior years, those things we ought to be a will to get the information on should we not?

>> steny to get that in writing is appealing understand that request degette >> i appreciate that. will we will do is submit these questions to you in an effort to be transparent and open and provide them the public with the greatest amount of information look forward to those responses or why they can't be answered. >> the time has expired. >> the gentleman from new york restaurant was recognized for five minutes. >> thank you mr. chairman. i ask unanimous consent of that this document called behind the veil, the aarp doesn't know, the place into the record i cherish the privileges that we have on congressional -- >> reserve the right to object? >> the right to object as been recognized. >> the report that my colleague

and friend mr. rent was asking be put into the record has this been pure review by anyone? >> come any organizations? >> this is mr. trinkle's request. >> i understand but it's your report. has this been peer reviewed or -- >> this report has been -- we requested it has been prepared and has been submitted. >> but has it been peer reviewed. >> it's before all of you right now, not any more than other reports are. >> might i add the report has 246 footnotes documenting everything thoroughly in the report. >> a reason why you don't want us to know who prepared it and who paid for it and why it's not

official. i just want to protect the privileges of the members of congress not to be challenged when they want to put things into the record i truly believe we have a responsibility to protect that record and to know what we are by unanimous consent putting into the record so i'm asking unanimous consent notwithstanding the many unanswered questions that it be placed into the record and that we can foresee to make certain that my motion is not abused by other people who just want to stop people from expressing themselves. so i ask that it be placed in the record by unanimous consent. >> mr. chairman, i withdraw my right to reserve on mr. rangel's motion to place this on reviewed report into the record. >> reserving the right to object. >> this isn't taking out of my five minutes i hope.

[laughter] >> you're five minutes is taking away, yes. >> this is a procedural matter. it has nothing to do with the time -- >> reserving the right to object mr. chairman. >> by will, again, raised the concern i have that this report -- this document indicates that it's a report prepared by individual representatives. -- >> this gentleman, this will not be -- we are subjecting it to the record now there is objection. we want to move on to this hearing. i'm reserving the right to object but i believe i have an opportunity to explain my reservation for the question i have answered to see if i will remove my reservation.

>> the gentleman from louisiana. >> i believe i have the floor and i made a reservation to the unanimous consent request. >> to remove or withdraw and i have a reservation on that unanimous consent request. >> it's mr. trinkle's time -- >> no it's not, time. >> will the gentleman yield? >> this report was prepared by the two members on the cover. >> mr. chairman does that mean they use their staff, no ways and means committee staff? >> onerous consultant. >> is it the stuff used pittard report? >> and chairman levin approved it, he was in the loop and approved. >> the use of committee staff? >> yes, and the irs detailed it. >> does the gentleman withdraw?

>> the chairman is representing the ways and means committee staff helped prepare this report and the use of the committee staff was approved by then chairman levin -- >> yes. >> i'm being told that is not accurate. islamic my understanding is chairman levin, when he was chairman, approved the detail the from the irs. >> the time is expired from new york. >> the gentle lady from kansas -- spec there is unanimous consent request on the floor -- >> i want to thank -- >> the gentle lady from kansas -- >> i said parliamentary inquiry, mr. chairman. >> parliamentary inquiry. now under what provision is the chair denying me an opportunity to question the witness?

i made a motion that had nothing to do with asking the witness any questions, and if you were telling me now that because i made a procedural motion that i as a member of the committee -- >> we will start over again with five minutes. >> thank you so much for your consideration. [laughter] now mr. rand, since i don't know where this report came from, can you tell me where you think it came from? >> mr. chairman, parliamentary -- >> the gentleman is recognized for parliamentary. >> i hope this doesn't come out of my five minutes. >> the ploch will be stopped. >> mr. chairman, there was a unanimous consent request that was offered by the chairman from new york as far as i know, that request hasn't been disclosed. i don't see how we can proceed

forward with regular order until we dispose of this procedural request for unanimous consent and i would ask for regular order to be restored and observed and let us dispose of this unanimous consent request. >> with the gentleman like a vote on that? is their objection? >> my question hadn't been answered. chairman tristani tried to answer but the information i am receiving on this side of the list that chairman when when he was the chairman of the committee didn't approve of committee staff been used to prepare this report that he approved the use of a detail the from the irs sign chongging to find out mr. term and a very simple, in answer to a simple question, was the committee staff used to prepare this report?

