COLUMN ONE : For AARP, a Reversal of Fortune : The 31.5-million-member seniors’ group sailed through the ‘80s. Its clout has faded with a GOP Congress intent on balancing the budget. Looming is Medicare fight.

WASHINGTON —  For decades, a near-sacred rule in American politics has been: Don’t mess with grandma and grandpa, or with the group that most often represents them, the mammoth 31.5-million-member American Assn. of Retired Persons.

But by the time a tough-minded Republican Congress left town this month for the summer recess, the rules seemed to have changed.

The score card in the House: Low-income energy assistance, which helps pay utility bills, was eliminated; money for ombudsmen in nursing homes was wiped out; funding for a program to combat elder abuse disappeared; a senior employment program was slashed by $60 million, wiping out 14,000 job slots.

When Congress returns, the biggest battle looms as Republicans try to cut $270 billion from the growth of Medicare and make the most radical changes in the massive health program for the elderly since it was created more than a generation ago.

“The last time we saw anything like this was in 1981,” the first year of the Reagan Administration, said a battle-weary Martin Corry, director of federal affairs for the AARP.

The AARP actually plowed through the 1980s with comparative ease, deploying lobbyists to win new benefits for its constituents and solidifying itself as the nation’s third-largest membership organization behind the Roman Catholic Church and the American Automobile Assn.

The growth came not only because seniors saw the AARP as an effective voice for their interests, but also because of the AARP’s all-purpose service orientation, including providing a social outlet for the lonely, and a marketplace of successful and highly profitable products. Criticism of the AARP was rarely, if ever, heard.

Now, with a changing political climate, the AARP finds itself in treacherous new waters.

The mantra of the first Capitol Hill Republican majority in 40 years is a balanced budget. The biggest program of all--Social Security--remains sacrosanct, but Medicare, which provides benefits for 33 million people over the age of 65 and 4 million disabled people of all ages, is a ripe target for GOP budget planners. The proposed savings from Medicare will be the biggest single component of the plan to balance the federal budget by 2002. The formerly untouchable AARP itself became a target, both in Congress and elsewhere, as the chief lobbyist for “greedy old geezers,” to use the new congressional buzz phrase.

In a move aimed directly at the AARP, which receives $80 million from the Labor Department for job training, the House and Senate voted separately to bar any nonprofit group with federal contracts from lobbying.

A watershed moment came at midsummer, when a vitriolic Sen. Alan K. Simpson (R-Wyo.) staged contentious hearings to question the AARP’s tax-free status. While Simpson denounced the group as “millions of people in search of airline discounts,” his colleague Sen. John R. McCain (R-Ariz.) declared that “over 75%” of his correspondence from AARP members expressed “outrage” over AARP lobbying. Many of these seniors, McCain added, “mailed me their AARP membership cards.”

From across the aisle, Sen. John B. Breaux (D-La.) blasted the AARP as little more than “a multiple-services organization,” deriving “all kinds of income from licensing your name, like Andre Agassi or Michael Jordan.”

“On the contrary,” AARP Chief Executive Officer Horace B. Deets insisted, his group “is truly motivated by its desire to improve the social welfare of the older population of this country.”

More pointedly, AARP chief lobbyist Corry said later, “on issues vital to our members, we will do what we have to do.”

From its grand, marble-adorned headquarters here, the battle cry has gone out to the AARP’s 4,000 chapters. Nobody keeps a precise tally of who shows up at which meeting, but the organization estimates its infantry of activists at about 175,000 strong--including volunteers who work as legislative advocates, serve as speakers on health and political issues and spearhead letter-writing campaigns.

Combined with its Washington staff of nearly 2,000, this cadre of local loyalists has made the AARP “the best, most sophisticated public policy and advocacy lobby in America,” said Fernando Torres-Gil, assistant secretary for aging at the Department of Health and Human Services.

It’s a drastically different role than retired California school principal Ethel Percy Andrus envisioned in 1947. Indignant because nobody would sell health insurance to retired teachers, she created a special organization for retired educators. Membership was opened to the general public in 1958, and the AARP was born.

