Bringing home the bacon and the votes -- June 26, 2014 column

By MARSHA MERCER

It’s a simple strategy for a congressional hopeful: Tie the weight of what’s wrong with Washington around an incumbent’s neck and watch him or her sink.  

Sometimes the mere threat of being cursed as a Washington insider prompts veteran members of Congress to fold their tents. Other times, the strategy confirms the conventional wisdom that voters want to send the Old Guard, and even the Middle-Aged Guard, packing.  

Witness Rep. Eric Cantor’s demise in Virginia’s 7^th congressional district Republican primary. Winner Dave Brat is a college professor and local tea party favorite unencumbered by legislative experience or a voting record.  

Cantor, first elected in 2000, could have played up his experience and given people a reason to vote for him again. But that would have meant acknowledging that Washington does some things right, an anathema to Republicans these days.

People prize experience in other fields:  surgeons who know their way around the body, hairdressers who can wield scissors, pitchers who throw strikes. Why not legislators who can get laws passed and, yes, bring home the bacon? It’s only pork when it goes elsewhere.

We want the federally funded roads and bridges that make our commutes and our kids’ school bus rides safer. Could I see a show of hands of those willing to sacrifice the current economic boost of their nearby military base for the delayed pleasure of debt reduction? I thought so.

It has dawned on some incumbents that they make a fatal mistake when they fail to defend – and even tout -- their Washington experience. It’s smart to make a virtue of necessity.

And the strategy may be especially appealing in the South, which has long believed in electing candidates young and keeping them in Washington. The practice has paid dividends in many, many federal facilities with high-paying jobs.    

On Tuesday, Sen. Thad Cochran, 76, won the Republican primary runoff for Senate in Mississippi by focusing on what he and Washington had done and could yet do for Mississippi.

Cochran went to Congress in 1973, the same year his opponent, state Sen. Chris McDaniel, was born. McDaniel argued the courtly Cochran had stayed in Washington too long.

After Cochran narrowly won the primary and faced a runoff just three weeks later, he started talking about the billions of federal dollars he has brought his state for highways, bridges, education, research facilities and to rebuild after the devastation of Hurricane Katrina.  McDaniel, a tea party favorite, would cut the very programs Mississippi relies on, Cochran warned.   

Cochran made his pitch not just to Republicans but also to independents and Democrats, particularly black voters, in the open runoff, increasing turnout by 66,000 votes over the primary. Cochran won with 51 percent of the vote to McDaniel’s 49 percent.

In Louisiana, Sen. Mary Landrieu, a vulnerable Democrat first elected in 1996, isn’t shy about telling voters about the bacon she’s brought home. She’s proud of getting an additional $3 billion in federal funds for her state after Hurricane Katrina and of her role as chair of the Energy and Natural Resources Committee, which she casts as an asset for the state’s 300,000 oil and gas workers.

“The voters over 18 years have established great clout in Washington,” Landrieu says in a campaign ad. “It doesn’t belong to me; it belongs to them.” The people of Louisiana “sit at the head of the table with the gavel,” she says, adding, “The state has clout that it should really think carefully about before giving up.”

Landrieu told The Washington Post: “People may be mad at Washington, but I think they look at me and they say, ‘You know, she’s an exception, she’s actually been able to produce major pieces of legislation…she doesn’t vote with the Democratic Party all the time.’”

In Virginia, freshman Democratic Sen. Mark Warner, who faces Republican Ed Gillespie in November, is also trying to turn his Washington experience into a plus.

Former Republican Sen. John Warner of Virginia told a forum in Charlottesville June 20 that Virginia needs Mark Warner’s seniority – especially after the loss of Cantor.

“Seniority helps this state,” said John Warner, who served in the Senate for three decades. “That should be the factor that people should consider in the voting box.”  

(c) 2014 Marsha Mercer. All rights reserved.

Fat chance: still selling hope -- June 19, 2014 column

By MARSHA MERCER

In the Roaring Twenties, an enterprising young English immigrant living in Chicago began selling hope in a jar. 

“I, M.J. McGowan, after five years of tireless research, have made the discovery you have been waiting for,” he announced in ads in True Romance and other magazines. 

