Rep. John Linder, a Republican of Georgia, dropped by our office yesterday, and the conversation turned to our front-page profile of the AARP’s top lobbyist in Washington, John Rother. That was the piece that described Mr. Rother as perhaps having more influence than many senators on the future of Social Security. The article noted that the interest group had spent $5 million in newspaper ads in just the first two weeks of January in trying to block President Bush’s plan for private accounts as part of Social Security. Asked Mr. Linder of Mr. Rother: “Who elected him?”

It’s an excellent question. As is, as it often is in politics, “Where does the money come from?” The AARP’s 2003 annual report, the most recent one available online, shows that $76 million of the organization’s $770 million budget for that year came from “federal and other grants.” In other words, the Republican Congress is appropriating tens of millions of dollars to a group that is lobbying to block President Bush’s signature second-term domestic policy initiative.

That’s interesting enough. But where the plot really thickens is the largest chunk of AARP revenues: the line called “royalties and service provider management fees.” In 2003, that was $300 million, and some portion of it came from a deal that AARP cut with Deutsche Bank AG to market mutual funds to AARP members. That’s right, the AARP is busy selling its own members the same stocks and bonds it argues are too risky for American taxpayers to invest Social Security funds in.

Indeed, some of the funds the AARP and its German banker partners are selling to its senior citizen members are pretty risky. There’s a technology fund that was down 24% in 2000, down 34% in 2001, and down 39% in 2002, all the while the fund’s operating expenses, which include a hefty management fee for German bankers, were about 1% a year. AARP also offers a large-company growth fund that has underperformed its benchmark index for the past one-, five-, and 10-year periods, all the while generating healthy fees for the AARP and those German banker partners.

Given that experience, it’s easy to see how the AARP’s members might get the idea that investing in the markets might not turn out so well. But most plans under consideration by Congress call for the private accounts in Social Security to be invested in more conservative or index-oriented assets, along the lines of the federal Thrift Savings Plan that is good enough for members of Congress to invest in for their retirements.

The point is, if AARP is going to be this big a player in this policy debate, the Republicans, as well as all Americans with an interest in saving Social Security without tax increases, are going to want to shine some light on its funding and motives. After all, if the government-offered Social Security investment plan outperforms the one offered by AARP and Deutsche Bank, the AARP’s members, and even some members of Congress, might start wondering whether what the AARP’s really afraid of is competition.