The political dimension of the AARP evolved naturally, said Gil Eisner, 62, of Los Angeles, who coordinates the organization’s voter education and citizen lobby program, AARP/VOTE, in California.

“They took [the] attitude . . . ‘There is no one who speaks for the retired senior,’ ” said Eisner, and that led to “a political tone, an advocacy role with respect to legislation.”

For years, Democratic committee leaders in Congress listened carefully to AARP lobbyists and paid attention to their legislative wish lists. Voter guides distributed by the hundreds of thousands, and mass mailings of AARP bulletins and newsletters kept the membership alerted to issues being promoted in Washington.

Sheer numbers meant that “a legislator who stood up and said, ‘I’m going to tinker with the AARP’ could be sure they would come down on him like a ton of bricks,” said William Schneider, a political analyst at the American Enterprise Institute.

But with the Republican takeover on Capitol Hill, AARP lobbyists suddenly got the cold shoulder. Deets was still holding regular meetings with House Speaker Newt Gingrich (R-Ga.) and other powerful GOP figures. But when the time came for plotting legislative strategy, it was members of newly emergent conservative senior groups who were huddling with Gingrich, Majority Leader Dick Armey (R-Tex.) and the GOP committee chairmen.

The conservative senior groups back the Republican plans to slow the growth of Medicare, enthusiastically support a balanced budget, and take a much more skeptical attitude about government programs. The AARP has been a strong backer of a big federal government, dispensing many benefits. The conservative groups, arm in arm with the new Republican majority, want to shrink government.

“If you’re fed up with the AARP, join the Seniors Coalition,” exhorted a direct mail appeals for a one of these newly influential groups.

The new rivals to the AARP want to court seniors like 72-year-old retired food broker Walter Stiles, who recently told an AARP health care forum in Manchester, N.H., that he was so fed up with the AARP’s “greed” at the expense of younger generations that he was going to resign from the organization.

Jake Hansen, the Seniors Coalition’s legislative director, said, “When Democrats were in control, we were sort of a nuisance to the Establishment group. Now we have every bit as much influence with Congress as AARP, except we don’t have 31 million members.”

The numbers are tiny compared to the AARP. All three conservative senior groups--Seniors Coalition, 60-Plus, and Seniors USA--together have about 4 million members.

Hansen acknowledged that 80% of his 2 million members and supporters also belong to the AARP. The reason for that is that, lobbying aside, the AARP helps define what it means to grow old in America.

The organization, which enrolls one in every two people over the age of 65, offers affirmation. The AARP eases the aging process, which often makes seniors feel like forlorn outsiders in a youth-conscious society. The AARP offers travel discounts, tax advice, worker training and support groups for widows and widowers. Special programs cater to the needs of older women. At any given moment, an AARP member can find information about fitness, insurance, legal problems or educational resources.

Stalwarts of the AARP say it is precisely the something-for-everyone quality that has made the group so successful. “The AARP isn’t any one thing,” said Milton Tepper, 81, of North Hollywood. “It’s like a giant mass of pudding. It’s just there.”

With the steady graying of America, the group continues to grow. A decade ago, anticipating the hordes of baby boomers, the AARP’s marketing wizards lowered the eligibility age to 50. The leading edge of the biggest generation in U.S. history, the 76 million Americans born between 1946 and 1965, will begin signing up for AARP membership next year, when they hit 50. (President Clinton will become eligible next year, along with Cher, Donald Trump, Candice Bergen, Dolly Parton, Sally Field, Priscilla Presley and Liza Minnelli. An aide to Sen. Bob Dole, the Senate majority leader and a leading Republican presidential candidate, said the 73-year-old Kansan is not an AARP member.)

Today, 46% of the members are under age 65. One-third of the members are still working. The pages of Modern Maturity, the AARP’s glossy, upscale magazine, are filled with lushly colored ads promoting cruises, golf vacations, second homes in the mountains or at the shore.