“At last I can tell you how to reduce quickly, comfortably – without the bother of tiresome exercise, without the boredom of stupid diet, without resorting to enervating salt baths, without rubber suits,” he said. 

Simply pat on the new Reducine cream, his ads claimed, and “excess fat is literally dissolved away, leaving the figure slim and properly rounded, giving lithe grace to the body every man and woman desires…quickly, surely, and permanently.”

The Federal Trade Commission wasn’t buying.  

McGowan had published “false and misleading statements as to the quality and effectiveness of said compound,” the FTC charged, and got a cease-and-desist order.  It was the first time the agency had gone after a purveyor of false hope in the fight against fat.

In the 87 years since then, the FTC has filed hundreds of cases challenging false and unproven weight-loss claims, Mary Knoelbel Engle told a Senate panel on Tuesday. She’s the associate director of the Division of Advertising Practices in the FTC’s Bureau of Consumer Protection.

And yet Americans’ hunger for a magic potion is stronger than ever.  We spent an estimated $2.4 billion on weight-loss products and services last year, and the growing industry is expected to reach $2.7 billion by 2018. Nevertheless, nearly 70 percent of Americans are overweight or obese.

“The endless flood of unfounded claims being made in the weight-loss industry vividly illustrates the challenges we, and consumers, are up against,” Engle told the Senate Commerce subcommittee on consumer protection.

Next to her at the witness table – and in the hot seat -- was Dr. Mehmet Oz. 

Dubbed “America’s doctor” by Oprah Winfrey, Oz is a cardiothoracic surgeon with a loyal daytime TV viewership and a huge reach. The Doctor Oz Show is seen in 118 countries.  Senators grilled Oz about why he touts nontraditional, “miracle” weight-loss remedies.    

For example, in April 2012, Oz said, “You may think magic is make-believe, but this little bean has scientists saying they found the magic weight-loss cure for every body type. It's green coffee extract."

Sales of the dietary supplement skyrocketed, and the FTC started investigating. Last month, the agency filed suit in Florida, alleging that the company promoted Pure Green Coffee with Oz show footage and claimed clinical proof that people could lose weight rapidly without changing their eating or exercise habits. The FTC says more than 536,000 bottles of the product have been sold since May 2012.

“I get that you do a lot of good on your show,” Sen. Claire McCaskill, D-Mo., who heads the subcommittee, told Oz.  “But I don’t get why you need to say this stuff because you know it’s not true.”

Oz contends he’s trying to motivate and energize people.  

“My show is about hope,” he said. Talking about the latest products gives viewers hope, and they may try something that jumpstarts their weight loss, he said.

Oz doesn’t get income from the products, and he warns that the products aren’t for long-term use. He has sued some companies that use his name, face and words in their ads.

He conceded, though, that “I do think I’ve made it more difficult for the FTC” because “in an intent to engage viewers, I use flowery language. I use language that was very passionate, but ended up not being helpful but incendiary. It provided fodder for unscrupulous advertisers.”

Oz said he’s being more careful with his language, but as a “cheerleader for the audience” he plans to keep talking about the latest products.  

“When they don’t think they have hope, when they don’t think they can make it happen, I want to look – and I do look -- everywhere, including at alternative healing traditions, for any evidence that might be supportive to them,” he said.

McCaskill was adamant. “When you call a product a miracle, and it’s something you can buy, and it’s something that gives people false hope, I just don’t understand why you need to go there,” she said.

Now, more than ever, buyer, beware of hope in a jar.

©2014 Marsha Mercer. All rights reserved.

30

Who's broke? Not former presidents, thanks to taxpayers -- June 12, 2014 column

By MARSHA MERCER

After he left the White House in 1953, former President Harry Truman complained that it cost $30,000 a year out of his own pocket to reply to all his mail and requests for speeches.

In those days, former presidents received a fond farewell but no federal pension, and speech-making wasn’t the gold mine it is today.

Congress had authorized pensions for retired federal workers and members of Congress (surprise!) but it had not approved federal aid for ex-presidents.

In 1912, industrialist Andrew Carnegie offered to pay former presidents $25,000 a year from the Carnegie Foundation of New York. Fortunately, that idea didn’t sit well with Congress or citizens. Imagine where we’d be if our presidents knew they’d be beholden to one outside group in their later years.   

