US retirement fund fast running out of cash

WASHINGTON - The US government pension and health insurance programmes will soon run out of resources as the baby-boom generation prepares for retirement and the ongoing recession hits tax receipts, officials warned Tuesday.

In an annual report, the government warned that a state-run health insurance plan for the elderly known as Medicare will be insolvent by 2017 - two years earlier than predicted in last year’s report.

A separate fund for Social Security, the government’s pension plan, will be exhausted by 2037 - four years earlier than reported in 2008.

The report adds another headache to President Barack Obama’s list of economic challenges and could prod Congress to revive a debate that has long struggled to make headway.

‘The longer we wait to address the long-term solvency of Medicare and Social Security the sooner those challenges will be upon us and the harder the options will be,’ Treasury Secretary Timothy Geithner said in a statement.

Medicare is mainly threatened by the spiralling cost of US health care, already one of the world’s costliest system, the report said. Social Security’s intakes were being slowed by an economic downturn considered the worst since the Great Depression.

An effort by former president George W. Bush to partially privatise Social Security was scuppered earlier this decade. Republicans have pressed Obama to lay out his own plans to deal with the looming cash shortfall.