U.S. Treasury Secretary Jacob Lew on Friday called for efforts to strengthen Social Security and Medicare, two government-run entitlement programs, to solve their long-term solvency problems and reduce government deficits.
"Social Security and Medicare are meeting their commitments today, and they will continue to meet their commitments in the years ahead. Yet as the Trustees' reports have been indicating for a while now, these programs face long-term challenges," Lew said here at an event releasing the annual Social Security and Medicare Trustees reports.
Unless U.S. Congress acts, Social Security, a government retirement and disability program, would reach insolvency in 2033, the same year as the projection made last year. Medicare, a government health care program, will reach insolvency in 2026, two years later than the estimate made last year, showed the two reports.
U.S. President Barack Obama is determined to work on a bipartisan basis to put Social Security and Medicare "on a stronger footing", stressed Lew, adding that "protecting Social Security and Medicare is one of the most significant challenges we face today as a nation."
For Social Security, Obama is ready to address future financing shortfalls, and he has put forward a set of principles for reform. These principles underscore the need to find common ground to extend the life of the program while making it clear that changes to Social Security that involve deep cuts in benefits or privatization will be unacceptable, Lew said.
"The President also has a specific plan to further strengthen Medicare. He wants to shrink the cost of health care spending, reduce excessive subsidies to prescription drug companies, and ask wealthy seniors to contribute a little more. This plan will not only make Medicare stronger, it will help lower future budget deficits," he said.
Combined U.S. health care spending topped 2.6 trillion U.S. dollars, or 17.9 percent of U.S. economic output in 2010, the highest among all developed countries, governmental data showed. Experts held that the United States needs to curb the surging costs of entitlement programs including Medicare and Social Security on back of an aging population to put U.S. fiscal house in order.