William Howard Taft, the only former president eligible, declined Carnegie’s offer. In his post-presidency, Taft was a law professor at Yale and became chief justice.

Truman’s financial woes finally led to the Former Presidents Act of 1958, which aimed to “maintain the dignity” of the presidency by providing pensions and benefits so former presidents wouldn’t have to take unsuitable employment, according to the nonpartisan Congressional Research Service.

Today, besides an annual pension of $201,700, each former president gets funds for travel, office space, support staff and mailing privileges, Secret Service protection and other benefits.

“No current former president has claimed publically to have significant financial concerns,” Wendy Ginsberg wrote in “Former Presidents: Pensions, Office Allowances, and Other Federal Benefits,” issued this past April. Ginsberg, American national government analyst at CRS, wrote the 2014 and 2008 reports on presidential pensions.

Then along came Hillary Clinton. The likely 2016 presidential contender insisted the other day that she and her husband were “not only dead broke, but in debt” when they left the White House in January 2001.  

“We had no money when we got there and we struggled to, you know, piece together the resources for mortgages for houses, for Chelsea’s education. You know it was not easy,” she told Diane Sawyer of ABC News.

The Clintons have reportedly made vast sums talking since they left the White House: $5 million for Hillary Clinton’s speeches and more than $100 million for former President Bill Clinton’s.  

“He's worked very hard, first of all, we had to pay off all our debts which was, you know, we had to make double the money because of obviously taxes…and get us houses and take care of family members,” Clinton said.

Her critics rightly pounced on her comments as tone deaf.  But she is merely the latest presidential hopeful who inhabits a far different world than most voters. Most Americans struggle to pay their rent or mortgage – not to buy two multimillion-dollar mansions.

Clinton tried to “clarify” that she knows “how hard life is for so many people today.” That’s comforting.  

She frequently says things “need to be put into context,” so let’s put “broke” into context.

Her financial disclosure forms, filed in 2000, show assets between $781,000 and almost $1.8 million, according to the Associated Press, which also reported between $2.3 million and $10.6 million in legal bills.

Still, the Clintons’ finances were hardly bleak. In December 2000, the month before they left 1600 Pennsylvania Ave., Hillary Clinton signed a near-record book deal for $8 million with Simon & Schuster. The memoir, “Living History,” became a bestseller.

By 2004, the Clintons had paid off their debts, AP reported, and by 2009, the Clintons’ wealth was between $10 million and $50 million.

Even if Bill Clinton hadn’t made a fortune in speeches, he still would have had a cushy retirement after eight years in the top job. Between fiscal 2001 and this year, Clinton has received $15.9 million in pensions and benefits, the CRS reported.

His predecessor, former President George Herbert Walker Bush, has received about $14 million in pension and benefits since fiscal 2000, and former President George W. Bush has received about $7.1 million in pension benefits since he left office in 2009, CRS reported.

Even Richard Nixon received full pension benefits, despite resigning in disgrace during his second term. The Former Presidents Act didn’t envision such a scenario but the Justice Department ruled that Nixon was eligible for full benefits.

Hillary Clinton didn’t mention the presidential pension in her poor-Hillary recitation. To be sure, presidents earn their pensions. Nobody wants a former president to be “dead broke,” and fortunately they aren’t.  For that, former presidents and their spouses can thank taxpayers. 

© 2014 Marsha Mercer. All rights reserved.

How Congress can help the birds and the bees (butterflies, too) -- June 5, 2014 column

By MARSHA MERCER

Lady Bird Johnson was right. We need more wildflowers along our highways.  

President Lyndon B. Johnson signed the Highway Beautification Act of 1965 to fulfill Lady Bird’s vision, although early results were disappointing. Some states enthusiastically planted Texas wildflowers on their roadsides despite soil and weather conditions far different from the Lone Star State’s – only to watch them die.

 “In a culture where failures are not discussed, those learning experiences were not shared with other states. So each was left to plant, fail, and learn the same hard lesson,” Bonnie L. Harper-Lore writes in “Roadside Use of Native Plants,” first published by the Federal Highway Administration. 

