Saving Medicare the Republican way

It's a promise: "A Romney-Ryan administration will protect and strengthen Medicare, for my mom’s generation, for my generation, and for my kids and yours." That's what Paul Ryan told the Republican National Convention last night in his acceptance speech.

How do the Republicans plan to do this? The Republican Platform spells it out: "The first step is to move [Medicare and Medicaid] away from their current unsustainable defined-benefit entitlement model to a fiscally sound defined-contribution model."

Right--that has worked so well for pension plans.

Once upon a time we were told that the 401(k) defined-contribution plans would let us retire rich. We could choose our own investments! No intermediaries would take hefty cuts! The miracle of compounding interest would do the rest!

But then interest rates tumbled, and financial institutions took hefty cuts anyway, and our houses lost a third of their value, and most of us forgot that we really needed to be socking away the maximum allowable percentage of our salaries if we planned to continue eating in retirement.

You might want to check out David Callahan's article, "A Perfect Failure: Why the 401(k) Has Been a Flop." Or you might just want to consider your own 401(k). Will you have saved a million dollars by the time you retire? That's how much you'll need if you want to draw out a modest $40,000 a year, and if you want your savings to last as long as you do.

Now ask yourself: do you really want an individualized, free-market Medicare along with your individualized, free-market 401(k)?

Soon-to-retire Boomers will remember a sentence reportedly uttered by an American officer in Vietnam: "We had to destroy the village in order to save it." That's pretty much how Mr. Ryan plans to save Medicare.

I do hope Messrs Obama and Biden come up with a better idea.