Yes, the guy at the table this time wore a beard and spoke somewhat less elliptically than his predecessor.

But the substance of Ben S. Bernanke's message to a Senate panel was basically the same one that Alan Greenspan delivered repeatedly for years from that same catbird seat:

The federal budget is cruising toward a waterfall - actually two waterfalls, a small one and a big one.

The small one is called Social Security; the big one is called health care. And if we don't change course soon, we risk a political and economic dunking.

Currently, "we are experiencing what seems likely to be the calm before the storm," Bernanke said of the current federal budget deficit, whose shrinkage last year was much celebrated and largely irrelevant.

It's true, Bernanke noted, that the government's flow of red ink slowed in 2006 to $248 billion from $319 billion a year earlier.

But rather than pat itself on the back, Congress needs to look ahead.

Next year, the first baby boomers will turn 62, and millions will begin claiming their Social Security benefits, followed by Medicare three years later.

Now consider that in 2006, about 40 cents of every federal dollar went to cover the costs of Social Security, Medicare and Medicaid.

The coming baby-boom retirement wave means that spending on those entitlement programs will rise - not just faster than inflation, but faster than the growth of the economy as a whole.

That leaves less money for defense, education, or anything else you might think government should fund.

There are several other choices, but none is pleasant.

Tax hikes won't be limited to the Wall Street bonus-brigade and overstuffed CEOs - the middle class will wind up paying more as well.

Borrowing more won't cut it either, Bernanke said. We're already paying more than $400 billion a year in interest just to service the debt we've got.

By 2030, that debt burden could triple as a percentage of the overall economy - which means the annual interest cost would skyrocket.

Additional borrowing to pay that interest could put us into a fiscal death spiral, resulting in default, runaway inflation, a badly weakened economy, or all three.

So what's left? Some combination of tax hikes, benefit cuts, and reform of the entitlement programs to make them more efficient seems inevitable.

Social Security is actually the easy part. You wouldn't know it from the furious political battle that erupted over President Bush's plan a couple of years ago to partly privatize the retirement system, but left- and right-leaning policy experts have actually found a fair amount of common ground over how to change the program.

A compromise plan would likely involve tweaking the Social Security benefit formula, lifting the cap on payroll taxes, and gradually raising the retirement age in line with seniors' lengthening life expectancies.

Medicare and Medicaid are much thornier issues, mainly because of the broader problem of rising health-care costs for everyone.

Coming up with a fair and effective program that the economy can support probably hangs on a broader change that would affect health-care funding across the board.

But whatever approach Congress takes, it's critical that it get started now.

Every year that the budget isn't balanced puts us deeper in the debt hole, making it that much harder to get out.

The federal deficit also aggravates our international financial imbalance, effectively forcing us to import foreigners' savings to fund both public and private investment.

"The longer we wait, the more severe, the more draconian, the more difficult the objectives are going to be," Bernanke told the senators. "I think the right time to start was about 10 years ago."

No kidding.

The Economy | Greenspan Admonitions

November 2005

He called on Congress to get the nation's fiscal house in order and bring the swollen deficits under control.

"Unless the situation is reversed at some point, these budget trends will cause serious economic disruptions," he said.

April 2005

Large government deficits threaten the U.S. economy, he said, calling on Congress to return to the budget discipline of the 1990s.

"Unless that trend is reversed," Greenspan warned, "at some point, these deficits would cause the economy to stagnate, or worse."

February 2003

He questioned the need for a new economic- stimulus package, voicing concern about the rising federal budget deficit. "We ought to be . . . very careful not to allow deficits to get out of hand."

SOURCE: Inquirer research