Lady Bird, though, knew the importance of choosing native plants. She once said, “Wherever I go in America, I like it when the land speaks its own language in its own regional accent.”

We’re a lot savvier today about sharing our gardening failures and about the value of natives -- not just for their beauty but, increasingly, for birds, honeybees, monarch butterflies and other pollinators.

Congress has another chance to encourage states to plant natives on roadsides and enhance more than the scenery. The proposed Highways Bettering the Economy and Environment Act, known as the Highways BEE Act, would encourage states to mow and spray chemicals less and plant more native herbaceous plants and grasses.

Using what’s called integrated vegetation management practices would create a healthier habitat for the insects and animals we rely upon to move the pollen that fertilizes many fruit, nut and vegetable plants.

The BEE bill has zero additional cost and imposes no requirements from Washington. It simply directs the U.S. Department of Transportation to use existing authority and funds to encourage willing state transportation departments and rights-of-way managers to use practices that support pollinators, ground nesting birds, monarch butterflies and other creatures.

The bill is a bipartisan no-brainer, and it could save states money. Texas, for example, saved about 25 percent annually in roadside maintenance in areas where it planted wildflowers and stopped mowing.

States manage about 17 million acres of highway rights-of-way. This amounts to “17 million acres of opportunity,” says the Pollinator Partnership, a nonprofit group that strongly supports the Highways BEE Act.

Sensible though it is, Highways BEE is no sure thing. This is Congress we’re talking about.

An identical bill, also supported by the pollinators group and others, failed in 2012 when backers were unable to attach it to a transportation bill. The plan is to try again with an amendment to the Highway Trust Fund reauthorization bill. Congress is moving to approve highway funding soon; the trust fund is expected to run out of money at the end of August. 

“Under this bill, all states will be able to make the choices that are in the best interest of pollinators when managing their lands,” said Rep. Jeff Denham, R-Calif., a sponsor with Rep. Alcee L. Hastings, D-Fla.

“Seventy-five percent of all flowering plant species rely on creatures like birds, bats, bees and butterflies for fertilization,” said Hastings. “This kind of roadside vegetation management provides much-needed habitat for pollinators and other small nesting animals.”

Denham and Hastings are co-chairs of the Congressional Pollinator Protection Caucus. Both men represent agricultural districts, and Denham owns an almond orchard.

Bees are responsible for pollinating more than 90 crops and contribute $15 billion in added crop value annually. Almonds are one of the biggest crops that rely on bees. More than half the nation’s commercial bees are needed to pollinate almonds. 

But bees have been in decline. In the 1980s, beekeepers managed about 3 million colonies and suffering winter bee losses of 10 to 15 percent. Today, beekeepers have a tough time maintaining 2.5 million colonies and their winter losses average more than 30 percent. The precise cause of the decline is still a mystery.

The Obama White House is taking an interest. First lady Michelle Obama planted a pollinator garden for the first time this year, and President Barack Obama agreed with the leaders of Mexico and Canada in February to create a joint task force to help restore the monarch butterfly.

Congress should pass the Highways BEE Act. Soon, native plants blooming along our highways will speak to us, as Lady Bird Johnson said, in their regional accents. More importantly, they’ll help bees and butterflies go about their invaluable work.

© 2014 Marsha Mercer. All rights reserved.

Innovative libraries meet traditional, today's and tomorrow's needs -- on Stateline June 4, 2014

Libraries See Light After Years of Cuts

By Marsha Mercer, Special to Stateline

Librarian Sandy Irwin displays e-readers that can be checked out of the Durango, Colorado public library. Libraries are struggling to be relevant to the public after suffering years of budget cuts. (AP)

When Louisiana eliminated state aid to public libraries in 2012, Mary Bennett Lindsey had one thought:  “How are we ever going to keep those computers going?”

Lindsey is director of the rural Audubon Regional Library—three small branch libraries and a 10-year-old bookmobile that serve 30,000 residents of two parishes about an hour’s drive north of Baton Rouge. The cut in state aid meant Audubon Regional lost $50,000, or 10 percent, of its annual budget.