>> they did work to prepare this report. >> and given that this report was never provided to the members of the committee or the report or the committee staff how to prepare it. >> it's not a committee report. >> the resources are used. >> mr. chairman, you may call it a member report but when the committee resources are used it is members of this committee who have an opportunity and a right to review these reports before they are submitted for a broadcast publication and used by the media i would hope otherwise how are we to be prepared to question witnesses on a report that we are hearing rumor and speculation from all of the place. so if the case is that this is a report that is being requested to be included in the record, and was prepared by the committee staff unbeknownst to the members of this committee for it to be considered into the record as any kind of official documents i would object to that if the chairman which is to

portray this report as a report by two individual members who i believe they have misused the committee resources -- >> that is what it is. >> members of the committee to be misused resources to prepare the report on that basis -- >> ginny brown-waite. >> so those individual members used without authorization committee staff resources with the approval s tomb of the ranking republican at the time resources of this committee to prepare a report which members of this committee didn't have an opportunity to review with that understanding i will remove my reservation and allow this report which is it an official report and prepared under the normal course that this committee is accustomed to preparing reports to be allowed into the record. cynically again recognize the gentleman from new york. >> would you indicate that my -- >> i have four minutes and 45 seconds.

>> i was saying that he never said permission is granted to put in the record. >> the permission is granted. >> did you have an opportunity to see this report from the aarp america, does it know? >> i saw the report, the staff went through and that's the reason why. >> did anyone ask you questions in connections with the preparation of this report? from the committee? >> from the office -- i have no idea why the committee would be asking you questions. do you know who prepared this other than what you've heard this morning? do you know who prepared it? >> that was my understanding as you were going through the conversation and reiterated that there were -- >> did anyone representing office of this committee, any increase? >> no, the answer is no.

an outside organization of a plot to discredit your organization as it relates to your position on of the affordable care act. is their anything i'm saying that is inconsistent with that? >> we are in the position to speculate -- >> is their anything in this report would indicate that the united states congress was involved in the investigating this or did anyone hold themselves out to be staffed of the united states congress and making this report? >> it simply went through the names that you've identified. >> and so useful to members names but they were not identified as members of this committee. >> as a matter of fact.

>> they were not in cannot identify as members of the united states congress. were they? >> not in the report, not in the cover of the report. do you have counsel but tigard normally when accusations are being raised against your organization to be? how could you possibly defend if you don't even know who made them. >> we do the council in the normal procedure. >> i hope he makes an increase as to why would anyone put out a report and not identify who they are as to where they come from because wally and representative david reichert could be ripped from the various states that have what reps? but there's nothing on this report that indicates that the converse is involved in the

inquiry that certainly is not complementary to the work that your organization has been doing for half a century. is that correct cracks. >> i hope your counselor share verney so it is impossible for me to get any information it will be in the record. i would hope that they would find out exactly what was the motivation behind the report because the motivation is just to refer you to the irs anyone can do that without a report, and i would hope that they would ask a question or get answers for as to what was the resources that were used in order to prepare the report, the identification with the united states government, the united states congress, the ways and means committee, the subcommittee of oversight and the subcommittee on health and the reason i wanted it in the record is so that it doesn't

disappear. i want is in the record to be able to use this in the record and i want to make certain that the ability that we have to put whatever we think is helpful to an inquiry, helpful to a hearing that no member be denied for partisan reasons the opportunity to put it in so let me thank you for this opportunity. i yield the balance of my time and i think you for your answers and i look forward to working with you to see that america continues to receive the best possible health care we can provide. the gentleman yields back. and again, this is the report, it says right on the report investigative report to prepared by representative wally herger of california and david reichert

of washington inside with recognition of former representative ginny brown-waite who represents that district of florida throughout it indicates congressional inquiries. so i think it's very clear i think it's important that we not have this as an diverting our attention from the purpose, the very real purpose -- >> what are you reading, mr. chairman of? >> with that, the gentle lady from kansas, ms. jenkins is recognized for five minutes. >> thank you, mr. chair, and thank you for being here to answer the question as representative ross noted earlier representative nancy pelosi the democratic minority leader is on record as having

