Fed chairman warns of potential fiscal disaster for United States

Senate is told deficits are looming threat.

WASHINGTON: Warning against complacency over the U.S. federal deficit, Ben Bernanke, the Federal Reserve chairman, said Thursday that recent positive trends on the budget were a "calm before the storm" masking a long- term economic threat posed by looming deficits in Social Security and Medicare.

"The longer we wait, the more severe, the more draconian, the more difficult the adjustment is going to be," Bernanke said in response to a question at a Senate hearing about when lawmakers should tackle the growth of spending in the twin retirement systems. "I think the right time to start is about 10 years ago."

In substance, Bernanke's comments were consistent with his past warnings, and those of his predecessor, Alan Greenspan, about the cost of the baby boom generation retiring. But his tone appeared to be more urgent, and the timing seemed aimed at the arrival of a new Democratic-led Congress that is just now setting its priorities.