“I went down to the legislature and said we needed the money put back,” Lindsey said. At the budget hearing, though, all she heard were other stories of desperate need for state funds.   

“We were competing with autistic children, with residential care for adults who couldn’t take care of themselves – all good causes, all heart-breaking stories,” she said. Audubon would have to make do without state money for its 19 public Internet access computers, three children’s computers, 10 staff computers as well as 20 loaner laptops.

Buffeted by financial and cultural pressures, public libraries around the country are struggling to remain relevant and connect with patrons in the high-cost digital age. States, never a deep pocket for public libraries, have cut or even zeroed out aid, forcing libraries to rely more heavily on local funds.  

Reliance on Local Funds Grows

Overall, states slashed funding to public libraries 37.6 percent from fiscal 2001 to 2010, from $1.28 billion to $799.4 million, the Institute of Museum and Library Services reported in a survey for fiscal 2010 which was released in January. The institute is the primary source of federal funds to libraries and museums. (See the institute’s 50-state interactive here.)

Meanwhile, local revenue dedicated to libraries grew 23.5 percent over the 10 years, from $7.76 billion in 2001 to $9.59 billion in 2010.

States provide only about 7.5 percent of operating revenue for public libraries; local governments shoulder 85 percent. Gifts, fines, fees and grants contribute about 7 percent and the federal government just 0.5 percent, according to the institute.

  TWEET THIS FACT

States that fail to support their public libraries risk losing federal Library Services and Technology Act grants, which are part of the 0.5 percent federal contribution. The grants total $154.8 million in fiscal 2014. Designed to supplement, not replace, state library funding, the grants require a 34 percent state match. States can receive waiversfrom the requirement if they show that libraries were not singled out for budget cuts. Illinois, Louisiana and Texas received waivers last year. Nebraska applied for a waiver and was denied, reducing its grant funds. Michigan was denied a waiver and did not appeal. 

Besides Louisiana, 11 states provide no direct aid to public libraries, an American Library Association surveyfound. They are California, Idaho, Indiana, Maine, New Hampshire, South Dakota, Texas, Vermont, Washington, Wisconsin and Wyoming.

Two Examples

In Seattle, voters agreed in August 2012 to a seven-year, $123 million local real estate excise tax in order to reopen branches and restore services of the Seattle Public Library that had been drastically curtailed during the recession.

Since the levy went into effect last year, all library locations are open on Sundays, more than 800 Internet-connected computers have been replaced, and 50,000 new e-books and e-audio files purchased.

 “We’ve been fortunate to have a city that appreciates what we do,” said Seattle city librarian Marcellus Turner.

“We’ve had the opportunity to bring in new staff and conduct marketing studies to find out what our community needs,” he said. The next project is drawing Seattle’s large population of 20-somethings to the library.

In contrast, funding for almost all public libraries in Kentucky is on hold as tea party activists challenge library local taxing authority in court. The lawsuits contend that jurisdictions improperly raised taxes for decades because they did not seek voter approval of tax changes.

Brandon Voelker, lawyer for the plaintiffs, said, “It’s not about the library. We’re all in agreement libraries are good.” But he said, “The government needs to ask for permission to raise taxes.”  

The tea party-backed lawsuit won in circuit court and awaits a ruling by the Kentucky Court of Appeals.

If the lawsuit succeeds, 99 library systems in the state could lose about $62 million a year, said Lisa Rice, director of the Warren County Public Library and chair of the Kentucky Public Library Association’s advocacy committee.

“Up to 78 percent of the libraries’ funding would be lost, and (the lawsuit) also opens the possibility of tax refunds,” said Rice. Library supporters had hoped the legislature would solve the problem, but it adjourned without acting. 

Changing Library Experience

Studies by the Pew Internet & American Life Project found that Americans appreciate and support their public libraries.

“The vast majority of Americans use the library at some point in their lives, and over half of those 16 and older did so in the last year,” said Kathryn Zickuhr, Pew research associate. More patrons are visiting their libraries online, but 48 percent visited a library building last year, indicating that people value the physical space, even if they engage in digital activities once they get there, she said. (Stateline is funded by Pew)

One key to libraries’ success is offering the public the “expensive and scarce resource,” Zickuhr said. While books once were expensive and scarce, people now seek a broader range of services such as laser cutters, 3-D printers and even recording studios.  