Those who enlist in the AARP army for the minimal annual fee of $8 get discounts on car rentals and hotels, advice on taxes and investments and a profusion of bulletins and newsletters along with a subscription to Modern Maturity.

Many seek nothing else. As Barry Wanger of Newton, Mass., who recently sent in his own AARP form, reasoned, “Where else can you get a magazine for $8?”

Keeping the dues low is an excellent tactic. Once members are enrolled, the AARP can sell them mutual funds, health insurance, life insurance and prescription drugs. In fact, the organization makes more money from its products and services than the cash it collects in membership dues.

Shrewd marketing also has long been an AARP hallmark, making it virtually impossible to disentangle its strands of commerce and politics. The AARP’s closely guarded lists of members and customers are the stuff of dreams for upscale marketers: 52% of the members have attended or graduated from college.

Nearly 6 million AARP members buy the organization’s health insurance. Another 1.6 million use its auto and homeowners coverage. AARP mutual funds attract 800,000 clients. Its mail-order prescription drugs draw 2.5 million buyers. Modern Maturity has one of the highest advertising base rates of any U.S. publication, and a circulation in league with the millions Reader’s Digest and TV Guide sell.

The allowances, fees and royalties the AARP collects from the insurance companies and mutual funds it sells its members generated $164 million for the organization, compared with $145 million from membership dues. Combined, the figures provide the bulk of operating budget for the AARP’s array of grass-roots programs--and make the AARP one of the major business ventures based in the Washington area. In the process, the organization’s financial success has also provided fodder for its critics.

Simpson’s Capitol Hill hearings, for example, focused attention on the AARP’s continuing dispute with the Internal Revenue Service over whether it owes taxes on the money it makes from selling insurance to members. The AARP made a payment of $135 million “in lieu of taxes” for the years 1985 to 1993, and will pay another $15 million in lieu of taxes for 1994, while the issue remains unresolved. AARP officials note that the IRS is also having similar disputes with other nonprofit groups about tax issues.

By presenting AARP leaders in a defensive stance, moreover, the Senate inquiry may have chipped away at the behemoth organization’s credibility.

While officially nonpartisan, there is little doubt that the AARP’s activist Washington staff gives the group a liberal patina. Whether for children or senior citizens, the AARP has consistently backed the expanded social welfare programs that are identified with a “big government,” liberal agenda.

That high-profile effort now makes the organization ripe for assault, Schneider said.

“You can’t knock grandma, so what do you do? You knock AARP,” he said. “It’s a wonderful target. It’s big, it’s out there and, most important, it went against Newt Gingrich on health care.”

For some AARP members, the reversal of political fortunes has made them all the more determined to hunker down and defend what they believe is rightfully theirs: an old age of comfort and contentment, not privation.

Noting that “not all seniors are out there golfing,” retired nurse Carmen Lopez, 69, of Santa Monica said she faithfully attends monthly AARP meetings in a community room at the Santa Monica Mall. Lopez, who describes herself as “low income,” said that coalition-building with other community groups is an increasing theme as her AARP chapter seeks to develop a strategy to fight any major cutbacks in the value of Medicare benefits.

She praised the AARP for defending its members’ interests. “If it weren’t for the AARP, where would we be?” Lopez asked. “Even the Gray Panthers are dying off.”

Her sense of gratitude was echoed by retired chemical engineer Leonard Marques, 76, who stumbled into an AARP program three years ago while recovering from a stroke. The rehabilitation center that was treating him sent him to AARP for job training. Soon, he was not only working in a nonprofit refugee aid program, but also attending regular AARP meetings in his hometown of Sebastopol, Calif.

For Marques, the organization’s political endeavors are irrelevant. “I’m not in politics. I’m a technician. I’m an engineer,” he said. “But I think this organization is essential for older people. They get pushed out from the society.”

“AARP is helping them to be in a job, to get self-confidence, to get self-esteem,” Marques said. “This organization is taking the people who have been dumped by society and making them feel they’re still part of the process.”