WRAPUP 3-Medicare funds issue fuels U.S. budget fight

* Medicare seen exhausting trust fund in 2024

* Money squeeze plays into budget, debt talks

* Elderly fear benefits to be cut

* Boehner: retirees will be taken care of
(Adds Boehner, paragraphs 8-9)

By Glenn Somerville and Pedro da Costa

WASHINGTON, May 13 (Reuters) - Two of the government's most
popular programs for the elderly will run out of money sooner
than previously thought, according to a report on Friday that
heightens pressure for a long-term U.S. budget fix.

Trustees for the programs estimated the Medicare trust fund
would be exhausted in 2024, not 2029 as estimated last year.
The Social Security retirement program will run out of money a
year earlier in 2036 and after that would have to reduce
benefits.

The latest projections struck in the middle of an intense
debate between the Obama administration and opposition
Republicans about how to rein in the nation's runaway debt, set
to hit the legal limit of $14.3 trillion on Monday.

Republicans have been pushing for much deeper spending cuts
than the administration prefers as a price for agreeing to
raise the debt limit.

The administration has warned of financial catastrophe if
the ceiling on the debt is not raised. It has said the nation
would begin defaulting on obligations on Aug. 2 absent action.

Republicans said the worsening finances of the two popular
programs underscored the need for bold action on the budget.

"Today's report yet again highlights the urgent need to
save and strengthen our critical health and retirement security
programs," said House of Representatives Budget Committee
Chairman Paul Ryan.

House of Representatives Speaker John Boehner, the top
Republican in Congress, vowed retirees would be taken care of.

"But we all know that if nothing is changed, senior
benefits are gonna get cut. Why? Because they're unaffordable,"
Boehner said in an excerpt of an interview to air on CBS' "Face
the Nation" on Sunday. "That's why we have to deal with it. And
we need to deal with it now."
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Factbox on Treasury tools to avoid debt limit:

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Graphic - US debt to hit the ceiling:

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PASS FOR SOCIAL SECURITY?

So far, Social Security appears to be off the table in the
budget talks. But Republicans in the House of Representatives
want to overhaul the Medicare healthcare program for future
retirees. Their proposal would give the elderly a federal
subsidy to purchase medical coverage from private insurers.

Republicans argue the change is needed because a recent
analysis by the nonpartisan Congressional Budget Office shows
the trust fund will be depleted in nine years -- even earlier
than the plan's trustees forecast.

The budget debate is deeply entwined with the struggle by
the Obama administration to persuade lawmakers to hike the
legal limit on the nation's debt.

The current limit is expected to be hit on Monday but the
Treasury Department is taking extraordinary actions to ensure
it can keep meeting the nation's obligations, such as interest
on the debt and other bill payments. But it has warned it will
run out of maneuvering room by Aug. 2.

Treasury Secretary Timothy Geithner urged Congress again on
Friday to lift the limit, suggesting that a failure to do so
could put Social Security and Medicare payments at risk.

PAY DEBTS AND OBLIGATIONS

"I want to again encourage Congress to move as quickly as
possible, so that all Americans will remain confident that the
United States will meet all of its obligations -- not just our
interest payments but also our commitments to our seniors," he
said at a news conference.

In a report to be released on Monday, the centrist think
tank called Third Way warned that if inaction in Washington
forced a U.S. debt default -- something that has never happened
in the country's history -- it could plunge the economy back
into recession. [ID:nN13194417]

But a survey conducted May 5 to 8 by Gallup showed 47
percent of Americans wanted their congressional representatives
to oppose a rise in the debt ceiling -- suggesting the
political battle to raise it may be a lengthy one.
[ID:nN13195484]

Some 60 million Americans were receiving benefits under
Social Security at the end of last year. According to the
Kaiser Family Foundation, a health researcher, about 47 million
people were receiving Medicare benefits last year.

A key lobby group of the elderly, AARP, said Medicare and
Social Security were "critical lifelines for millions of older
Americans" and said Congress' attention should be directed
toward finding ways "to strengthen -- not undermine -- these
pillars of financial and health security."
(Reporting by Glenn Somerville, Pedro Dacosta and Donna Smith;
Editing by Peter Cooney)