“You meet a need in your community that no one else is meeting,” said Kendall Wiggin, state librarian of Connecticut, and president-elect of the chief library officers group.  “When I was younger, it was framed art work. We loaned a lot of paintings.”

These days, libraries are meeting community needs with technology. The Westport Public Library in Connecticut invites sixth through ninth graders to “hang out and geek out” at the library on “Maker Mondays.” Each session features a different hands-on activity, such as stop-motion animation or making a Doodle Bot drawing robot.

In Tennessee, the Chattanooga Public Library became “a lab for the freelance job market,” said Corrine Hill, the library’s executive director. She said the library’s broadband access gives people the opportunity to take an idea “from discovery to traction.”

Hill said one father used a 3-D library printer to create a robotic device that allows his quadriplegic child to eat without assistance.

From Books to Seeds

Librarians help toddlers get ready to learn in school and seniors to apply for Social Security. If you need a checkup in Pima County, Arizona, the library has a full-time county health nurse. The homeless go for help to the San Francisco Public Library, which hired its first social worker five years ago. About three dozen libraries have started garden seed libraries; others loan power tools. 

“In the old days, we bought that set of World Book encyclopedias because people couldn’t afford it,” said Gina Millsap, chief executive officer of the Topeka & Shawnee County Public Library. The library even loans cake pans.

Struggling with budget cuts in 2009 and 2010, Topeka & Shawnee cut its annual budget for books, films, music and other content by 50 percent – from $2 million to $1 million -- and cut staff 6 percent.  The library, which has no branches, kept the content budget at $1 million. When the financial picture brightened, it expanded services, including deliveries to work sites, retirement centers and nursing homes in its 550-mile service area.

The Topeka library loans digital cameras and teaches classes in video production. A 3-D printer recently arrived for the digital media lab. The library checks out exercise kits as well as adaptive devices, such as magnifiers for those with macular degeneration, so that people can try before they buy.

Signs of Improvement

There are signs the slowly improving economy is helping libraries’ budgets. Revenue from all sources to the nation’s 8,956 public libraries ticked up slightly, from $11.3 billion in 2010 to $11.4 billion in 2011.

“There continue to be reductions in hours and flat budgets – but perhaps the constant budget cuts are leveling off for public libraries,” said the library association’s  report on its 2013-2014 survey of Chiefs of State Library Agencies.

When they were surveyed last December and January, most state librarians believed their states’ direct aid to public libraries would remain the same or that it was too soon to say. Eleven chiefs expected their states to increase library funds by more than 10 percent. They were Colorado, Hawaii, Iowa, Illinois, Michigan, Missouri, Montana, North Dakota, Nebraska, New Mexico and Oregon.

In Louisiana, the good news at Audubon Regional is that the economy has improved, thanks to oil and gas production, and local tax revenues are up. The library’s current budget is just above $500,000, slightly higher than before the state cut off funds.

Six days a week, residents sit at library computers to fill out online applications for jobs, Social Security and other benefits. They use the free Wi-Fi – a big draw in a rural area with spotty Internet access – and check out DVDs, the latest books and laptops.

“Once we get people into the libraries, they say, `Oh, wow!’” Lindsey said. 

http://bit.ly/1m8vaNu

Pension predators prey on retirees -- June 2014 AARP Bulletin

Beware of the Pension Predators

Retirees hit with sky-high interest rates

by Marsha Mercer, AARP Bulletin, June 2014

One form of pension poaching involves attorneys, financial planners and insurance agents trying to persuade veterans over 65 who have pensions to invest in insurance products. — Adam Voorhes; Styling by Robin Finlay

Daryl Henry, a disabled Navy retiree from Laurel, Md., was beset by bills. In 2003 he read an ad and arranged to get a cash advance in exchange for signing over almost all of his $1,083 monthly pension for eight years.

Henry, who spent 20 years in the Navy, agreed to pay a company associated with Structured Investments Co. of Southern California $1,070 a month in return for money upfront. The repayment cost for the $42,131 advance: $102,720.