complained that aarp is in the pocket of republicans and she suggested that because you sell insurance to your members, there is a conflict of interest i'm just curious if you believe leader pelosi is wrong and in the interest of time with the bells ringing just a simple yes or no, mr. rand. >> we don't believe anybody who says we are in the pockets of anybody. >> representative pete stark, democrat from california is quoted as saying aarp members know they are being sold out by an organization that is happily using members' dues and premiums to promote a medicare bill that does more harm than good. do you agree with representatives dark cracks >> we do not. >> representative rangel from new york is quoted as saying

aarp has forgotten where they've come from because once you get into the business of making money with a devil you forget your mission is representative rangel wrong? >> we've not forgotten our mission. >> representative john larson, a democrat from connecticut is quoted as saying why does the national aarp leadership support the bill that meets almost none of their clearly stated needs and conditions as representative larsen writes to question this lot check? >> we have said in the testimony there's a number of items -- >> yes or no. >> is he right in questioning this? >> i don't believe he's right in questioning it. >> former representative rahm emanuel, a democrat from illinois is quoted as saying aarp's latest step forward into the insurance realm gives him some pause. when there are principles about

the medicare drug prices and the importation run into their business practices, which goes? business practices or principles? why would just like you to answer the question which goes, business practices or principles? >> first with principles and policies. ..

>> i do not know. >> could you find out for us? thank you. the point of the jamaica as i think we've run across something that democrats and republicans in washington can agree on and perhaps that is that the aarp leadership doesn't necessarily protect the best interests of the american senior citizens but they pledge to represent. so i simply take a few as representing the leadership of aarp, please don't mislead our seniors. they sent all of us, republicans and democrats alike to this body to represent them. please don't use ms ponds to line your pockets on their backs. without a yield that. >> cannot comment? >> the gentlelady yells back. >> i think it's very important

that we not allow the purpose of this hearing to be taken in a different direction. the seniors of this nation deserves the right to know how money is being spent and whether it's been spent in their best interest. with that, i yield five minutes to the gentleman from oregon, mr. blumenauer. >> thank you, mr. chairman. i actually agree with the notion about the senior citizens. i would first of all like to thank aarp because i have not always agreed on some issues, but i respect the work that is done. the folks back home provides lots of energy and activity. i for 1:00 a.m. sorry that you are subject to do something of that nature because they truly think reading through a 25 a

half page with 2432 dresser that an authoritative in scholarly misses the mark. i find it fascinating on page 17. you are taken to task because somehow you are undermining your long-term business interests because you have underwriting standards that are more flexible in the to the needs of people who are 52 mike 60 that caused potentially money. and you're taken to task for that. you supported the affordable care act, which now requires every american to have these protections, which you undertook that perhaps some financial disadvantage to their motto because you thought it was the right thing. i remember that when some members of congress who used to

support top and seniors with end-of-life care, when the big lie about death penalty and they retreated. aarp was part of 400 individuals and groups that came forward to tell the chairs. not just because someone like my friend from georgia thinks something is than that though doesn't put it in the bill. and i vitiate your zeroing in. this route port takes you to task because aarp had the audacity -- the audacity to support the children health program expansion. assuming you did not only for some sort of convoluted financial benefit, ignoring the fact that your members have children and grandchildren and

great-grandchildren and we all want intergenerational cooperation. mr. chairman, i have read it. i think it's a little bit goofy. with all due respect, the notion somehow that they focus on medicare advantage that is rocky and his nature conan cut. medicare advantage means that 75% of your members who are senior citizens have see first papers pay $90 a year more. so maybe trying to reform medicare and kitsch speaks to the 75% of your members and 75% of american seniors who are paying more because the system got out of hand. >> you've expressed her rationale. >> i just think i'm glad it's in

the record. i hope people look at it. witchhunt is such a nasty turn. i look forward to bringing before s. people who have really crossed the line, people that call mingle fun and push the limits are crossed over them in terms of irs regulations. but i think any fair reading is that your work on preexisting conditions, children's health, end-of-life, medicare reform speaks to what we need to be doing as a country and as a congress. sadly, this morning's exercise moves us no further along towards the implementation that the things that you came out for back in the day used to be bipartisan support in. and sunday, they will again.

