If you are like many Americans, you may not have even heard of David Walker, let alone know why what he says may be so important.

And by what authority does Mr. Walker have the right to publicly state that the “nation’s finances are going to hell”?

As it turns out, he is the comptroller general of the United States—the nation’s top auditor.

So, maybe we should listen closely when Mr. Walker warns that the “United States can be likened to Rome before the fall of the empire” (USA Today, November 14). He is warning that America faces a “demographic tsunami” that “will never recede” (ibid.). That is strong language, coming from the man who is responsible for keeping track of the nation’s finances.

Just what is this “demographic tsunami” Mr. Walker is warning of?

The population of the United States is aging, living longer and having fewer children.

The 80 million baby boomers, born between 1946 and 1964, are getting set to start retiring— the first ones in 2008. As they do, it will have a dramatic impact on federal expenditures and tax revenue.

To pay the benefits promised to retirees, there will have to be a massive increase in federal spending on Social Security, Medicare and Medicaid.

As the baby boomers retire, there will be progressively more and more people drawing from the system. Today, 47 million people are covered by Social Security. By 2020, that number will be 69 million.

Exacerbating this massive increase in projected federal spending, the average American lifespan has increased 13 percent over the past 50 years. This means that the length of time retirees are collecting federal entitlements is also stretching.

Compounding these two problems is the fact that the baby boomers had fewer children than their parents did. This means that as they retire, there will be a comparatively smaller number of people entering the workforce and being taxed to pay retiree benefits. In other words, there will be a comparatively smaller tax base to pay ever-increasing retirement benefits. Right now about 4.1 workers fund every retired person. By 2020, there are projected to be only 2.9, and by 2030 only 2.2 (Congressional Quarterly, October 21).

Just how will the government pay for the escalating Social Security, Medicare and Medicaid costs?

According to USA Today, “$53 trillion is what federal, state and local governments need immediately—stashed away, earning interest, beyond the $3 trillion in taxes collected last year—to repay debts and honor future benefits promised under Medicare, Social Security and government pensions” (Oct. 5, 2004).

The federal government is already up to its eyeballs in debt, and is spending far more than it is taking in, so more borrowing (which would only postpone the day of reckoning) will probably not be a viable option.

If you think the government will be able to cut other programs to pay for retirement benefits, think again. This year, Congress struggled to trim a mere $50 billion from the budget, over five years! That’s out of the projected $1.6 trillion deficit over that period. This $50 billion savings pales in comparison to the prescription-drug Medicare costs alone. According to USA Today, 2003’s projected Medicare cost of $400 billion over 10 years has risen to at least $720 billion ( op. cit.). Mr. Walker says that the U.S. just can’t afford it.

If extra borrowing and/or budget cutting are not probable options, then that leaves the government only three other conventional alternatives: hiking taxes, slashing benefits and raising the retirement age.

Raising taxes and slashing benefits are both political “hot potatoes,” so don’t be surprised if politicians keep trying to delay the day of reckoning by ignoring this dilemma.

As Stuart Butler of the conservative Heritage Foundation says, to avoid huge tax increases, the government will have to “renegotiate” the social contracts made with its citizens.

The idea of “renegotiating,” that is, cutting the promised benefits to millions of senior citizens who are counting on them to fund their retirement, is to them an appalling idea. Especially since “over half of all U.S. workers do not participate in any kind of employer pension or retirement plan” (Money Management Executive, June 6). Any leader with a little foresight and political will could have seen this situation developing years and years ago and taken the proper steps to fix it.

Current retirees are probably safe, since it would be tantamount to political suicide for anyone to suggest cutting the benefits of our fixed-income elders. However, Americans that are more than just a few years away from retirement may be shocked at what they will and won’t be entitled to.

The one thing Americans will probably be entitled to is an increased number of working years before retirement.

Unfortunately, U.S. citizens may also be in for a “future of unfunded promises” and a “lower standard of living,” as Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, envisions (USA Today, November 14).

Don’t expect action any time soon. Federal governments have a history of letting economic bubbles develop and pop, then picking up the pieces afterward.

Based on the Federal Reserve’s past proclivity to expand the money supply every time there is a crisis, politicians will probably take the seemingly easy way out. With a click of a mouse, they will create the additional money needed to repay debts and promised entitlements under Medicare, Social Security, Medicaid and government pensions—the $53 trillion worth. This way, the government can prolong the facade of a healthy fiscal business model a little longer—paying debt and promised benefits with devalued dollars. Future waves of retirees will still get their promised Social Security checks, but instead of being able to buy 10 loaves of bread they will eventually be able to buy only five, or even fewer.

This government-induced inflation will lead to a continual and catastrophic erosion of the value of the dollar (and any cash savings you might have) and, subsequently, the nation’s wealth.

Empires rise and fall.

Prior to its fall, Rome was the largest political, military and economic unit the world had ever seen. During its decline, Rome tried to take the easy way out of its debt problems by devaluing its currency to pay rising costs—stealing from its debt holders and people. Many citizens of the day never recognized the warning signs of the impending Roman collapse and were caught unaware.

Like Rome, America is in serious financial trouble and is about to fall. Will you be caught unaware?