Henry was named the lead plaintiff among 61 retirees in a suit against Structured Investments in 2005. A California Superior Court judge ruled in 2011 that the company's advances violated a federal law that forbids assignment or sale of military pensions. The judge ordered that people who were still paying could stop their payments and the retirees would be repaid nearly $3 million.

Get investment advice and money-saving tips in the AARP Money Newsletter. Sign up now!

The victory was sweet, but brief. Within weeks, Structured Investments declared bankruptcy. None of the victims has received any restitution.

Robert Bramson, a Walnut Creek, Calif., attorney who filed Henry's suit, continues to work on the clients' behalf. He said he's already spent about $225,000 of his own money in legal fees and expenses, hoping they'll see some payment in the bankruptcy proceedings. "The business I'm in is to help people who are getting taken advantage of," Bramson said.

Henry is one of an unknown number of people who have signed over their pensions to a growing army of pension predators who go after veterans and other retirees who have a steady income stream. Smooth talkers encourage them to tap their future income for a cash lump sum now — often at an exorbitant cost.

AARP Member Discounts

Discover great deals and savings on travel, shopping, dining and entertainment, health needs and more as an AARP member.

The good news is that Congress and some states are beginning to go after those who prey on people with pensions. AARP supports efforts to license lenders and ensure that they comply with federal and state consumer disclosure laws, state small-loan interest rate caps and usury laws. AARP also has urged the federal Consumer Financial Protection Bureau to issue regulations "to eliminate unfair, deceptive and abusive practices in the alternative financial services industry." For now, though, people with pensions need to be their own first line of defense. Here's what you need to know to protect yourself.

Cash today, pension tomorrow

Companies with patriotic-sounding names and flag-waving websites court military retirees as well as teachers, firefighters, police officers and others who have pensions. The hard-to-resist pitch: Convert part of tomorrow's pension income into cash today. The question is: What's the cost? Effective annual interest rates for pension loans can top 100 percent.

Avoid Pension Benefit Scams

• Do the math. Figure out how much you will actually pay over time for the lump-sum amount.

• Never give a creditor access to the bank account where your benefits are deposited.

• Know that federal law prohibits assigning military and some other government pensions to a third party. Pension poachers get around this rule by calling the lump sum payment an advance, not a loan.

• Find more help ataarp.org/fraudwatchnetwork

Pension advances are a variation on payday loans — short-term loans, usually under $500, that come with sky-high interest rates. In contrast, pension advances typically run into the tens of thousands of dollars, and the repayment period can last more than three years. Contracts can be confusing.

Pension advance companies fly under the legal and regulatory radar by insisting they are not banks and therefore are not subject to truth-in-lending or usury laws. Although it is illegal for military and federal pensioners to assign or sell their pensions, companies skirt the law by having retirees deposit a hefty portion of their pensions into bank accounts controlled by the companies. The firms claim that the transactions are advances, not loans, and the payments aren't interest.

Mark Corbett, vice president of marketing at buyyourpension.com, said the term "loan" suggests that the money can be repaid early. A pension buyout customer who agrees to turn over a portion of his or her pension for six years has a firm commitment for six years.

"We buy income streams," he said. "Everything we do is completely legal and legitimate. We're completely transparent."

Corbett said business is booming and that he gets 30 to 50 calls a day from people who want cash for their pensions.

"The first thing I do is try to talk them out of it," he said. "It's expensive money. I tell them: 'Don't sell your pension unless you have a really good plan for the money.' "

Next page: Can pension poaching affect Medicaid services? »

If You Need Cash

If creditors are hounding you, here are 5 alternatives to pension loans:

1. Talk to creditors about a payment plan.

2. Get free credit counseling. Find a certified professional through theNational Foundation for Credit Counseling.

3. Workers can ask about an interest-free salary advance.

4. Consider advances on credit cards. The interest rate could be lower than the pension loan rate.

5. Look into a military loan. Some companies offer loans to military retirees that are less than the pension loan rate.

Another form of pension poaching involves attorneys, financial planners and insurance agents trying to persuade veterans over 65 who have pensions to invest in insurance products so they can qualify for VA Aid and Attendance benefits that help pay for assistance with daily living tasks. Such actions prompted a stern warning last year from the Federal Trade Commission.