i appreciate your effort. again, i apologize for being a part of this, but i do hope people understand this but it is no indictment of aarp. it does say something about this committee's operation. thank you and i yield back. >> shunning yields back. i think it is important to note that aarp and it written in formal testimony did not refute any specific conclusions or findings in this report. neither ranking member refuted any specific conclusions or findings in this report in their opening statements. so all of this talk about which congressional staffer was involved with the report or who the committee will investigate next is simply a stunt to draw

away from the finding of the report, specifically that aarp students to gain an additional $1 billion over the next 10 years as a result of the democrat health care law. with that, yield five minutes. with that i yield five minutes. i yield five minutes to the lady from tennessee, ms. black. >> thank you, mr. chairman. i want to begin by saying how disappointed i am that this has been turned into a witchhunt. it is the role and responsibility when there are things that seem to be outside of what should be happening that we should investigate. but have concerns about other operations may not be operated or they have questions that they bring that before this

committee. just a personal ax. and prior to coming progress and i was the executive director of a 501(c)(3) health care foundation. we were careful because we were providing funds for the half ago, for which we were the foundation about co-mingling members of our boards. one of the things that concerned me a favor this report report was the fact that you are aarp ain't, the 50 -- 501(c)(4) organization is run by 22 board members, but you also have seven board members from your for-profit and all seven of those board members also served by your other board. and so i am concerned about the co-mingling of word members from your for-profit and private not-for-profit. if you could speak about that, i would appreciate it.

>> i'd be glad to if i could. i'm not sure what for-profit you are talking about the seven members. we check in at the grantor trust? the insurance trust? >> now you have -- explain to me how many different boards do have. >> thank you. i appreciate the question because it needs to be clarified. there are basically three different boards that are involved in the aarp organization. one is the aarp board. there's 22 members. there is another board, which is the board for psi, are tax paying affiliate, which has on it to aarp board members. there is a third board, which is the aarp foundation board, which has four board members on it. there are seven toto.

but for aarp board members are in the board. the purpose of having the aarp board members on this interlocking boards is to make sure that the mission of aarp is the first priority of each of the boards and that everything that goes through those present concert with her aarp policy and their mission. >> so which of those board sets your rate? the premium rate? >> premium rates are set at the state insurance. >> you have a contract with united? who oversees those contracts? which one of the boards oversee those contracts? >> contracts are not overseen by the board. there overseen by asi. they manage and oversee the contracts. >> you have members from your for-profit or not-for-profit,

correct? you said you have to numbers -- >> two board members from aarp -- >> or nonprofit? >> nonprofit on the seven-member board of the asi. >> and so with these three different boards, are they all in the same office? >> no. >> no, they have three different offices with three different managers? so, three different managers -- >> there is the president foundation, president of asi. >> as far as miniatures cocom your administrative staff federal three separate are three separate administrative staffs? >> it's been a few occasions where they may be co-mingled come at the time is that, but there are only a few of those occasions. most of the work is done by the staffs of the individual entities. >> mr. brand, are you the overseer of all of these?

>> no cop on the aarp, the c-4. >> nonprofit c-4. >> to use it as an ex officio on any of these motherboards? >> i said on the the board of asi is a nonvoting member. >> i am concerned about the intermingling of these board members have veto power and decisions that are being made by each one of these groups then these members being co-mingled. i am concerned about that and i will be interested to see what the irs looks at the way in which you manage your organization by the co-mingling of what they had to say because i know how sensitive of a situation that was as i've served as the executive or of a nonprofit and for-profit. >> the young lady's time has expired. with akamai we have a series of

votes, so we will recess and reconvene immediately after the vote and we will continue with this panel. i apologize it will probably about an hour, but a appreciator indulgence. with that i will recess. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

>> the committee reconvenes. i'd like to first recognize the chairman of the committee, mr. boustany for a comment. >> thank you, channing. i want to make sure her previous comment he made about mr. levin's comments that i spoke of earlier discussion. i want to be very clear so there is no confusion here that when mr. levin requested the irs commissioners shall mean an irs detail he be assigned republican staff of the committee, detailing would be looking into and i quote for mr. levin's letter, in areas related to tax-exempt organizations and other matters of interest to the ways and means committee. mr. levin was not aware that the detail he would be working on the investigation specifically.

