What Bill Novelli wants, Bill Novelli gets ...
By Matt Miller

(FORTUNE Magazine) – BILL NOVELLI DOESN'T ACT LIKE one of the most powerful people in Washington--he's mild-mannered and informal. But to see the future of domestic policy, there may be only one question you need to ask: What does Bill Novelli want? Two years ago Novelli, the chief executive of AARP, wanted a big prescription drug benefit added to Medicare, and he got it. This year he doesn't want President Bush's new private accounts carved out of Social Security, and it looks like they're dead. The 64-year-old ex-Unilever marketer speaks softly but carries Washington's biggest stick: the clout that comes from representing AARP's 35 million members.

So what does he want now? Nothing less than to fix the national disaster that is health care. I sat down with Novelli in his E Street office the other day to get the scoop without all those pesky Presidents and Senators acting as middlemen. Novelli never thought Social Security should top the President's agenda; the challenges facing health care are far more urgent. He says leaders in both parties are despondent over the mess. "The public hasn't reached the point of intense pain," he says, but corporate America has. "We've got to get corporations to really weigh in, to go to the White House and the Congress and say, 'The game is up, we can't take this anymore.' I do believe there will be a groundswell--maybe even a corporate revolution."

When that revolution comes, Novelli adds, AARP's clout can help make a seniors-CEO alliance a new force for bipartisan reform. "Right now there is advantage in partisanship," he says. "Everybody has their advocacy groups, there's money in it, they all have safe seats." But AARP, like all Great Powers, has no permanent allies, only permanent interests. It tipped the scales for Republicans on the drug bill, and is tipping them now for Democrats on Social Security. "This is certainly presumptuous of me," Novelli says quietly, "but sometimes I think that we are a centrist party."

Though Novelli wouldn't have led with Social Security, he thinks it's a "real shame" there likely won't be a fix enacted this year or next. Partisan fever is running too high, and advocates of private accounts (which AARP has spent millions to discredit) are too far from where he (and nearly every Democrat) thinks a "balanced" solution lies. As for the President's new call to "progressively" trim future benefits, Novelli says that plan would hurt middle-income people and make higher earners turn away from Social Security over time. Novelli's goal is to keep the amount of pre-retirement income the system guarantees at today's average level of 40%. He also wants any reform package to raise national savings to boost growth.

Hmm. If Novelli is going light on future benefit trims and wants to raise national savings (by shaving today's huge budget deficits), doesn't that mean AARP has to quit abstaining from the tax debate and push for a tax hike? Or at least condemn perennial Republican calls for the opposite? "AARP has been somewhat feckless about the revenue side," Novelli admits. Good old American taxophobia seems as big a factor for AARP as it is for the real politicians. Novelli says his members' "deep suspicion of government," and their sense that vast gobs of tax money are wasted, are barriers to franker tax talk. He seems hopeful that Ways and Means chairman Bill Thomas's creativity on these matters, including his recent mention of a value-added tax, could point the way toward answers, but not any time soon.

Though Republicans gripe that Novelli is flexing AARP's muscle to foil the President this year, the reality is subtler. Behind the scenes, Novelli is as preoccupied with making sure the President's Medicare drug plan will work as he has been with beating up the White House on Social Security. With billions in new subsidies coming on line for low-income seniors, AARP will run a major education and enrollment campaign. Novelli says this campaign will teach seniors that Medicare's new drug insurance is a smart thing to buy, even though healthier seniors may not "get back" more in benefits than they pay in premiums. As he explains, these private drug plans can only work as businesses (and thus serve public policy) if they attract the broadest possible risk pool, not merely today's top pill-poppers.

Siding with Democrats by day, helping the White House by night, rallying CEOs to fix health care: You'd never confuse Bill Novelli with Ross Perot, but with a little luck he may turn AARP into the shadow third party we need.

MATT MILLER (www.mattmilleronline.com) is a senior fellow at the Center for American Progress and the author of The Two Percent Solution: Fixing America's Problems in Ways Liberals and Conservatives Can Love.