David Walker, the head of  the GAO, is sounding the warning call. The problem, according to the nation’s top accountant, is the number one threat facing the US.

This is not a new trouble for the US. The nation started spending in the 1960s and still hasn’t slowed down. The problem we face is simple. We have large entitlement programs based on age. We have a large demographic tsunami called the baby bloomers that will start hitting “layout age” in larger and larger numbers soon. Combine these two things, and the US will not be able to afford the bill.   

Here are some facts on the issue:

Prescription-drug coverage under Medicare takes effect Jan. 1. Its projected cost, advertised at $400 billion over 10 years when it passed in 2003, has risen to at least $720 billion. “We couldn’t afford” it, Walker says of the new law.

• The leading edge of the baby boom hits age 62 in 2008 and can take early retirement. The number of people covered by Social Security is expected to grow from 47 million today to 69 million in 2020. By 2030, the Congressional Budget Office projects, Social Security spending as a share of the U.S. economy will rise by 40%.

• The bulk of Bush’s 10-year, $1.35 trillion tax-cut program is set to expire at the end of 2010. But Congress is moving to make the reductions permanent. That would keep tax revenue at roughly 18% of the economy, where it’s been for the past half-century — too low to support even current spending levels. “We can’t afford to make all the tax cuts permanent,” Walker says.

• Baby boomers begin to reach age 65 in 2011 and go on Medicare. Of all the nation’s fiscal problems, this is by far the biggest. If it grows 1% faster than the economy — a conservative estimate — Medicare would cost $2.6 trillion in 2050, after adjusting for inflation. That’s the size of the entire federal budget today.

“Social Security is Grenada,” Holtz-Eakin says. “Medicare is Vietnam.”

USATODAY.com - A ‘fiscal hurricane’ on the horizon.