i just want to offer the clarification. i yield back. >> the chairman yells back. the chairman from california, mr. becerra is recognized for five minutes. >> chairman, thank you for yielding time. i thank chairman boustany for the clarification, which simply leads to more confusion because the reality is here that we are looking on a document that was prepared without a think the knowledge of most every member on this committee. it appears to be a document that was prepared without the committee staff whole participation. it's certainly nowhere in the document indicates that this is an official report, certainly not an official investigative report by the ways and means committee. and in my 12 plus years have been on this committee, this is the first time i've seen us conduct business this particular

way. we are a week away from a government shut down, where this house has been unable to reconcile its differences with the president and their members on the other side of the aisle, which talks about the need to shut the government in order to make the case. we are watching is the discussion about a budget has become more an issue about a social agenda that some members believe they should have attached a fiscal bill. and i would think that most people watching this would wonder, with us just a week away from sandisk government shutdown in the services that would be provided to law that might be interested in this hearing is jeopardy as a result of a government shutdown that they probably wonder, is this the way that those who took control of the house of representatives intend to govern?

i don't believe this is anyway to run run the largest economy in the world or the smallest business on main street. and so, i hope we get down to the real business, which i thought -- i remember both sides of the aisle people campaign back in november talking about job creation. jobs, jobs, jobs. i don't know how having this hearing today, where we have requested mr. rand and mr. hammond to testify does anything to create jobs. and maybe this is the way the house of representatives will operate that this is how we do because fortunately with the work that has been done in the last two years, with the president, this congress was able to get the economy back on track. we just heard this morning that the economy was able to generate another quarter of a million new jobs in the last two months, 450,000 jobs created in the earth. but then again, when you recognize that in january of

2009, when new president barack obama was hemorrhaged 487,000 jobs in the pseudo-work right right in front of a. so in this committee, which is perhaps the most important committee in the house, the house, or stimulate the job. we find ourselves essentially engaged in a discrete, aggressive attack on an organization that represents and has for many decades perhaps the population in america which deserves the most respect, those who made it possible for us to be here. and so, i guess this is the business of the day and so we will conduct the business of today. i do hope and chairman boustany has said this and i applaud him, we will continue to do oversight. because whether mr. rand or mr. hammond or any other

organization that wishes to get favorable treatment from the taxpayers in this country, we have an obligation to do oversight, to make sure that no one abuses the opportunity to be treated differently than any other american who is paying his or her full share of taxes. and so, i think it would've been wholly wholly appropriate to have aarp or any other nonprofit come before this committee and explain itself. if we legitimately thought there was something going on. and so, i hope, mr. chairman -- i hope will conduct true oversight because i can tell you about any number of organizations that swindle the american public out of precious contributions and very few things that are good for this country. the biggest concern i have is that -- it's actually kind of funny here today i realized i was walking back here today is april 1st, april fools' day. and the fact we've been at this

for over an hour to be a joke, but this is not a joke and my sense is that is not a joke because i suspect what we are trying to do here, with some are trying to do through the hearings is perhaps silence voices instead of have full participation in the process. and i hope, mr. chairman, this is not an effort to silence voices of seniors in america because my understanding with regard to medicare, medicaid and social security, there separates underweight to cut benefits and i hope that this house -- willing to do the hearings that it takes to show the american people we're working for them, not against them. i yield back the balance of my time. >> mr. kind is recognized for five minutes. >> thank you, mr. chairman. i went to thank you for your presence here today. your patience is appreciated and to echo what my colleagues in california said, you know, you may think this to be some kind

of cruel april 1st joke colony before a congressional committee, but it really is him. whatever you are subjected to a prosecutorial congress committee is a serious matter and i think it's unfortunate he has i do want to describe in a modest on the other side, but the surface appears to be or may selective retribution or political retribution. there are many other organizations and individuals who could be sitting out there right now it's in the same types of questions and inquiries you have been subjected to over the last few hours, but they're not in a think that's unfortunate. if there's anything that ultimately works for the tax code, it is a feeling it is applied in a dress fairly to everyone in this country and not be news to some type of political weapon. we can go through it with the organizations that are collecting royalties or licensing fees, tax exempt from television patience to universities and the chamber of commerce, the nfib, association of health insurance plans and on

