Republicans continue to demand huge cuts in exchange for raising the debt ceiling.
A new government report on Medicare reveals that the widely used entitlement program will run out of money in 2024, much sooner than previously predicted.
"The trustee's reports underscore the need to act sooner rather than later to make reforms to these entitlement programs," Treasury Secretary Timothy Geithner says.
The political effect will hit both sides.
"His report is bad for Republicans who say we don't need tax increases and Democrats who say we don't need benefit cuts," says CNBC's John Harwood.
Hardline House Republicans want Medicare turned over to the states.
Republican Presidential candidate Newt Gingrich would end federal medicare.
"We seem to think seniors can choose everywhere except health care and in health care we have a centrally defined bureaucratic model that's a disaster," he says.
President Obama will campaign saying his health care reform left Medicare stronger.
His team will push to keep the program.
"What we can't do is follow the Republican plan to turn medicare into voucher program and shift the cost to seniors," says Heatlh and Human Services Secretary Kathleen Sebelius.
Still, Vice President Biden, who's chairing bipartisan budget talks, admits a Medicare shakeup is possible.
"It's on the table. It's all open for discussion. Its the only rational way to approach this," he says.