"What they don't reveal is that these transactions could mean that the veteran loses eligibility for Medicaid services or loses the use of their money for a long time. Adding insult to injury, the advisers are charging fees that range from hundreds to thousands of dollars for their services," the FTC warned.

Beverly Walsh was a retired schoolteacher in Lynnwood, Wash., who had served in the Navy in World War II. In 2006, an insurance agent who specialized in senior finances sold Walsh, then 81, a 10-year annuity valued at $215,000. In 2009 she bought a second annuity valued at $100,000. The agent also persuaded her to set up a trust so that she and her husband, an Army vet with Alzheimer's, could qualify for Medicaid and the Aid and Attendance benefit, in addition to obtaining a veteran's pension.

No applications for a pension, Medicaid or the Aid and Attendance benefit were ever filed, and no provisions were made for her or her husband's care.

Walsh's niece, Holly Beuthin of Renton, Wash., spent two years unraveling the details and complaining to state agencies.

The insurance agent "gained her trust over several years and then coerced her into making these financial decisions that she wasn't capable of understanding," said Beuthin, who had the pleasure of seeing the state fine the agent for financial misconduct in her aunt's case and revoke his license.

Beuthin was able to recover all of her aunt's money, but her aunt didn't live to see it. Beverly Walsh died last year at 88.

Washington Attorney General Bob Ferguson (D) proposes only a few laws every year. This year, one of the five he proposed was to protect veterans from what he calls "pension poachers."

"Aid & Attendance scams involve hucksters posing as investment 'advisers' who prey on vulnerable elderly veterans or their surviving spouses with the enticement of an untapped federal benefit," said a summary of the legislation prepared by his office.

In March, the Washington legislature passed a law, endorsed by AARP, which prohibits insurance agents from providing assistance to veterans in obtaining benefits that might lead to financial gain for the agent. 

"We hope this acts as a deterrent," said Ferguson, whose father and uncles served in World War II. "We see a lot of crimes, but few are more egregious than those that try to scam our veterans."

What's being done

In the past year, officials in several other states and on Capitol Hill have begun focusing on pension poaching.

• In Vermont, state Sen. Kevin Mullin (R) worked with AARP Vermont on a bill that passed unanimously in both houses of the legislature and was signed into law by Gov. Peter Shumlin (D) in April. It requires pension lenders to abide by the same banking and consumer protection regulations as other lenders — including a requirement that they be licensed.

Enter AARP’s Rock Your Finances $50K Giveaway and you could win like a rock star!

• In New York, Gov. Andrew Cuomo (D) ordered an investigation of pension advance companies, and the state's Department of Financial Services issued subpoenas to 10 companies.

• In Arkansas and New Mexico, state security officials have issued cease-and-desist orders against companies owned by Voyager Financial Group, which bundled military pension plans for sale to investors.

At the federal level, the Securities and Exchange Commission, Federal Trade Commission, Financial Industry Regulatory Authority and Consumer Financial Protection Bureau have issued warnings about pension and benefit scams.

"These schemes are usually very bad deals for the retirees," said Richard Cordray, head of the Consumer Financial Protection Bureau.

On Capitol Hill, the Senate Health, Education, Labor and Pensions Committee is investigating pension loans.

In the House, Rep. Matt Cartwright (D-Pa.) introduced the Annuity Safety and Security Under Reasonable Enforcement Act, known as ASSURE, last year with Rep. Gerry Connolly (D-Va.). Cartwright calls pension advance interest rates, ranging from 27 percent to 106 percent, "highway robbery." His bill would limit the interest rate on such loans to the prime rate plus 6 percent.

Thom Stoddert, 63, a Vietnam veteran in Olympia, Wash., and a writer for Veterans Voice, has devoted years to helping veterans avoid scams. "I come across these people who pretend they're advocates for veterans, but they're just making money," Stoddert said. "I didn't spend nights sleeping in the mud and cold, nor did I spend countless hours watching veterans and soldiers die, so those who never served could use us as a fountain for their greed."

Marsha Mercer is an independent journalist in Northern Virginia. http://bit.ly/1m8cJsm