and on and on, that same questions can be directed here. and on the surface it just smacks the political richard duchenne. and everyone on this committee and sure is not in complete agreement with aarp and where they come on policy issues. i was number two in 2004 when you are supporting the medicare modernization act, which i'll created the new prescription drug is a plan for seniors. the main reason i wasn't as because it was the largest expansion of entitlement spending since medicare was created in 1965 and a nickel of that was paid for. at all what to deficit financing. a prohibitive price negotiation of drug companies that bill. significant policy differences. and yet, republicans have controlled the congress was a bill that offered a new supported it. they were not coming back the next week or the next month, subject to need these questions. it was only after you have the audacity to support the affordable care act that they

want to call you before here and start questioning you about your loyalty payments for making a list of organizations could very well be subjected to the same line of inquiry. former representative. capitol hill publication here titled don't play politics with aarp. and in that article, i'd like to just quote one paragraph that he wrote. the fact is that the organization of aarp did significant revenue from selling products, but that is an unusual. many nonprofit health insurers like carefirst, member organizations like nra to my trade associations like the american bankers association and human service pack goodies like the red cross get significant revenue from product sales and in licensing. that's the point i was just making. mr. rand, maybe you can inform the committee how many members duchesne members does aarp have today. [inaudible] >> 37, just shy of 40 million.

it is my understanding that aarp does not spend a nickel to rackley advocating the election of any candidate running for office in the united states. is that correct? >> that's correct and we don't have a pack. >> said in a contributing campaign funds to any person, republican, democrat or otherwise running for office. i do want to on the spot, but the 60 plus association is an alternative of aarp. gina how many dues paying members the association has? >> i don't know. >> let me answer that for you. none, zero. they take all the contributions for the interests out there that don't have to be disclosed in turnaround at gram-negative political act against candidates throughout the country familiar a tax exempt organization. it's not surprising that we don't find him sitting next to you here today either because they basically one on the attack against democratic candidates in the last election cycle.

let me also ask you that, you know, let me get to the crucial question here. i think aarp supported the affordable care act today because there was direct financial benefit for you of what was ms legislation that was passed? or was it based on substantive policy regions of why you supported the affordable care act? >> had nothing to do with revenues. it was 100% focused on our mission and what our seniors and 50 plus populations were saying they needed for the american dream. >> and what more specifically found in the affordable care act made sense for your members to mount the support of that? >> we talked about no preexisting conditions, which is what they wanted, which we advocated for. stop being of age discrimination through a trading, which they said as we get older we have less money. >> i want to thank our

witnesses, you mr. rand, mr. hammond for participating today's hearing. with that, that will conclude our first panel that they took up her second panel. >> mr. chairman. >> please. >> mr. chairman? >> yes. >> ester chairman, according to the release on march 25th, it to commit britain comments as long as they follow set forth as an advisor. is that correct? >> yes, that is correct. >> and compliance to any organization, is that correct? >> that is correct. >> and so, mr. chairman, with that the weather witness before us today, aarp?

>> now, our witnesses today have had an opportunity to submit testimony because they've already had that opportunity. >> can i respond to that, mr. chairman? >> well, again, aarp has had their opportunity to submit their testimony and submit for the record so that sardi ben edited out. >> it is my understanding that the report is 26 pages long with 243 footnote that was released on wednesday. this will not finish on time for aarp to have written comments. they should have the benefit unvested point to get all of our questions answered. >> i mentioned the gentleman we mentioned with aarp two weeks ago and went over this report with them so they've had two

weeks to be able to submit to us a report. again, i would like to move onto her second panel. >> i just correct that? we went over four pages, mr. chairman. [inaudible] >> i object. >> the witnesses have provided testimony. >> can i provide to the advisory direct quote from the advisor? a person or any organization wishing to submit for the human record for the hearing page of the committee website complete

the information from the committee's homepage. >> that's for testimony. >> just a quote from our advisory. in a limited time available to hear from witnesses will testimony, active testimony will be from indicted witnesses only. any individual not scheduled for oral appearance may submit a written statement for consideration by the committee and for inclusion in the printed record of hearing a list of inviting witness will follow. ..