It may not seem all that relevant to us in Chattanooga that our friends up in Knox County are seeing an alarming share of their budget devoured by pensions for their Sheriff's Office.
"It's killing us," Knox County Mayor Tim Burchett recently declared in the Knoxville News Sentinel.
But while we're sympathizing with Knox County for its difficulties, we might want to save some sympathy for ourselves and the rest of our country as well. That's because what is happening in Knox County is not so very different from the mammoth budget problems that are descending on our nation as a whole through runaway entitlement costs.
But first let's look at Knox County's plight.
The county is spending more than $8 million per year on a pension plan for its Sheriff's Office. That's a lot of money, but what makes it more troubling is that the $8 million is almost three times as much as the plan was projected to cost when it was approved five years ago.
There are a number of reasons for that huge disparity. For one, eligibility for the program has been quietly expanded beyond the uniformed officers it was originally supposed to cover. More people covered means more expense. In addition, the projection of a 7.5 percent return on investments was much too high. The real return has been a dismal negative 0.08 percent, meaning far less money to sustain the pensions.
Now, Knox County is seeking ways to rein in the explosive costs of the pension plan. It is looking at raising the retirement age, slashing benefits, requiring participating employees to contribute more -- or killing the plan outright. The only alternative is eventually to raise taxes, which would be unpopular, to say the least.
If all this sounds vaguely familiar, it should -- because it's similar to the problems facing a variety of federal programs.
Advocates of reforming the United States' out-of-control entitlement spending have pointed out for years -- albeit in vain -- that entitlements often were adopted with falsely optimistic promises that their long-term costs would be low.
But it didn't work out that way. For example:
Congress passed a Medicare prescription drug benefit in 2004, vowing that it would cost "only" $400 billion over 10 years. Shortly after the benefit became law, that 10-year cost estimate rose to a shocking $700 billion!
In 1967, the House Ways and Means Committee estimated that the Medicare program would cost roughly $12 billion by 1990. What was our nation actually spending on Medicare by 1990? Nearly 10 times that much -- and the annual cost is over half a trillion dollars today!
The Medicare hospital insurance program was supposed to cost about $9 billion by 1990, according to 1965 projections. It actually cost $67 billion by 1990.
In short, government -- at all levels -- doesn't always do a good job of predicting what a program will cost.
It is easy to make sunny predictions about the cost of new programs -- especially if it may be a long time before the real costs are known. But sunny predictions don't pay the bills, whether for a local pension plan or for massive federal programs such as Medicare.
If we want to avoid job-killing tax hikes or harsh cuts in benefits -- or both -- the time for reform is now, not later.